Merchants Welcome CFPB Director's Concern About Lack of Competition Over Credit Card 'Swipe' Fees

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

WASHINGTON, December 21, 2023 – The Merchants Payments Coalition welcomed remarks made today by Consumer Financial Protection Bureau Director Rohit Chopra expressing concern about the lack of competition over credit card “swipe” fees.

“We hear retailers saying they don’t even know how much they’re going to pay when a card is swiped depending on if it’s a credit card or debit card or something else,” Chopra said. “We’re really focused on making sure that consumers can switch, find lower rates, but I think retailers are also asking for some of the same things.”

“Regulators always are a little skeptical when there’s not full competition, when all the prices are the same set across the different competitors,” he said. “I really fall on the side of what can you do to create competition across the board.”

Chopra’s comments came during a live interview on CNBC’s Squawk Box program this morning about the Credit Card Competition Act, which would bring competition to the swipe fees global card networks and Wall Street banks charge merchants to process credit card transactions. In addition to addressing credit card swipe fees, Chopra noted that the Federal Reserve has proposed lowering the regulated rate for debit card swipe fees.

“The cost of processing a lot of these transactions has really fallen and I think in some ways there has to be a way to keep up with that,” Chopra said. “We regulate the consumer side, not the retail side, but if you look across the globe you want to make sure that consumers are getting lower rates, retailers are getting lower rates, that banks and credit card issuers are fairly advertising the rewards and (other benefits) they offer.”

Swipe fees are up 50 percent since the pandemic and hit a record $160.7 billion last year, costing the average family over $1,000 a year. Visa and Mastercard, which control over 80 percent of the market, each centrally set the swipe fee rates charged by all of the banks that issue credit cards under their brands.

“Swipe fees have a huge negative impact on consumers, and it’s significant to see the head of a consumer protection agency expressing concern about them,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “These fees are too much for small businesses to absorb, so it’s consumers who ultimately pay swipe fees through higher prices. That is why a broad range of consumer and union groups recently formed a coalition to support reform of credit card swipe fees.”

Chopra’s appearance today comes as the CCCA – sponsored 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. – is pending in Congress.

The bill would end Visa and Mastercard’s longstanding monopoly over how transactions on cards issued under their brands are routed for processing. Instead, cards from the nation’s largest banks would be required to be able to be routed over at least one competing network like NYCE, Star or Shazam 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
The 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.