US retail trade groups have intensified their push for swipe fee legislation as costs tied to credit card processing continue to climb.
the centre of the debate is the bipartisan Credit Card Competition Act, a proposal aimed at introducing competition in credit card processing and lowering the so-called interchange or swipe fees paid by retailers on every card transaction.
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The National Retail Federation (NRF) and other industry bodies say the current system, dominated by a small number of card networks, leaves merchants with little negotiating power on fees that have become a significant overhead.
Why retailers say swipe fee reform matters
Retailers argue that credit card swipe fees — typically ranging from about 2% to 4% of the transaction value in the US — represent one of their largest controllable costs after labour and rent.
Because Visa and Mastercard account for an estimated 80 % of the credit card processing market, merchants have limited ability to negotiate lower rates or choose alternative payment routing options.
The NRF’s recent statement underscores this concern, noting that the duopoly in card network processing leaves millions of businesses without control over non-negotiable fees on card transactions.
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By GlobalDataRetailers contend these costs contribute to higher prices for consumers and reduce margins, particularly for small and medium businesses with tight operating budgets.
Retailers have also opposed proposed legal settlements with Visa and Mastercard, saying reductions of just 0.1 percentage points in swipe fees over several years would provide minimal relief.
They argue that such deals leave intact rules that effectively require merchants to accept all card types if they accept any, including high-fee premium and rewards cards.
What the credit card competition act would change
The Credit Card Competition Act, reintroduced in the current session of the U.S. Congress, would require banks that issue credit cards to enable at least one alternative network beyond Visa or Mastercard for transaction routing.
Supporters say this would prompt greater competition on fees and services at checkout.
Proponents note that the bill is bipartisan, with backing from senators and representatives across both major US political parties.
Its aim is to replicate some of the effects of debit card swipe fee reforms enacted under the Durbin Amendment in 2010, which sought to introduce competitiveness and transparency into processing fee structures.
Industry advocates argue that enabling additional networks could lower costs for small retailers and businesses that currently pay the same or higher fees than larger competitors despite having less leverage to negotiate with card processors.
They also contend lower interchange fees could help contain consumer prices — though experts note that cost savings are not guaranteed to be passed on to shoppers.
Broader context and industry response
The push for swipe fee reform comes amid broader scrutiny of interchange fees in the US financial system.
A recent Federal Reserve report showed that aggregate debit and prepaid card interchange fees paid by merchants have been rising, contributing to growing debate on whether current market structures disadvantage retailers.
Political momentum has also shifted, with high-profile endorsements of swipe fee legislation from influential lawmakers and even the US president, who has publicly backed efforts to lower interchange costs alongside proposals to cap credit card interest rates.
Retail trade associations and merchant coalitions are urging Congress to act swiftly, warning that without legislative change, swipe fee reform will remain elusive and costs will continue to burden both businesses and consumers.
Retailers and payments experts alike will be watching how the Credit Card Competition Act progresses through the legislative process, with implications for the future of card processing fees, competition in payments infrastructure, and cost pressures facing the retail sector.
