June 07, 2023

Bill Introducing Competition in Credit Card Swipe Fees Would Save Restaurant Operators Billions Every Year

The Credit Card Competition Act would allow business owners to choose the networks to process payments
Washington, D.C. – Many consumers don’t realize that each time they swipe their credit card, to pay for a good or service, the business owner has to pay an additional percentage of the total bill to route the transaction.  Unfortunately, due to a duopoly in the credit card processing system, the fees have been spiraling out of control, harming business owners across the nation who have no choice but to pay.

The bipartisan and bicameral Credit Card Competition Act of 2023, introduced today by Sens. Dick Durbin (D-IL) and Roger Marshall (R-KS) and Reps. Lance Gooden (R-TX) and Zoe Lofgren (D-CA) would inject competition into this process by prohibiting card issuers from forcing restaurants to use the issuer’s processing network. This change would drive down processing costs for both operators and diners alike, saving U.S. businesses and consumers an estimated $11 billion a year.

“Swipe fees are one of the most expensive costs restaurant operators have to manage – behind food and labor costs – and being able to accept credit cards is essential to running a restaurant,” said Sean Kennedy, executive vice president of Public Affairs for the National Restaurant Association. “The Credit Card Competition Act would empower restaurant owners to choose the most cost effective and secure network to route a credit card transaction. The impact of this would be significant – saving restaurant operators and consumers billions of dollars a year.”

The two dominant credit card companies account for over 80% of all credit card transactions in the U.S. and those transactions can only be processed on their network. This means that restaurants that want to accept these credit cards do not have a choice but to pay the processing fee set by these companies. The lack of competition means these two companies can effectively price-fix how much it costs restaurants to run a credit card. In the past decade the cost of these fees has more than doubled – unchecked by market competition. The Credit Card Competition Act would:
  • Require that credit cards issued by the nation’s largest banks – those with over $100 billion in assets – are able to be routed through at least two unaffiliated networks.
  • Require that those banks offer a non-dominant network choice, creating competition and allowing smaller companies to compete in the credit card processing marketplace. This “dual routing” requirement already exists for debit cards and has saved businesses and consumers an estimated $9 billion a year over the last decade.
  • The bill also strengthens national security by blocking networks that are “owned, operated, or sponsored by a foreign state entity,” like China Union Pay, from entering the U.S. credit card market.
Learn more about the Credit Card Competition Act and its impact on restaurant operator costs here. Or, listen to our latest Order Up podcast for a discussion about what restaurant operators should know about the bill.

About the National Restaurant Association

Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises more than 1 million restaurant and foodservice outlets and a workforce of 15.5 million employees. Together with 52 State Associations, we are a network of professional organizations dedicated to serving every restaurant through advocacy, education, and food safety. We sponsor the industry's largest trade show (National Restaurant Association Show); leading food safety training and certification program (ServSafe); unique career-building high school program (the NRAEF's ProStart). For more information, visit Restaurant.org and find @WeRRestaurants on Twitter, Facebook and YouTube.