Retailers Back Credit Card Competition Act to Ease Inflationary Pressures
The National Retail Federation (NRF) is advocating for the Credit Card Competition Act (CCCA) as a potential remedy for rising prices.A proposed amendment seeks to integrate the CCCA into the GENIUS Act, a cryptocurrency bill designed to establish a regulatory framework for stablecoins.
The Core of the CCCA: Fostering Competition
the Credit Card Competition Act is designed to inject competition into the credit card payment processing sector. It mandates that large banks provide merchants with greater flexibility in choosing payment networks for credit card transactions. this aims to challenge the existing dominance of Visa and Mastercard, possibly leading to reduced interchange fees for merchants and retailers.
Did You No?
interchange fees,also known as “swipe fees,” are charges that merchants pay to banks for processing credit and debit card transactions. These fees can substantially impact a retailer’s operating costs.
NRF’s Stance: A Necessary Intervention
The NRF emphasizes the importance of controlling swipe fees to alleviate financial burdens on consumers and small businesses. With prices for many goods still high, bringing rising swipe fees under control would help offset those costs and provide crucial relief for consumers and small businesses alike,
said Stephanie Martz, the NRF’s chief administrative officer and general counsel. She added, Swipe fees are constantly rising, and card networks face nothing to stop them. The Credit Card Competition Act has growing bipartisan support and would bring fairness to our nation’s broken credit card market. Stablecoin legislation complements efforts to bring competition to swipe fees,and adding the CCCA is a perfect match.
The Visa-Mastercard Duopoly: A Market Overview
Visa and Mastercard collectively control over 80% of the U.S. credit card market. They centrally determine swipe fees, which range from approximately 2% to 4% of each transaction.These fees are charged by all banks issuing their cards, and processing is restricted to their proprietary networks.
Pro Tip
Small buisness owners should regularly review their merchant service agreements to understand the fees they are paying and explore options for reducing these costs.
The High Cost of Swipe Fees: Impact on Consumers
In 2024, swipe fees amounted to more than $187 billion, representing a meaningful operating expense for retailers. According to the NRF, these fees increase consumer prices by nearly $1,200 annually for the average family. In January,Visa increased the network fee component of swipe fees by an estimated $100 million.
How the CCCA Aims to Change the Landscape
The CCCA would mandate that credit cards issued by the nation’s largest banks be enabled to be processed over at least two unaffiliated networks. This could include Visa or Mastercard, alongside a competing network such as american Express or Discover, or debit networks like Star, NYCE, or Shazam. Merchants would then have the choice of which network to use, fostering competition based on fees, security, and service. According to data from CMS Payments Intelligence,this is expected to save retailers and their customers $17 billion annually.
scope and Limitations of the CCCA
The NRF clarified that the CCCA would only apply to banks with assets of at least $100 billion, exempting local community banks and small credit unions. Furthermore, credit card rewards programs would remain unaffected, as these are determined by the banks issuing the cards, not the processing networks.
