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The credit card swipe at a convenience store

Credit Card Competition Act could reduce swipe fees

Estimated reading time: 3 minutes

Legislative change could be coming to the world of credit card swipe fees as early as this week. According to the National Association of Convenience Stores (NACS), Senators Richard Durbin of Illinois and Roger Marshall of Kansas are calling for the Credit Card Competition Act to be considered as an amendment to a package of spending bills appearing before Congress eminently. The bill aims to reduce credit card processing fees retailers pay.

Card processing fees are a percentage of each debit or credit transaction that retailers must pay to the card processor. These fees can range from 2-4% of each transaction and are the second highest business expense for most retailers, second only to payroll and labor costs.

The Credit Card Competition Act would require large banks, primarily Visa and Mastercard, to allow merchants to choose between at least two different networks to process credit card transactions. Proponents of the bill, including NACS and the National Retail Federation (NRF), claim these requirements would introduce more competition to card processing and drive down fees. NACS estimates that the convenience industry alone would save $1.5 billion a year – or about $9,000 per c-store in the United States.

The bill, which failed to come to a vote in 2022, was reintroduced in June 2023. Durbin addressed his colleagues on the senate floor on September 13, urging them to pass the bill. The push to pass the Credit Card Competition Act came partially from reports by the Wall Street Journal that Visa and Mastercard are planning to increase swipe fees even further.

“We’re fighting inflation in America, and Visa and Mastercard are on the other side of the battle. Consumers and retailers are trying to keep prices down. Visa and Mastercard are trying to run them up with a fee they charge for each transaction.”

Sen. Richard Durbin

High swipe fees not only impact retailers, with an estimated $15 billion in fees paid across the retail sector annually, but consumers as well. Retailers saddled with expensive swipe fees often choose to pass those fees onto shoppers by raising prices. Durbin spoke on the impact of the increasing prices of consumer goods during his September 13th address.

“American consumers today are concerned about inflation and the high prices of groceries and gas,” he said. “What they may not know is that the fees charged when they use their credit card, known as swipe fees, are adding to this problem.”

For retailers who want to get involved in urging their legislators to pass the Credit Card Competition Act, NACs has created a series of signage to display in stores. Signage encourages passing the bill and offer thanks to various legislators who have shown their support, like Senator Peter Welch of Vermont and Representative Zoe Lofgren of California.

To learn more about swipe fees, check out our blog that explains what they are and how they impact convenience retailers.

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