The true cost of credit-card swipe fees and the push to lower them
Experts say credit-card swipe fees cost the average American family about $1,200 a year, and a renewed push in Congress could change how those fees are set.
The Credit Card Competition Act wants to lower that amount.
How a typical credit-card transaction works
Every time consumers tap or swipe a credit card, merchants pay a fee — often about 3% of the transaction — to process the payment. Those costs, charged by payment networks, are frequently passed on to customers through higher prices.
A consumer pays with a credit card, the merchant accepts the payment, and a payment network finalizes the transaction with the card issuer — most commonly Visa or Mastercard. It’s within that payment network step where swipe fees are charged to merchants.
Right now, merchants generally must use the same payment network as the credit card being used. For example, if a customer pays with a Visa credit card, the Visa network processes the transaction.
What supporters say
Supporters of the CCCA say that the lack of choice limits competition and keeps swipe fees high.
The bill would require large credit-card-issuing banks to enable at least one additional, competing payment network on their cards, giving merchants another option for processing transactions.
Doug Kantor is with the National Association of Convenience Stores, which is part of the Merchants Payments Coalition. He said more competition would benefit businesses and consumers.
“When the merchant has more money, than they can pay their employees or expand and open a new store — that’s good for everybody,” Kantor said. “When customers have more money in their pockets so that they can buy more things, that’s good for everybody. It’s good for the economy. It’s good for the customer. So taking that friction out, that really adds up.”
What opponents say
Opponents argue the proposal could have unintended consequences. The American Bankers Association sent a letter to Congress raising concerns that the bill could eliminate rewards programs that many consumers rely on, and that there are no guarantees that merchants would pass savings on to customers.
The CCCA has been introduced in Congress in the past but recently gained renewed attention and was reintroduced after receiving the president’s endorsement.
The debate continues on Capitol Hill as lawmakers weigh the potential impact on businesses, banks and consumers.
This story was originally reported for broadcast by NBC San Diego. AI tools helped convert the story to a digital article, and an NBC San Diego journalist edited the article for publication.
