“Exorbitantly high swipe fees are adding inflationary pressures to the US economy and stifling business growth,” said David French, NRF senior vice president for government relations. French emphasised that the CCCA represents a “bipartisan, common-sense solution” to bring fairness and transparency to the payments system, delivering much-needed relief to businesses and consumers.
Rising credit card swipe fees are increasing costs for retailers and consumers but could be mitigated by the bipartisan CCCA.
The legislation aims to introduce competition by requiring large banks to support at least two unaffiliated payment networks, potentially saving $16.4 billion annually.
NRF highlights that the current system inflates consumer prices and stifles business growth.
The comments were submitted to the committee ahead of a hearing titled ‘Breaking the Visa-Mastercard Duopoly: Bringing Competition and Lower Fees to the Credit Card System’, led by committee chairman Senator Richard Durbin (D-Ill.) and Senator Roger Marshall (R-Kan.), co-sponsors of the CCCA, NRF said in a press release.
Visa and Mastercard dominate over 80 per cent of the US credit card market and set uniform swipe fee rates across all banks issuing their cards. These fees, described as ‘take-it-or-leave-it’, reached a record $172 billion in 2022, making them one of the highest operating expenses for retailers. French noted that these costs are passed on to consumers, raising prices by over $1,100 annually for the average family.
“The current system is engineered to maximise profits for networks and major credit card issuers, leaving merchants and consumers to bear excessive costs without any control,” French stated, calling for congressional action to address the “market failure.”
The proposed Credit Card Competition Act would require credit cards issued by the nation’s largest banks—those with assets exceeding $100 billion—to be compatible with at least two unaffiliated payment networks. This could include alternatives like American Express, Discover, or regional debit networks, in addition to Visa or Mastercard. By giving merchants the choice of which network to use, the legislation aims to spark competition over fees, security, and service.
The NRF estimates this increased competition could save retailers and consumers approximately $16.4 billion annually. Small banks, credit unions, and credit card rewards programmes would not be affected by the proposed legislation.
The NRF, a leading advocate for the retail industry, has been campaigning for fairer swipe fees for over 20 years. Previous victories include a cap on debit card swipe fees and a court settlement allowing retailers to choose whether to accept credit or debit cards.
With swipe fees at an all-time high, the NRF hopes the CCCA will provide a long-overdue remedy for retailers and consumers facing inflated costs in the current payment system, the release added.
Fibre2Fashion News Desk (KD)
