A Senate bill targeting credit card “swipe fees” will not be included in the annual defense policy legislation. However, the sponsors of the Credit Card Competition Act have reached an agreement with leadership to bring it to the floor for a vote by the end of the year, according to a source familiar with the discussions. Senator Roger Marshall, who reintroduced the bill with Senator Dick Durbin, confirmed that they have been assured the bill will receive a vote this Congress.
The proposed legislation would require financial institutions with assets exceeding $100 billion to offer at least two network options for processing credit card transactions. At least one of those options must be a network other than Visa or Mastercard, which currently dominate the credit card market in the U.S. with an 80% share. The National Retail Federation (NRF), a major advocate for the bill, argues that swipe fees are one of the highest operating costs for retailers, second only to labor. The NRF estimates that credit card swipe fees cost retailers more than $160 billion annually.
The bill sponsors emphasize that their aim is not to cap fees but to introduce more competition and choice in order to reduce credit card swipe fees. Senator Marshall states that the bill will inject competition into the credit card market without imposing price controls. The sponsors hope that the bill will benefit small businesses and consumers while challenging the practices of large financial institutions.
There were discussions about attaching the swipe fee bill to the National Defense Authorization Act, which is scheduled for a vote before the August recess. However, with Senator Durbin testing positive for COVID-19 and being unable to participate in the discussions, this plan became less likely. Despite opposition from banking giants and credit card companies, the sponsors of the swipe fee bill are determined to bring it to a vote and believe they have the necessary support.
The impact of the bill on credit card rewards programs is a point of contention. Some studies suggest that the reduction in rewards due to the bill would be negligible. However, the Electronic Payments Coalition argues that issuers would not be able to sustain these programs if the revenue from swipe fees is eliminated.
The competition between banks for customers will still exist if the bill becomes law, according to Stephanie Martz, a representative from the NRF. She points out that banks would need to offer rewards or incentives to encourage customers to use their credit cards.
This is not the first time Congress has attempted to regulate card processing fees. In 2010, the Durbin Amendment to the Dodd-Frank Act capped swipe fees for debit cards issued by the largest banks. The sponsors of the Credit Card Competition Act have made previous attempts to pass the bill but were unsuccessful. This time, they have gained additional support from Senators Peter Welch and JD Vance.
The sponsors of the bill remain committed to driving down costs and believe that the bipartisan legislation will be passed in the near future.
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