The Credit Card Competition Act would provide companies access to more payment network options beyond the obvious two: Mastercard and Visa.

A credit card swiped through a reader sounds like sweet success for glass companies. But in some states, that familiar swoosh reverberates with processing fees.

When customers swipe, tap, insert or type in their card’s digits to pay online, merchants and banks route related financial and transactional information over a network for processing. As a result, businesses are charged processing fees, which have increased in recent years.

A new bipartisan bill seeks to lower those fees by encouraging competition.

The Credit Card Competition Act (H.R. 3881/S.1838) would provide companies access to more payment network options beyond the obvious two: Mastercard and Visa.

According to Kevin Brooks, owner of Future Design Building Materials in Leitchfield, Kentucky, the stakes are much higher for building material dealers.

“This is much different than [say the] food industry because that purchase is small and doesn’t affect the consumer as much,” says Brooks.

According to the Merchants Payments Coalition (MPC), Visa and Mastercard control 80% of the U.S. credit card market. MPC officials say that “each centrally sets the swipe fees charged by banks that issue cards under their brands, and also blocks transactions from being processed over other networks that could do the job with lower fees and better security.”

H.R. 3881/S.1838 would require the Board of Governors of the Federal Reserve System to prohibit certain card issuers with assets in excess of $100 billion from restricting the number of networks through which transactions may be processed. Allowing more payment processing services into the mix would increase competition, which, in turn, many feel would help to reduce fees.

“Competition is foundational to a free market, but, unfortunately, there is none when it comes to how credit card transactions are processed in the U.S.,” a statement from MPC says.

Meanwhile, processing fees have “more than doubled over the past decade and soared to a record $172 billion in 2023, up from $161 billion in 2022 and $138 billion in 2021,” the association reports. According to MPC, in April 2022, Visa and Mastercard increased their swipe fees by nearly $1.2 billion annually.

H.R. 3881/S.1838 would require big banks to allow any credit cards they issue to be processed over at least two unaffiliated networks, allowing for competitors such as Discover to join Visa and Mastercard.

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