New Estimate Shows Credit Card Competition Act Would Save Merchants and Consumers $15 Billion a Year

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

WASHINGTON, June 13, 2023 – The Merchants Payments Coalition today welcomed a new estimate showing that passage of the Credit Card Competition Act would save merchants and their customers at least $15 billion a year.

“As swipe fees go up each year, the amount that would be saved by bringing competition to these out-of-control fees goes up with it,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “We have the highest swipe fees in the industrialized world and the amount of relief that could be provided to small businesses and consumers struggling to cope with still-high inflation is enormous. All Congress has to do is tell the card networks and megabanks ‘enough is enough.’ ”

Payments consulting firm CMSPI last year estimated that the Credit Card Competition Act would save merchants and consumers at least $11 billion a year, based on pre-pandemic 2019 credit card spending. As the bill was reintroduced last week, CMSPI revised its estimate based on the latest figures and now says the savings would “conservatively” amount to $15 billion.

“Increased competition for credit card network routing would result in significant pro-competitive efficiencies for U.S. payment services, which have some of the least competitive rates across the globe,” CMSPI said.

The legislation, first offered in 2022, was reintroduced last week by Senators Richard Durbin, D-Ill.; Roger Marshall, R-Kan.; Peter Welch, D-Vt., and J.D. Vance, R-Ohio, and by Representatives Lance Gooden, R-Texas; Zoe Lofgren, D-Calif.; Thomas Tiffany, R-Wis., and Jefferson Van Drew, R-N.J.

The bill would address “swipe” fees averaging over 2 percent of the transaction that banks and card networks like Visa and Mastercard charge merchants to process credit card transactions. Credit and debit card swipe fees have doubled over the past decade, soaring by $22 billion in 2022 alone to a record $160.7 billion, and are most merchants’ highest operating cost after labor, driving up consumer prices by an estimated $1,024 a year for the average family. Swipe fees for credit cards alone totaled $126.4 billion last year, up 20 percent from 2021.

Visa and Mastercard centrally price-fix swipe fees charged by banks that issue cards under their brands, and also block transactions from being processed over other networks that could do the job with lower fees and better security. The legislation would require banks with at least $100 billion in assets to enable cards they issue to be processed over at least two unaffiliated networks – Visa or Mastercard plus a competitor like NYCE, Star or Shazam.

Banks would decide which networks to enable, but merchants would then choose which to use on individual transactions, meaning networks would have to compete over fees, security and service. Consumers would still use the same cards, rewards would not be affected, and community banks and small credit unions would be exempt.

In addition to lowering fees, the bill would improve security. Independent networks have less fraud than Visa and Mastercard’s networks, according to the Federal Reserve, and the bill would bar networks controlled by foreign governments like China’s UnionPay from processing American credit cards. Any bank can currently put China UnionPay on its credit cards with no legal restrictions, but the bill would close that loophole.

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.