WASHINGTON—Two congressional committees held hearings yesterday on a topic that is garnering heightened attention—digital currencies. The Senate Banking Committee examined the issue in a hearing entitled “Cryptocurrencies: What are they good for?” and the House Financial Services Subcommittee on National Security, International Development and Monetary Policy held a hearing entitled, “The Promises and Perils of Central Bank Digital Currencies.” Each brought forth witnesses to debate the merits and future of digital currencies.
NACS submitted a letter for the record in both hearings criticizing the lack of competition in the current payment system caused by the Visa/Mastercard duopoly. NACS supports payment advances that could help create a functioning competitive market and advocated for the exploration of digital currencies in order to disrupt the current payment system dominated by Visa and Mastercard. But NACS cautioned the respective committees that Visa and Mastercard would try to find ways to remain dominant in the face of the adoption of a digital currency and that Congress and regulators should take care to ensure that could not happen.
NACS suggests that with the evolution towards digital currencies, the traditional payment network connecting a bank, retailer and a customer is no longer needed. “Digital currencies represent an opportunity to disrupt the broken, antiquated U.S. payments system,” the letter stated. “Having a network in the middle extracting huge fees to make that happen no longer makes sense, and those networks can and should be disintermediated from a system of digital currency.”
However, with such potential, NACS warned the committees that the dominant players today will try to get a stranglehold on any new system. “Visa, Mastercard and the banks that rely on them to fix the price of huge swipe fees understand the threat of disruption of payments by digital currency. They will try to control the system and preserve the monopolistic position played by those two major networks. If that monopoly is preserved, it will cost American consumers and the economy billions of dollars every year. That result would drag down the U.S. economy with unnecessary and unjustified costs for at least another generation,” NACS stated.
NACS helped found the Merchants Payments Coalition to advocate for a more competitive and balanced payment system for the benefit of the industry, and it remains at the forefront of movements to bring positive change to U.S. payments.
To read more about NACS advocacy for fair payment systems, particularly as the swipe fee debate continues on the Hill, read “Swipe Right” in NACS Magazine.