Merchants Say Soaring Bank Profits Show Need to Pass Credit Card Competition Act

Contact: J. Craig Shearman
(202) 257-3678

WASHINGTON, April 15, 2024 – High profits reported last week by three of the nation’s largest credit card-issuing banks show the need for Congress to pass the Credit Card Competition Act, the Merchants Payments Coalition said today.

“Megabanks continue to make higher and higher profits as small merchants struggle and consumers shoulder the burden as swipe fees drive up prices,” MPC Executive Committee member and National Grocers Association Senior Vice President of Government Relations and Counsel Christopher Jones said. “Only Congress can introduce competition to credit card swipe fees and bring fairness to this broken market.”

JPMorgan Chase reported Friday that net income soared 44.8% from the fourth quarter of 2023 to $13.4 billion in the first quarter of 2024, giving it a profit margin of 32% on revenues of $41.9 billion. JPMorgan is the largest U.S. issuer of credit cards, with nearly twice the dollar volume on its cards as No. 2 Citigroup.

Citigroup reported that first-quarter net income totaled $3.4 billion, a profit margin of 16% on revenue of $21.1 billion, while No. 6 card issuer Wells Fargo reported net income of $4.6 billion, a 22% profit margin on revenue of $20.9 billion.

High swipe fees contribute to huge profits for the card industry. Visa reported net profit margins of 57% in the first quarter while Mastercard reported net margins of 43% for the final quarter of 2023, the latest data available, while money center banks that issue the majority of credit cards average 31 percent. By contrast, the average net profit for general retail is only 3 percent.

Swipe fees are up 50 percent since the pandemic and hit a record $172 billion last year, costing the average family over $1,000 a year. Visa and Mastercard each centrally set the swipe fee rates charged by all banks that issue credit cards under their brands and also block transactions from being processed over competing networks that offer lower fees and better security.

The CCCA would require that cards from the nation’s largest banks be able to be routed over at least one competing network like NYCE, Star, Shazam or Discover in addition to Visa or Mastercard’s networks. Banks would choose which networks to enable but merchants would then choose which to use, meaning networks would have to compete over fees, security and service,
saving merchants and their customers an estimated $15 billion a year. Financial institutions with less than $100 billion in assets – including all community banks and all but one credit union – would be exempt.

About MPC
Merchants Payments Coalition represents retailers, supermarkets, convenience stores, gasoline stations, online merchants and others fighting for a more competitive and transparent card system that is fair to consumers and merchants. Follow MPC on Twitter, Facebook or LinkedIn for the latest on swipe fees.