On the recordMarch 10, 2011
I urge my colleagues to read it. It shows how Visa leveraged its dominance in the credit card industry to enter into and dominate the debit card industry. Visa then changed the debit interchange fee system so it looked like the credit card fee system. The result: the United States has the highest interchange fees in the world. We also have some of the worst fraud prevention technology in the world. This is because Visa gives banks higher interchange rates for so-called signature debit transactions instead of PIN debit transactions. So the banks tell their customers to pay with signature debit, even though far less fraud occurs with the use of PIN numbers. It doesn't have to be this way. Many countries such as Canada have thriving debit card systems with zero interchange fees. Canada has low fraud and wide consumer debit usage. Other places such as the European Union carefully regulate interchange rates to keep them to a reasonable level. But in this country, we have let dominant card networks--and they are a powerful bunch--take over our debit card system. They are driving that system on an unsustainable course. I have worked for years to reform interchange fees and to bring transparency, competition, and choice to the credit card and debit card industry. I first introduced a bill on this in 2008. In 2009, I joined with Senator Kit Bond of Missouri to file a modest floor amendment to the Credit CARD Act.
