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ARLINGTON, Va. — FMI, The Food Industry Association, commended the Senate Judiciary Committee and Chairman Dick Durbin (D-IL) for holding a hearing on the lack of competition in the credit card transaction system dominated by Visa and Mastercard. The hearing focused on the Credit Card Competition Act (CCCA), which seeks to reduce the financial burden of credit card swipe fees on grocers and their customers.
In a statement submitted for the hearing, FMI highlighted the stark contrast between the grocery industry’s competitive nature and the lack of competition in credit card transaction routing and fee-setting. Visa and Mastercard collectively control more than 80% of the U.S. card market and set the network and interchange fees that merchants are required to pay, creating a significant cost burden for businesses and consumers.
Christine Pollack, FMI Vice President of Government Relations, emphasized the disproportionate impact of swipe fees on the grocery sector. “Every time a credit card is used for a purchase, a merchant is charged on average 2-4% of the transaction price by the credit card networks and the nation’s largest banks. With the average margin in the grocery industry at just 1.6% in 2023, card networks and banks earn more from a grocery purchase than the store itself, forcing consumers to bear these fees through higher prices,” she said.
In 2023, merchants paid $172.05 billion in credit and debit card fees, a 7.1% increase from the previous year, with $100.7 billion of those fees attributed to Visa and Mastercard-branded credit cards, according to the Nilson Report. The Merchants Payments Coalition estimates these hidden fees cost the average American household over $1,100 annually, regardless of whether purchases are made using cash or cards.
Pollack expressed strong support for the bipartisan Credit Card Competition Act, which would require the largest credit card-issuing banks to enable transactions to be routed through at least one additional secure network. “This legislation would foster competition, enhance security, lower swipe fees, and improve transparency while encouraging innovation in fraud protection,” she said.
FMI urged swift action from Congress to pass the CCCA, citing the critical need for relief for food retailers and their customers. “We applaud the Senate Judiciary Committee and Chairman Durbin for examining this issue and call on the Senate and House to enact the Credit Card Competition Act before the end of the year,” Pollack concluded.
