Payments

Lawmakers propose credit card competition bill to reduce transaction fees

Image: Adobe Stock.

June 12, 2023

The recently proposed Credit Card Competition Act of 2023 to bring competition to credit card fees and reduce costs to businesses and consumers has gained the support of the National Restaurant Foundation, according to a press release.

The bipartisan bill — introduced by Sen. Dick Durbin, D-Illinois, Sen. Roger Marshall, R-Kansas, Rep. Lance Gooden, R-Texas and Rep. Zoe Lofgren, D-California — will prohibit card issuers from forcing restaurants to use the issuer's processing network. This would reduce process costs for both operators and diners alike, saving U.S. businesses and consumers an estimated $11 billion a year, according to the press release.

"The Credit Card Competition Act would empower restaurant owners to choose the most cost effective and secure network to route a credit card transaction," Sean Kennedy, executive vice president of public affairs for the National Restaurant Association, said in the press release. "The impact of this would be significant — saving restaurant operators and consumers billions of dollars a year."

In the past decade the cost of these fees has more than doubled — unchecked by market competition, according to the press release.

The act would:

• Require that credit cards issued by the nation's largest banks — those with over $100 billion in assets — are able to be routed through at least two unaffiliated networks.
• Require that those banks offer a non-dominant network choice, creating competition and allowing smaller companies to compete in the credit card processing marketplace. This "dual routing" requirement already exists for debit cards and has saved businesses and consumers an estimated $9 billion a year over the last decade.
• Strengthen national security by blocking networks that are "owned, operated, or sponsored by a foreign state entity," like China Union Pay, from entering the U.S. credit card market.