Opinion: Legislation That Could Lower Swipe Fees Can Also Reduce Benefits

If consumers aren’t yet aware that some of the most positive aspects of having a credit card are under threat, now is the time to get the word out. Once they learn of legislation that has the power to sour the sweeter attributes of their accounts, they won’t be terribly happy.

Sen. Dick Durbin (D-Il) and Sen. Roger Marshall (R-KS) have been trying to get support for the latest version of the Credit Card Competition Act (CCCA). If they follow through and Congress passes this piece of legislation, it would change the current swipe fee system, opening the door to competitors in the transaction space.

Although the purpose of this law is to lower the cost of swipe fees, there could also be some negative side effects that consumers need to know about. Card issuers may react by dramatically scaling back or eliminating rewards and perks that are currently attached to countless credit cards. Using these products can also become more expensive. 

According to an April 2025 Morning Consult survey conducted for the American Bankers Association, the vast majority of cardholders are more than content with their accounts. So much so, in fact, that they do not want the government to mess with the system: 

• 94% value the convenience of using their credit cards.
• 91% value the rewards program on their credit cards.
• 80% have at least one credit card that offers rewards.
• 63% would be disappointed to lose the rewards program on their credit cards due to government regulatory changes

These results are striking but hardly shocking. Individuals and business owners open credit cards for a variety of sound reasons. Being able to make purchases virtually anywhere for anything and then have the option to pay over time for those things is just one reason.

When used correctly, credit cards can enhance a budget, as well as help someone out of a jam when they don’t have sufficient cash to cover an emergency. 

Credit cards also come with powerful consumer laws. For example, the Fair Credit Billing Act allows people who charged goods and services to withhold payment on a disputed amount, as long as they made a good faith effort to resolve the issue with the seller. 

However, the icing on the credit cake is that most cardholders love the sweet benefits that are piled onto their plastic:

• Cash back and rewards. Cardholders can earn cash or rack up rewards (points and miles) redeemable for free stuff. Essentially, it gives people a way to profit from the charging process. According to a 2024 Ipsos Consumer Tracker survey, 71% of people have rewards or cash back credit cards, and 68% use their cards because of the attached programs. 
• Perks. Many issuers also offer a variety of perks that can make their cardholders’ lives safer, easier, and more enjoyable. These extras range from embedded insurance policies to credits they can use for certain services to complimentary entry into airport lounges.

The idea behind this law is to lower swipe fees, which are a legitimate concern for businesses. According to the National Retail Federation, these fees have become most retailers’ highest operating cost, second only to labor. That expense is often passed on to the consumer through higher prices. 

Merchants currently incur swipe fees ranging from 2% to 3% with each credit card payment the consumer makes. Under the proposed legislation, larger banks would be required to include at least one other credit card network in addition to Visa or Mastercard. 

By adding more players to the game, there will be greater competition in the swiping space, which would potentially lead to a fee war. Whichever company offers the lowest fees may win the merchant’s business. Because the merchant’s costs would be lowered, they could pass on their savings to the customer. 

Unfortunately, CCCA is also rife with potential downstream problems. 

Swipe fees are an important revenue stream for credit card issuers. The money they earn from these transactions supports the very benefits that consumers say they most want. 

Without those funds coming in, credit card issuers may be forced to make up the difference in other ways to keep the benefits as they are, or would have to trim or eliminate those benefits. 

Many consumers, even those who consistently pay their balances in full, may lose out on rewards due to the CCCA.

Half of all cardholders who pay their balances in full may not have as much opportunity to come out ahead with cash back cards. For example, charging $2,000 a month on a card that offers 2% back on everything puts $40 in the person’s pocket – a gift that can cover a small bill. If the card issuer lowers that rate or limits the earnings, the cardholder loses. 

Making it harder to accumulate points and miles could have a detrimental effect on cardholder activities such as travel, since many rewards cards are designed to help people afford those costs. Trading in rewards for a flight instead of dipping into savings is especially helpful for people on tight budgets.

Because perks are costly for companies to pay for, they too may be on the chopping block.

Of course, credit card issuers could lean into alternative revenue streams to keep the rewards programs and perks alive, but that may mean increasing interest rates and annual fees. Is that what consumers want? Most likely, no.