The National Restaurant Association is calling on restaurateurs to throw their support behind the Credit Card Competition Act, a bipartisan bill in Congress that would reduce the fees they have to pay for running credit card orders.

Whenever a consumer pays for something—such as a pizza—with a credit card, the business owner has to pay an additional percentage of the total bill to route the transaction. According to the National Restaurant Association, these fees “have been spiraling out of control, harming business owners across the nation who have no choice but to pay.”

The association points to a duopoly—Visa and Mastercard—that dominates the credit card processing market.

Related: The fast-evolving world of payment processing

The Credit Card Competition Act of 2023 was introduced in the Senate by Sens. Dick Durbin (D-IL) and Roger Marshall (R-KS). In the House, it was put forth by Reps. Lance Gooden (R-TX) and Zoe Lofgren (D-CA). The bill would prohibit card issuers from forcing restaurants to use the issuer’s processing network, thus potentially driving down processing costs for operators—and, presumably, saving money for diners. Its supporters say the bill would inject competition into the credit card processing market and save 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, the National Restaurant Association points out. So restaurants that want to accept these credit cards are forced 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,” the association argues. “In the past decade the cost of these fees has more than doubled—unchecked by market competition.”

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Not everyone is behind the bill. As USA Today has reported, critics say these processing fees allow banks to reward credit card holders for spending with their cards. “That 3% you earn in cash-back rewards at the supermarket is largely paid for through those interchange fees, not just on grocery purchases but all credit card transactions,” USA Today noted.

Republicans and Democrats alike reacted with alarm when Visa and Mastercard hiked their fees in April 2022. Durbin and Marshall, along with Reps. Peter Welch (D-VT) and Beth Van Duyne (R-TX) in the House, raised objections in a letter sent to the CEOs of Visa and Mastercard. But the credit card giants raised many of the fees anyway, according to USA Today.

That led Durbin and Marshall to collaborate on the Credit Card Competition Act, which was first introduced—but stalled—in the Senate in 2022. For 2023, it has been added as an amendment to the National Defense Authorization Act, which sets the budget for the Department of Defense. Supporters of the bill say that increased competition between processors is also a national security issue, pointing to the risks of one of the two big payment networks getting hacked.

According to the National Restaurant Association, the Credit Card Competition Act would:

  • Require that credit cards issued by the nation’s largest banks—those with more than $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 association says.
  • Strengthen 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.

Restaurant owners who want to support the bill can click here to contact their senators and representatives.

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