Bipartisan Legislation Aiming to Lower Credit Card Fees Wins President Trump’s Support
Senators Dick Durbin (D-IL) and Roger Marshall (R-KS) reintroduced the federal Credit Card Competition Act on Tuesday in an effort to disrupt the Visa-Mastercard “duopoly” in order to provide financial assistance to both small businesses and consumers.
The bipartisan legislation – a rarity in a deeply divided Congress – seeks to require that banks enable at least two competing payment networks for each credit card swipe, allowing merchants a choice in how transactions are processed. A wide range of consumer protection organizations, small business groups and labor unions have long supported this legislation, saying that it would help cut down on steadily rising credit card swipe fees.
This change could force competition into a credit card market dominated by Visa and Mastercard. The bill’s authors indicated that they hoped the legislation would lead to lower interchange fees, which merchants and consumers pay to process every credit card transaction.
Want to learn more about how credit card fees are hurting consumers and businesses? See our blog post about the common models of credit card pricing and how your business can save money.
“Americans are struggling with everyday purchases like groceries and gas, and credit card swipe fees inflate those already exorbitant prices,” Durbin said in a press release announcing the legislation. “By bringing real competition to credit card networks, which is currently dominated by the Visa-Mastercard duopoly, we can reduce swipe fees and hold down costs for Main Street merchants and their customers. Let’s pass the Credit Card Competition Act as soon as possible.”
The current payment processing system locks merchants into whatever network appears on a customer's card. If a customer swipes a Visa card, the merchant must pay Visa's fees—no shopping around, no negotiation, no alternative.
The legislation takes aim at this market structure by introducing a simple but powerful requirement: banks with assets over $100 billion would be required to enable credit card transactions on at least two unaffiliated networks, meaning that Visa and Mastercard could not be the only two options.
These two companies currently control more than 80 percent of the credit card market, providing them enormous control over the fees that accompany every card transaction. Swipe fees have tripled since 2009, leaving businesses to foot larger bills for processing card transactions, while stuffing the coffers of these industry behemoths.
Total credit and debit card swipe fees reached a record $187.2 billion in 2024—a staggering 70% increase since the pandemic. Credit card fees charged by Visa and Mastercard alone hit $111.2 billion in 2024, up from $100.8 billion in 2023.
For the millions of small businesses that accept credit cards, the legislation would offer concrete relief. One analysis touted by supporters of the legislation, like the Merchants Payment Coalition, found that credit routing competition could save merchants and their customers up to $17B each year.
“Small business owners pay exorbitant fees just to be able to accept credit cards from their customers and those costs have skyrocketed, becoming one of the top expenses small businesses manage each month,” Brad Close, the president of the National Federation of Independent Business, said in a press release on Tuesday. “It’s time for Washington to advance the Credit Card Competition Act so small business owners can invest in their own employees and communities instead of Wall Street’s bottom line.”
President Donald Trump also threw his support behind the bill.
“Everyone should support great Republican Senator Roger Marshall's Credit Card Competition Act, in order to stop the out of control Swipe Fee ripoff,” the commander-in-chief posted on Truth Social.
Swipe Fees Squeeze Small Companies
While business owners have struggled under the weight of ever-increasing swipe fees, Visa and Mastercard have thrived. In recent years, both companies have reported net profit margins around 50%, a figure leaps and bounds above the national average profit margin of about 7%.
In the U.S., swipe fees add between 2%-4% to a transaction, and the average swipe fee for Visa and Mastercard is about 2.35%. These rates starkly contrast to many other markets. In the European Union, interchange fees are capped at 0.3% for credit cards and 0.2% for debit. That means American merchants pay roughly ten times as much to process credit cards.
Small businesses are particularly disadvantaged by swipe fees. While large retailers can negotiate volume discounts directly with the networks, smaller businesses pay higher rates for the exact same service.
A 2022 Independent Business Survey found that nearly 70% of independent businesses believe capping credit card swipe fees would be highly effective in improving their survival and success.
Tired of paying processor fees just to get paid? See how Nickel’s unlimited $0 ACH can help your business save money.
Financial Industry Fights Against Bill
While many organizations representing small businesses and retailers have promoted the legislation, it has also provoked fierce backlash from power players in the financial industry.
The Electronic Payments Coalition, a lobbying group which represents card networks and major banks, calls the bill "untested, flawed" and warns it amounts to a "big government takeover of the credit card system."
After the legislation was re-introduced on Tuesday, EPC Executive Chairman Richard Hunt said in a statement that the bill was being pushed by “corporate mega-stores,” who are campaign donors to the legislative sponsors and that the bill would “line the pockets of corporate mega-stores while hurting Main Street small businesses” while “eliminating the credit card rewards Americans rely on to make everyday purchases more affordable.”
The EPC has regularly pointed to reports that have raised questions about whether small businesses would benefit from legislation like the Credit Card Competition Act. For example, the industry group has pointed to a report from the Congressional Research Service that says “it is unlikely a small business would be aware of a smaller network, and even if it did offer payment on that network, the odds that a bank would issue a card enabled for that exact network are relatively small.” That same report also noted “it is unclear who would benefit” from the legislation.
The Road Ahead
This legislation has failed to advance in previous sessions despite bipartisan support. But Trump’s support may provide useful leverage to overcome strong opposition from financial industry giants.
On Tuesday, Senate Majority Leader John Thune told reporters that he would likely bring the bill to a vote. Even so, Thune also tamped down excitement about the legislation by saying that the legislation “would probably deprive an awful lot of people of access to credit around the country.”
Nickel will monitor developments and provide updates as to how progress on the legislation will affect you.
