NACS Urges Congress to Consider Guardrails on Digital Currencies

NACS this week sent a letter to the House Small Business Subcommittee on Innovation, Entrepreneurship and Workforce Development expressing appreciation for the Subcommittee’s examination of the potential benefits and challenges posed by digital currencies for small businesses.

NACS recognizes the potential for stablecoins and other cryptocurrencies to help create more competition within the current broken credit card market in the U.S. But in order to make this happen, Congress, the Federal Reserve, financial regulators and antitrust authorities must work together to ensure that new innovations in the digital asset space are not co-opted by anticompetitive forces like the Visa-Mastercard duopoly so that a modernized U.S. payments system is more fair, efficient and affordable for small businesses and consumers alike.

The letter states:

“Unfortunately, the U.S. payments system has fallen behind when compared to other aspects of the 21st century digital economy. According to the Federal Reserve, credit and debit cards accounted for two-third of all payments made by U.S. consumers over the last three years. Many Main Street business see an even higher volume of payments made via credit and debit cards––for the convenience store industry, approximately 81.9% of all transaction dollars were processed via card payments last year. As a result, the ‘swipe fees’ that convenience stores must pay to process every card transaction have become the industry’s second highest operating cost.

Credit card swipe fees in particular have become such an astronomical cost to merchants because just two companies, Visa and Mastercard, have maintained a stranglehold on the U.S. payments system by controlling more than 80% of the credit card market. These two dominant companies wield their excessive market power by centrally fixing swipe fee rates on behalf of the thousands of banks that issue cards with their logos on them, thus shielding some of the largest financial institutions in the world from having to compete with one another on both price and service.”

While the Credit Card Competition Act (CCCA) is the most critical reform that can be adopted today, digital assets can also serve as a complimentary, promising feature of a modernized U.S. payments system. However, NACS asked the Subcommittee to ensure that appropriate guardrails are put in place so that Visa and Mastercard cannot preserve or further expand their entrenched dominance into emerging digital currency markets.

NACS will continue to advocate for the passage of the CCCA. You can also send emails to your lawmakers voicing your support for the CCCA through our Call to Action portal. The more industry voices that speak out on the issue, the higher the likelihood of getting a vote and winning that vote. Your participation matters and makes all the difference.

Payment