Texans Pay $8.6 Billion in Credit Card Swipe Fees, but Could Save $1.4 Billion from Bill Before Congress

“Credit card swipe fees are multiplying inflation, and increasing the cost of everything people buy in Texas,”

WASHINGTON, D.C. (Texas Insider Report) — As a nation, the United States pays the highest credit card swipe fees in the industrialized world. And as Americans face an ever-increasing national debt – as well as rampant inflation and higher costs of goods and services – the last thing consumers need is higher credit card swipe fees.

Texas residents currently pay an estimated $8,607,963,861 per year in credit card swipe fees, and new legislation that could be voted on by the U.S. Senate as early as this week aims to significantly reduce these skyrocketing fees.

The Credit Card Competition Act would bring long-overdue competition to the credit card market and address the exorbitant swipe fees paid by Americans every year.

It’s estimated that passage of the legislation would save Texas residents $1,410,836,660. 

The cost to Texas residents – and potential savings once legislation is enacted – were released by the National Association of Convenience Stores (NACS), using estimates provided by the payments advisory firm CMSPI.
“Credit card swipe fees are multiplying inflation, and increasing the cost of everything people buy in Texas,” said Henry Armour, NACS President & CEO of NACS.

“Visa and Mastercard centrally fixing the prices that giant Wall Street banks charge Main Street merchants should no longer be tolerated. It’s time for some relief for Texas consumers. To get some relief for the people of Texas, we need the Credit Card Competition Act.” 

The bi-partisan Credit Card Competition Act is sponsored in the House and Senate by:
  • Senators
    • Richard Durbin (D-IL)
    • Roger Marshall (R-KS)
    • J.D. Vance (R-OH)
    • Peter Welch (D-VT), and
  • in the US House of Representatives, Congressmen  
    • Lance Gooden (R-TX)
    • Zoe Lofgren (D-CA)
    • Max Miller (R-OH)
    • Tom Tiffany (R-WI), and
    • Jeff Van Drew (R-NJ)
Nationally, the bill is aimed at credit card swipe fees, which nationally average 2.24% of the transaction, but can range as high as 4%.

Swipe fees have increased more than 50% since 2020 alone – and rose $22 billion last year to a record $160.7 billion when debit cards are included. They are most merchants’ highest operating cost average after labor, driving up prices by an estimated $1,024 a year for the average family.

Visa and Mastercard – which control over 80% of the market – each centrally set swipe fees charged by banks that issue cards under their brands, and also restrict processing to their own networks. The legislation would only apply to banks with at least $100 billion in assets, and ensure that they enable cards to be processed over at least two unaffiliated networks – Visa or Mastercard plus well-established, high-security competitors like NYCE, Star or SHAZAM.

That would make networks compete over fees, security and service, and is expected to save merchants and their customers across the nation a total of $15 billion a year.

In addition to lower fees, the bill also would help lower fraud.

The Federal Reserve says the competing networks have one-fifth the fraud of Visa and Mastercard’s networks. Credit card rewards would not be affected, nothing would change about which cards consumers use or how they use them, and community banks and small credit unions would be exempt.

The legislation also would strengthen security by prohibiting foreign networks like China Union Pay from being a network on credit cards issued in the United States.