Retailers across the nation are calling for action to be taken against increasing credit card swipe fees, which are driving up costs for businesses and consumers.

At a Senate Judiciary Committee hearing on November 19, the National Retail Federation (NRF) underlined the economic impact caused by these fees and pushed for the Credit Card Competition Act (CCCA) to ease this burden. “Arbitrarily high swipe fees are adding inflationary pressure to the US economy and prevent retailers and other merchants from growing their businesses,” said David French, NRF’s senior vice president for Government Relations, during the hearing.

He went on to note that the CCCA would introduce competition into credit card routing, promoting fairness and reducing costs. “The Credit Card Competition Act provides a bipartisan, common-sense solution that would finally bring competition to the credit card routing market” while providing “fairness and transparency to the payments system and relief to American businesses and consumers.”

Central to this issue are two of the biggest industry players, Visa and Mastercard. Together, they control over 80 percent of the US credit card market and set swipe fee rates that businesses must pay. In 2023 alone, these fees hit a record 172 billion dollars, becoming a major operating expense for retailers and resulting in higher prices for consumers.

During the hearing, which was chaired by Senator Richard Durbin, the market dominance of Visa and Mastercard in the credit card industry was spotlighted. “The current credit card system has been designed by the Visa-Mastercard duopoly to maximize profits for the networks and the nation’s largest credit card issuers while forcing merchants and their customers to pay excessive fees without any recourse to help bring these costs under control,” added French.

The CCCA aims to solve this by requiring large banks to allow credit card processing on at least two independent networks. This would give retailers the freedom to choose between competing networks, driving down fees and improving service and security. The NRF estimates this could save businesses and consumers up to 16.4 billion dollars annually. French clarified that the legislation would not impact smaller banks or credit unions, and credit card rewards would remain unchanged, as they are set by the issuing banks, not the networks.

As a leading advocate for fair swipe fees for more than two decades, previous efforts launched by the NRF include legislation limiting debit card fees and court rulings that have provided retailers with greater flexibility in accepting various payment methods. “The fight for fairness in payment systems is not new,” said French. “This market failure requires action by Congress.”

Representing a “common-sense solution” to a longstanding thorn in retailers' side, according to French, the NRF and its supporters aim for this legislative effort to provide much-needed relief to retailers and create a fairer payment system for everyone.