Credit Card Competition Act Causing Confliction

Inflation and rising prices have become a concern for Americans, and credit card swipe fees are part of the dilemma. More than 576 million Visa-Mastercards are in the hands of Americans, controlling 80 percent of the US credit card network market.

Every time a credit card is swiped, there is a fee extracted from Visa-Mastercard, which is then passed on to consumers in the form of higher prices.

These fees have continued to climb significantly. RILA and the NRF have been urging senators to vote and pass the Credit Card Competition Act, and advocating for retailers to show their support.

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In order to reduce excessive credit card fees, the Credit Card Competition Act of 2023 would enhance credit card competition and choice, requiring the giant banks that issue the majority of Visa and Mastercard credit cards to choose a second competitive network to go on each card, and then a merchant (primarily for small businesses) would get to choose which of those networks to use to process a transaction. This competition and choice between networks would incentivize better service and lower cost.

On the other side of the fight, major credit card processing networks and issuers like Visa, Mastercard, Discover, and Capital One say the bill will actually hurt consumers by diminishing popular credit card rewards programs and lessening fraud protections.

Consumers being misled is a concern of the opponents who feel that consumers might think they’re using their Mastercard or Visa credit card, but actually end up being routed over a different, cheaper network that has fraud protection and excludes rewards programs.

There are multiple aspects to consider when reviewing the Credit Card Competition Act. To learn about the potential downsides to the Act, click here. If you’re interested in the positives, read here.

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