(The Center Square) – Bipartisan swipe fee legislation sponsored by Illinois Sen. Dick Durbin and supported by President Donald Trump could get through Congress this year, but electronic payment processors are opposed.
The Credit Card Competition Act requires banks with more than $100 billion in assets to enable at least two unaffiliated card networks, including one outside of Visa and Mastercard. Supporters say the measure would help lower electronic processing fees for small businesses and pass savings on to consumers.
Durbin sponsored the legislation with Sen. Roger Marshall, R-Kansas. The Springfield Democrat urged his colleagues to support the bill during a Senate subcommittee hearing in Washington on Tuesday.
“For some small businesses, these swipe fees become their second or third-largest expense, and many have been forced to raise prices as a result,” Durbin said.
Durbin said Americans pay the highest swipe fees in the world.
Trump expressed support for the legislation in a social media post backing Marshall on Tuesday.
“Roger is working tirelessly to pass the Credit Card Competition Act, in order to stop the out of control Swipe Fee ripoff!” Trump posted.
Doug Kantor of the Merchants Payment Coalition executive committee said Congress may pass the bill this year with broad bipartisan support.
“The fees are up more than 80% just since COVID. That’s an increase that local Main Street businesses can’t handle, and so it’s contributing to inflation and consumers are paying it,” Kantor told The Center Square.
Nick Simpson, managing director of public affairs and communications at the Electronic Payments Coalition, said credit card processing rates have remained relatively flat.
“The volume of card usage has increased over the last decade. The average aggregate card processing costs has ranged about two to 2.2% of the transaction costs,” Simpson told The Center Square.
Simpson said the bill puts security and credit card rewards in jeopardy.
“We have studies that show the University of Miami found that businesses that make less than $500 million a year are unlikely to see any savings,” Simpson said.
The federal legislation is separate from an Illinois law banning swipe fees on the sales tax and tip portions of electronic payments.
Earlier this year, enactment of the Illinois Interchange Fee Prohibition Act was postponed to July 1. The measure remains under litigation after the Office of the Comptroller of the Currency ruled in April that banks based outside Illinois and anyone involved in processing payments for them are not obligated to follow the Illinois law.
Kantor said the White House could push the OCC and the National Credit Union Administration to withdraw their regulations, especially after they review comments from the public.
Brett Rowland and Jonathan Bilyk contributed to this story
