Credit Card Swipe Fees Return to Senate Floor

The Merchants Payments Coalition welcomes remarks made by senators.

September 15, 2023

The Merchants Payments Coalition welcomed remarks on the Senate floor by sponsors of the Credit Card Competition Act this week, addressing Visa and Mastercard’s reported plans to increase credit card swipe fees by more than $500 million beginning next month.

“Despite the nearly $100 billion Visa and Mastercard took out of communities and small businesses across the country last year, guess what they’re going to do in October? They’re going to raise the interchange fee again,” Senator Richard Durbin, D-Ill., said. “While we’re trying to fight inflation from every angle that we can find to bring down the cost of groceries and gas, the credit card companies have decided it’s just the right time to have this take-it-or-leave-it fee increase. When credit card fees go up, it increases inflation and consumers pay it.”

Durbin was joined by Senators Roger Marshall, R-Kan., and Peter Welch, D-Vt., who—along with Senator J.D. Vance, R-Ohio—are the Senate sponsors of the Credit Card Competition Act. Their floor speeches came two weeks after the Wall Street Journal reported that Visa and Mastercard plan to increase swipe fees by $502 million a year beginning in October, citing data from payments consulting firm CMSPI. The speeches followed a joint statement issued August 30 by Marshall and Senator Richard Durbin, D-Ill., calling on Visa and Mastercard to withdraw the increases.

“I rise today with a clear message to Wall Street: Enough is enough,” Marshall said. “At a time when Kansans are facing the highest inflation prices in 40 years, small businesses are fighting to keep their costs low while Wall Street plots their next payday, announcing they are doubling down and hiking up their fees on merchants and consumers yet again this fall. I’m not going to stand for the massive, wealthy corporations price-gouging small businesses at every turn.”

Welch said Visa and Mastercard’s “massive pricing power” has allowed credit card swipe fees for the two networks to grow from $33 billion in 2012 to $93 billion last year.

“They’re doing what monopolies and duopolies do,” he said. “They abuse that pricing power, and they just stick it to our merchants.”

“They justify what they’re doing because it’s a convenience for the shopper,” Welch said. “It is a convenience for the shopper. It’s a convenience for the merchant. But how does that justify a rip-off?”

“Merchants have been calling for relief from rising swipe fees but Visa and Mastercard’s response is to increase these fees again,” MPC Executive Committee member and NACS General Counsel Doug Kantor said. “Consumers and small businesses in the United States are already paying far more in swipe fees than any country in the industrialized world and can’t afford to pay more. Visa and Mastercard apparently don’t care. We agree that enough is enough. It’s time to pass the Credit Card Competition Act so global card networks and Wall Street banks will have to compete the same as Main Street businesses do every day.”

First proposed last year, the Credit Card Competition Act was reintroduced in June by the four senators plus Representatives Lance Gooden, R-Texas, Zoe Lofgren, D-Calif., Thomas Tiffany, R-Wis. and Jefferson Van Drew, R-N.J.

The bill is aimed at credit card swipe fees, which average 2.24% of the transaction but can range as high as 4%. Swipe fees have more than doubled over the past decade and rose $22 billion last year to a record $160.7 billion when debit cards are included. They are most merchants’ highest operating cost average labor, driving up prices by an estimated $1,024 a year for the average family.

Visa and Mastercard—which control over 80% of the market—each centrally set swipe fees charged by banks that issue cards under their brands and restrict processing to their own networks. The legislation would require banks with at least $100 billion in assets to enable cards to be processed over at least two unaffiliated networks—Visa or Mastercard plus well-established, high-security competitors like NYCE, Star or Shazam. That would make networks compete over fees, security and service and is expected to save merchants and their customers $15 billion a year.

In addition to lower fees, the Federal Reserve says the competing networks have one-fifth the fraud of Visa and Mastercard’s networks. Credit card rewards would not be affected, nothing would change about which cards consumers use or how they use them, and community banks and small credit unions would be exempt.