(Jan 14): First President Donald Trump targeted the interest rates credit-card companies' levy against US consumers. Now he’s targeting the interchange fees that merchants must pay to tap, swipe and insert their cards at checkout by endorsing a measure on Capitol Hill that aims to boost competition among payment networks.
Trump called on lawmakers in a social media post early on Tuesday to support legislation known as the Credit Card Competition Act, a bipartisan measure that would require larger banks to offer retailers the ability to bypass dominant networks Visa Inc and Mastercard Inc for transactions, taking direct aim at what has been a lucrative business model.
Trump said the legislation would “stop the out of control Swipe Fee ripoff”.
The bill has been backed for years by the nation’s big retailers seeking to shrink the processing fees they must pay for credit cards, which tend to be far higher in the US than in other countries, but many congressional allies of the banks have opposed the measure.
“We still view passage as unlikely though we will be watching in the next few days to see if the measure picks up GOP support,” TD Cowen analyst Jaret Seiberg wrote in a note. “To us, this is political as it is another way for the president to blame the banks for high prices.”
Trump has recently put a renewed focus on affordability issues ahead of the US midterm elections in November. That has left Wall Street in the crosshairs as banks push back against his call to cap credit card rates, which has been supported by progressive lawmakers for years and also drawn backing from Republicans.
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JPMorgan Chase & Co chief financial officer Jeremy Barnum said on Tuesday that a cap would “significantly change” its business and harm US customers and warned “everything is on the table” in fighting the measure.
Some critics have said the move could lead to many consumers losing access to credit. For riskier borrowers, banks would likely have either to terminate credit lines, raise minimum monthly payments or tack on extra fees, according to the Bank Policy Institute.
Senate Majority Leader John Thune and Republican Speaker Mike Johnson poured cold water on the proposal on Tuesday, with Thune saying the measure “would probably deprive an aweful lot of people of access to credit around the country”.
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Johnson said he spoke to Trump and fellow lawmakers about the proposal and concluded it would take “work” to resolve differences on it.
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