Federal Lawmakers Poised to Address Credit Card Swipe Fees

A new bipartisan bill would give merchants choice in the networks they use to process Visa and Mastercard purchases.
swiping a credit card

WASHINGTON, D.C. — Legislators introduced a bipartisan bill in both the U.S. Senate and House of Representatives on June 7 that would provide merchants with choice in the networks they use to process many Visa and Mastercard credit card purchases.

The Credit Card Competition Act would mandate that retailers in many cases have the right to route payments through networks unaffiliated by the credit card providers, potentially lowering the fees they have to pay, reported the Wall Street Journal.

The act was introduced by Senators Richard Durbin (D-Ill.), Roger Marshall (R-Kan.), Peter Welch (D-Vt.) and J.D. Vance (R-Ohio) and House Representatives Lance Gooden (R-Texas), Zoe Lofgren (D-Calif.), Tom Tiffany (R-Wis.) and Jeff Van Drew (R-N.J.).

In summer 2022, Sen. Durbin and Sen. Marshall introduced a nearly identical bill that was referred to the Senate Banking Committee but not voted on. The increased Republican support of the new bill is reportedly the result of legislators' offices hearing from small businesses and other merchants.

[Read more: Retail Groups Say Swipe Fees Will Push Easter Holiday Costs Higher]

In the United States, banks that issue Visa and Mastercard credit cards charge a swipe fee that averages 2.25 percent of the purchase price when the cards are processed over Visa or Mastercard's networks, a rate that is significantly higher than in other countries. American businesses pay seven times more in swipe fees than businesses in Europe and five times more than businesses in China.

NACS encouraged its members to reach out to their representatives in Congress and ask that they support the Credit Card Competition Act. Retailers and suppliers can send such messages through the NACS Grassroots Portal.

"Our stores compete every day for consumers' business — as does every other business in the country. In the broken credit card market, no competition means an open invitation for these large multinational corporations to continually increase rates and to only focus on what benefits them, as opposed to the customer," said NACS President and CEO Henry Armour.

Armour noted that credit card swipe fees for the c-store industry have increased 82 percent between 2020 and 2022 to reach $19.5 billion.

"Current inflationary prices make the problem of swipe fees even worse. With all of the economic uncertainty Americans face every day, one thing is certain: Swipe fees punish American families more than anyone else. This broken system needs to be fixed now, and we applaud all of the sponsors and cosponsors of this legislation for standing up for what's right," he said.

NACS is a founding member and serves on the Executive Committee of the Merchants Payments Coalition, a coalition comprising NACS and other merchant groups representing brick-and-mortar and online retailers.

The Retail Industry Leaders Association (RILA) also expressed support for the bill.

"For far too long Visa and MasterCard, along with the largest Wall Street banks, have used interchange fees to discreetly fleece retailers, restaurants, and every business — to the tune of $160 billion dollars last year alone," said RILA Executive Vice President, Government Affairs Austen Jensen. "The lack of competition in the credit card market means even though the cost of accepting and processing electronic payments has gone down, banks and card networks continue to raise fees unchecked, meaning higher costs for businesses and higher prices for consumers.

"The Credit Card Competition Act of 2023 ensures merchants will have more choices and can shop for service providers with more competitive prices when accepting credit card payments," Jensen continued. "Injecting competition into the payments market will benefit American consumers and businesses of all sizes."

RILA members include more than 200 retailers, product manufacturers and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs, and more than 100,000 stores, manufacturing facilities, and distribution centers domestically and abroad.