The National Retail Federation (NRF) has expressed approval of the new open banking regulations issued by the Consumer Financial Protection Bureau (CFPB). These rules are seen as a potential alternative to credit card "swipe" fees, which cost merchants and consumers billions annually.
Stephanie Martz, NRF Chief Administrative Officer and General Counsel, stated, “Retailers need to pay close attention to developments with open banking and the potential it offers as an alternative to the costly way payments are currently processed.” She added that open banking could eliminate intermediaries in payment processing, fostering competition that would benefit small businesses and consumers. “These new rules are an important step toward making that happen,” she said.
This week, the CFPB released its final version of the Personal Financial Data Rights Rule. The regulation mandates banks to share data on various financial products without charging for it. While primarily aimed at facilitating easier bank changes for consumers, CFPB Director Rohit Chopra mentioned that these rules will also promote open banking. This includes services where funds can be transferred directly from a consumer's bank account to a merchant’s account without using credit card networks like Visa or Mastercard.
Currently, Visa and Mastercard control over 80% of transactions and set swipe fees between 2-4%. These fees contribute significantly to merchants' operating costs after labor expenses. According to the Nilson Report, last year’s credit and debit card swipe fees reached $170 billion, raising prices by more than $1,100 annually for an average family.
In addition to these regulatory developments, Congress is reviewing the Credit Card Competition Act. If passed, this bill would require large banks to allow credit cards to be processed over at least one unaffiliated network besides Visa or Mastercard. This move aims to foster competition regarding fees, security, and service quality—potentially saving merchants and their customers over $16 billion each year.
