Several members of Congress are pushing a misnamed bill called the Credit Card Competition Act. The purpose is to engineer lower fees that merchants pay to banks and credit card networks when they accept credit cards, usually 2%-3% of the price of the item purchased. As this segment of What’s Ahead discloses, this is a scheme to transfer billions of dollars from banks to retailers, especially the giant ones.
Advocates claim the so-called swipe fees that merchants pay are exorbitant because Visa and Mastercard are a duopoly exercising monopolistic pricing power. They conveniently overlook competition from American Express and Discover, as well as the fact that many people are now using noncard pay services, such as Venmo, PayPal and Zelle. Venmo’s average fee is about 2%.
There’s also a nasty sleeper in this legislation that could deprive you of the rewards you thought you were getting by using a particular credit card.
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