Frustrated with extra credit card charges when shopping?
A pair of bipartisan bills in Congress seek to reduce swipe fees, also known as interchange fees, that retailers pay each time a customer makes a purchase with their card. This effort is supported by retail giants such as Walmart, Target and Kroger, as well as independent convenience and grocers.
“Credit card swipe fees are higher in the United States than anywhere else in the industrialized world – more than seven times higher than in Europe,” a business coalition wrote in a letter to lawmakers this week. last. “They are an inflation multiplier.”
Interchange fees are applied through a complex system, and fees vary by merchant, transaction size, type of card used, and banking institution, among other factors. Merchants paid about $138 billion in processing fees last year, according to the Nilson Report, a publication covering the payment industry.
These fees typically represent between 1% and 3% of the final price of a transaction, and stores often pass them on to customers in the form of higher prices.
Visa and Mastercard dominate over 80% of the US credit card market. In July, US Senators Dick Durbin of Illinois and Roger Marshall of Kansas introduced legislation that would allow businesses to route many payments to other networks not operated by Visa or Mastercard. This week, U.S. Representatives Peter Welch of Vermont and Lance Gooden of Texas proposed a similar measure.
Proponents of the bills say they would generate more competition in the credit card network market and break Visa and Mastercard’s hold on the industry.
“Credit card swiping fees inflate the prices consumers pay for groceries and gas,” Durbin said in July. “Bringing true competition to credit card networks will help lower swipe fees and keep costs down for Main Street merchants and their customers.”
Visa and Mastercard say the fees help fund rewards programs and banking services and help reduce risk for merchants by guaranteeing payment regardless of fraud or whether the customer pays their credit card bill.
Credit card companies say the legislation would not lower prices for consumers and instead lead to unintended consequences such as fewer rewards, less access to credit and data security risks.
“This legislation would again increase retailer bottom line at the expense of everyday Americans, depriving them of their credit card rewards and usurping their network choice,” said Jeff Tassey, chairman of the Electronic Payments Coalition, which represents issuers. and card networks.
Additionally, there are concerns that credit cards may become more expensive and less accessible to some consumers.
Some credit unions that serve underbanked communities are concerned that legislation could limit customers’ access to credit, said Deshundra Jefferson, spokeswoman for the Credit Union National Association.
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CNN Business’ Alicia Wallace contributed to this article.