CCCA could save merchants and consumers over $16B a year

By Jeff Domansky, Managing Editor

The Merchants Payments Coalition (MPC) has emphasized the urgent need for Congress to pass the Credit Card Competition Act (CCCA). With total swipe fees surpassing $170 billion annually and costing the average family over $1,100, the CCCA could save an estimated $16 billion annually.

The Problem: Soaring Swipe Fees

Swipe fees, also known as interchange fees, have been steadily rising. In 2023, credit and debit card swipe fees reached a record $172.05 billion, up from previous estimates. These fees directly impact businesses and consumers, increasing prices and affecting household budgets.

“Total swipe fees have jumped above $170 billion per year and cost the average family more than $1,100,” MPC Executive Committee member and National Grocers Association Senior Vice President of Government Relations and Counsel Christopher Jones said.

“Given those exploding numbers, the Credit Card Competition Act would save people an estimated $16 billion per year. Small businesses and their customers desperately need a competitive market system and the savings that would come from this legislation. It’s a modest hit to card industry revenues but very significant to those who ultimately pay these fees.”

The Solution: Credit Card Competition Act

The CCCA wants more competition in the credit card network routing system. Currently, Visa and Mastercard control over 80% of the market and centrally set swipe fee rates for all banks issuing credit cards under their brands. The MPC says this lack of competition prevents banks from offering lower rates and better security options.

The CCCA would ensure that cards from the nation’s largest banks can be routed over at least one competing network (such as NYCE, Star, Shazam, or Discover) in addition to Visa or Mastercard’s networks. By fostering competition, the CCCA would lead to significant pro-competitive efficiencies in US payment services.

Estimated Savings

According to a report by payments consulting firm CMSPI, the passage of the CCCA would conservatively save $16.4 billion annually. The savings would benefit both merchants and consumers. Some of the largest state-level savings are projected for California ($2.3 billion), Texas ($1.5 billion), New York ( $1.3 billion), Florida ($950.2 million), and Illinois ($651.5 million).

MPC says the CCCA represents a modest impact on card industry revenues but a significant relief for small businesses and their customers. By promoting competition and reducing swipe fees, this legislation would create a more competitive market system. Payment industry professionals should closely monitor the CCCA’s progress and advocate for its passage to benefit merchants and consumers.