Credit Card Interchange Fees


What It Is

Legislation has been introduced in Congress that would provide merchants with the ability to route payments through an unaffiliated credit card payment network and would apply to credit cards that use the Visa or Mastercard networks and are issued by financial institutions with more than $100 billion of assets. The bill would allow merchants to choose the payment network they wish to use for customers’ transactions, authorizing merchants to prioritize cost savings—increasing profitability—at the expense of fraud prevention, security measures, and popular rewards programs that are currently in place with existing payment networks. Consumers would have no choice in what payment option is used.

Why It Matters

If history is any guide, consumers will not benefit from this legislative proposal. Despite the retail lobby’s claim that debit interchange savings would be passed onto consumers as part of the Durbin Amendment to the Dodd-Frank Act, a 2014 study conducted by the Federal Reserve Bank of Richmond surveyed a diverse set of merchants and found that just 1.2 percent of merchants reduced prices after the Durbin Amendment’s cap on debit interchange was implemented. The retail lobby is now making these same inaccurate claims about credit interchange legislation.

The harm to consumers from the debit interchange cap has been enormous. It has resulted in the near elimination of free checking accounts, debt card rewards programs, and interest-bearing checking accounts. At the same time, minimum balance and direct deposit requirements have increased significantly, and since the Durbin Amendment was enacted, debit card fraud has increased by 124 percent.

What We Believe

CBA is opposed to this legislative approach and joined a coalition of financial services trade associations to advocate against the bill.
Mandating the inclusion of an additional, low-cost routing option would sacrifice security, leading to an increase in fraud; diminish or even eliminate popular reward programs consumers demand and value; and reduce access to credit for those who are unbanked and underbanked.
CBA also launched the “Washington Wallet Watch” campaign in August of 2023 to defend and protect consumers’ access to the world’s safest and most reliable credit card network.


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