Merchants Welcome Proposal to Assess Impact of Credit Card Swipe Fees on Wounded Military Veterans

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

WASHINGTON, October 4, 2022 – The Merchants Payments Coalition today welcomed proposed amendments to the National Defense Authorization Act that are intended to address soaring credit card “swipe” fees that drive up costs for many veterans when they buy groceries or other necessities at military commissaries.

“Wounded and disabled veterans and military heroes shouldn’t have to pay extra when they use a credit card at military commissaries,” MPC Executive Committee member and National Retail Federation Vice President for Government Relations, Banking and Financial Services Leon Buck said. “No one should have to pay these high, out-of-control fees, but certainly not our heroes.”

“These amendments would reveal how much swipe fees are costing our nation’s active duty military and veterans and introduce competition that would bring these fees under control,” said Buck, a former member of the U.S. Navy Judge Advocate General's Corps. “Swipe fees drive up prices for all Americans but it’s outrageous that Wall Street megabanks should profit on the backs of heroic men and women who’ve put their lives on the line for their country and come home wounded or disabled.”

Senators Richard Durbin, D-Ill., and Roger Marshall, R-Kan., last week introduced two amendments to the defense bill, which is awaiting action in the Senate when Congress returns after the midterm elections. Durbin said he wants to “find out which banks and card networks are profiting off of these surcharges on our heroic veterans” while Marshall said, “Our American heroes are being taken advantage of.”

The first amendment would require a report on how much military commissaries pay banks and card networks to process card transactions, and how much of that cost is passed on to veterans in the form of an extra fee for using a credit or debit card. Under federal law, Purple Heart and Medal of Honor recipients, former prisoners of war, veterans with service-connected disabilities, families and caregivers of disabled veterans are allowed to shop at on-base commissaries and use military recreation facilities, but are subject to a fee to cover processing costs when they pay with a card.

The second amendment would incorporate the language of Durbin and Marshall’s Credit Card Competition Act into the NDAA. The bill, which has also been introduced in the House by Representatives Peter Welch, D-Vt., and Lance Gooden, R-Texas, would address the processing fees that lead to the commissaries’ extra charge for veterans.

Banks and card networks like Visa and Mastercard currently charge merchants – including the military – a “swipe” fee averaging more than 2 percent of the transaction amount to process credit card transactions. Credit and debit card swipe fees have more than doubled over the past decade, soaring 25 percent last year alone to a record $137.8 billion. They are most merchants’ highest operating cost after labor and drove up consumer prices by about $900 a year for the average family last year.

Visa and Mastercard, which control more than 80 percent of the credit card market, centrally set the swipe fees charged by banks that issue cards under their brands rather than the banks competing to lower the fees. Visa and Mastercard also restrict processing to their own networks, prohibiting competition from other networks that can offer lower fees and better security, resulting in U.S. consumers paying the highest swipe fees in the industrialized world.

The Credit Card Competition Act would require that credit cards issued by the nation’s largest banks be able to be processed over at least two unaffiliated networks – Visa or Mastercard plus an additional network of their choosing such as NYCE, Star or Shazam. American Express or Discover could also be the second network, but networks supported by foreign governments like China’s UnionPay would be prohibited. The banks would decide which two networks to enable, and merchants would then choose which of the two to use. That means networks would have to complete to offer the best pricing, security and service.

The bill would apply only to financial institutions with at least $100 billion in assets – about 30 of the nation’s largest banks and just one credit union but 90 percent of Visa and Mastercard credit card volume – and would have no impact on community banks or small credit unions.

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.