Retailers Say ‘This is the Year’ as Lawmakers Reintroduce Credit Card Competition Bill

"It’s time for big banks and global card networks to compete the same as small businesses do every day."

NRF CAO and General Counsel Stephanie Martz

WASHINGTON, June 7, 2023 – The National Retail Federation called on Congress today to pass long-sought legislation to address credit card “swipe” fees, welcoming a measure that would let retailers route transactions over competing networks that offer lower fees and improved security.

“It’s time for big banks and global card networks to compete the same as small businesses do every day,” NRF Chief Administrative Officer and General Counsel Stephanie Martz said. “Skyrocketing swipe fees have been driving up prices for consumers for far too long, and we are confident this is the year Congress is going to say it’s time for that to stop. Competition will bring these fees under control and strengthen security at the same time.”

The Credit Card Competition Act was reintroduced today by Senators Richard Durbin, D-Ill.; Roger Marshall, R-Kan.; Peter Welch, D-Vt., and J.D. Vance, R-Ohio, along with Representatives Lance Gooden, R-Texas; Zoe Lofgren, D-Calif.; Thomas Tiffany, R-Wis., and Jefferson Van Drew, R-N.J. The bill was first offered in the Senate last July, by Durbin and Marshall and in the House last September by Gooden and Welch (before he was elected to the Senate).

Visa and Mastercard – which control 80% of the U.S. credit card market – currently restrict competition by allowing transactions made on cards issued under their brands to be processed only over their own networks. But the bill would require that credit cards issued by the nation’s largest banks be able to be processed over at least two unaffiliated networks – Visa or Mastercard plus a competing credit card network or one of several independent networks like Star, NYCE or Shazam. Merchants would then choose which of the two networks to use, prompting networks to compete over fees, security and service.

Independent networks usually charge lower fees and, according to the Federal Reserve, have less fraud, meaning the legislation could lead to both lower costs and better security. In addition, the bill would bar networks controlled by foreign governments like China’s UnionPay from handling transactions.

Competition over the processing of credit card transactions could save retailers and their customers at least $11 billion a year, according to payments consulting firm CMSPI. The measure would apply only to banks with at least $100 billion in assets and would have no effect on local community banks or small credit unions. Credit card rewards would not be affected because those are determined by banks that issue cards, not the networks that process transactions.

Swipe fees for Visa and Mastercard credit cards currently average 2.24% of the purchase amount and amounted to $93.2 billion in 2022, approaching four times the $25.6 billion charged in 2009. When all brands and types of cards are included, swipe fees totaled $160.7 billion in 2022, more than double the amount a decade earlier, according to the Nilson Report. The fees are most merchants’ highest costs after labor and drive up prices paid by consumers by more than $1,000 a year for the average family.

As the leading authority and voice for the retail industry, NRF has led retailers’ fight for fair swipe fees for more than 20 years, winning passage of legislation that capped debit card swipe fees and a key court settlement that gave retailers the right to accept either credit cards or debit cards without having to take both.

About NRF
The National Retail Federation passionately advocates for the people, brands, policies and ideas that help retail succeed. From its headquarters in Washington, D.C., NRF empowers the industry that powers the economy. Retail is the nation’s largest private-sector employer, contributing $3.9 trillion to annual GDP and supporting one in four U.S. jobs – 52 million working Americans. For over a century, NRF has been a voice for every retailer and every retail job, educating, inspiring and communicating the powerful impact retail has on local communities and global economies.