CNN
A pair of bipartisan bills in Congress aim to lower the swipe fees, also known as interchange fees, that retailers pay every time a customer makes a purchase with their card. The effort is backed by retail giants including Walmart, (WMT) Target (TGT), and Kroger (KR), as well as convenience stores and independent grocers.
“Swipe fees for credit cards are higher in the United States than anywhere else in the industrialized world — more than seven times as high as Europe,” a coalition of businesses wrote in a letter to lawmakers last week. “They are an inflation multiplier.”
Interchange fees are applied via a complex system, and the charges vary by merchant, transaction size, the type of card used and the banking institution, among other factors. Merchants paid about $138 billion in processing fees last year, according to the Nilson Report, a publication covering the payment industry.
These fees usually run between 1% and 3% of a transaction’s final price, and stores often pass them on to customers in the form of higher prices.
Visa (V) and Mastercard (MA) dominate more than 80% of the US credit card market. In July, US Sens. Dick Durbin of Illinois and Roger Marshall of Kansas introduced legislation that would allow businesses to route many payments to alternate networks not run by Visa (V) or Mastercard (MA). This week, US Reps. Peter Welch of Vermont and Lance Gooden of Texas proposed a similar measure.