Durbin pushes legislation to reduce credit card "swipe fees"; critics say rewards programs at risk
CHICAGO (CBS) -- Credit card rewards and airline miles could become a thing of the past, thanks to a new bill proposed in Congress, at least according to opponents of the Credit Card Competition Act introduced by U.S. Sen. Dick Durbin (D-Illinois).
Durbin stopped by a Chicago market on Friday day to push support for the bill, which the senator said will help lower the costs of doing business for retailers, meaning lower prices for you.
The idea behind the legislation is to reduce the so-called "swipe fees" retailers pay every time a customer uses a credit card, which is usually about 2% of the purchase.
"Every time you use one of these credit cards from Visa or MasterCard, put it in the machine, you're not only paying for what you're receiving, you're also paying a fee that the retailer has to add to the cost of the product they're selling," Durbin said.
The proposed legislation would require larger banks to offer merchants at least two choices for payment processing networks.
Visa and MasterCard could account for only one of those choices, giving retailers options for networks with smaller processing fees.
But opponents have said those processing fees fund popular rewards programs, which could go away if the bill is passed. Critics also have said cheaper networks have fewer fraud protections for consumers.