Credit Card Competition Act
Last Updated: December 12, 2024
The Issue
Each time a payment card is used, a swipe fee is charged to the retailer. Credit card swipe fees have been rising at a dramatic rate. This issue is exacerbated during inflationary times. Because credit card fees are a percentage of the total transaction cost, they multiply with every cent of inflation.
Visa and Mastercard control about 83% of the credit card volume in the United States. Retailers have no choice but to accept these cards, meaning they are stuck with whichever network is on the card.
Visa and Mastercard set the prices and terms for the thousands of banks that issue their cards—even though the biggest fees, swipe fees, go to the bank that issued the card. Banks should compete on their swipe fee prices, but they don’t.
This results in swipe fees increasing year after year and U.S. merchants and consumers paying more in these fees than the rest of the world. In fact, fees on Visa and Mastercard credit cards alone went from $26 billion in 2010 to more than $100 billion in 2023. The market is clearly broken.
Retail Impact
There are an estimated 152,000 convenience stores in the United States, 60% of which are single-store operators. These businesses have seen a historic jump in their swipe fees with inflation and rising gas prices. Since 2020, overall card fees paid by the convenience store industry are up 84%.
For many convenience retailers, the swipe fees they pay exceed their pre-tax profits. These fees represent their second-highest operating cost—less than labor but more than rent and utilities.
On Visa and Mastercard credit transactions, the average rate paid in the U.S. was 2.25% of the transaction amount—more than 7 times what merchants pay in Europe and 5 times what merchants pay in China.
The Credit Card Competition Act is bipartisan legislation introduced by Sen. Roger Marshall (R-KS), Sen. Dick Durbin (D-IL) in the Senate, and by Rep. Lance Gooden (R-TX) and Rep. Zoe Lofgren (D-CA) in the House of Representatives.
Both bills would require the largest U.S. banks that issue Visa or Mastercard credit cards to allow transactions to be processed over at least two unaffiliated card payment networks—the same process that has been used for debit card transactions for more than a decade.
The proposed legislation only applies to banks with more than $100 billion in assets, exempting the vast majority of banks and credit unions in the United States, including community banks and other small and mid-sized regional banks.
NACS Position
NACS supports the Credit Card Competition Act because businesses like convenience stores thrive on competition, and the card networks should too. The legislation would bring competition to credit cards through market-based reforms.
NACS members are encouraged to reach out to their members of Congress and ask them to support the Credit Card Competition Act. Take action via the NACS Grassroots Portal.