Proposed federal legislation could reduce credit card fees paid by merchants and spur more competition among credit card-issuing financial institutions, but it might also cut into rewards programs that consumers use to help pay for trips to destinations like Las Vegas, according to some analysts.
Credit card networks like Visa or Mastercard typically charge merchants between 2% and 3% per transaction. Some of that money is kept by the credit card network and some is taken as an “interchange fee,” which is fixed by Visa and Mastercard but paid to the bank that issued the card, according to the office of Sen. Dick Durbin, D-Ill., a sponsor of the Credit Card Competition Act of 2023.
