Proposed Credit Card Competition Act to reduce restaurant swipe fees

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Credit Card Competition Act restaurant fees overview: 

• Who: Democrats and Republicans in Congress have introduced a new credit card competition bill. 
• Why: The Credit Card Competition Act of 2023 seeks to reduce credit card fees for restaurants and consumers.
• Where: The Credit Card Competition Act of 2023 was introduced in the U.S. House and Senate.

A new bipartisan bill to help reduce credit card swipe fees for restaurants has been introduced in the House and Senate.

Sen. Dick Durbin, D-Ill., Sen. Roger Marshall, R-Kan., Sen. Peter Welch, D-Vt., and Sen. J.D. Vance, R-Ohio, Rep. Lance Gooden, R-Texas, and Rep. Zoe Lofgren, D-Calif., introduced the Credit Card Competition Act of 2023 June 7.

The act would help increase competition when it comes to credit card processing fees for restaurants, by cutting back on the cost of processing the transactions.

According to the National Restaurant Association, the fees are some of the largest operating expenses for restaurants, behind food and labor.

“These swipe fees have more than doubled over the past decade, costing U.S. businesses more than $160 billion in 2022,” according to a National Restaurant Association brief on the issue. 

“A lack of competition between the major credit card processing networks is why swipe fees continue to skyrocket.”

The act would require at least two competing card-processing networks to be enabled on every credit card. 

Visa and Mastercard have a duopoly, bill supporters say

Proponents of the bill say Visa and Mastercard have a duopoly on credit card fees.

“The Visa-Mastercard duopoly controls over 80% of the U.S. credit card network market, more than 576 million cards, and every time a Visa or Mastercard credit card is swiped, around 2% to 3% is deducted out of the transaction amount the merchant actually receives,” a summary of the bill states.

It says a merchant typically ends up receiving $98 or $97 on a $100 sale. In 2022, Visa, Mastercard and their card-issuing banks charged merchants a total of $93 billion in credit card fees, the brief states.

“These fees are passed on to consumers in the form of higher prices on everything from gas to groceries, and the fees keep going up.”

Meanwhile, a settlement website has recently been established for class members in a  Visa, Mastercard swipe fee class action lawsuit. Plaintiffs accused Visa, Mastercard, and banks of inflating the “interchange fee” they charged to merchants to use credit and debit cards.

What do you think of the proposed Credit Card Act? Let us know in the comments! 

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