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Swipe Fees Limit Holiday Spending for Consumers

Swipe Fees Limit Holiday Spending for Consumers

WASHINGTON—The Merchants Payments Coalition (MPC) released a new TV commercial that explains how soaring credit card swipe fees are limiting what consumers can afford to buy this holiday season. NACS is a founding member of the MPC.

“At a time when Americans are suffering under the effects of inflation, they are paying even more because of hidden swipe fees levied by Visa, Mastercard and the Wall Street megabanks that issue the majority of credit cards,” said Doug Kantor, NACS general counsel and MPC executive committee member. “U.S. swipe fees are the highest in the industrialized world and drive up prices paid by American consumers. The impact is particularly harmful during the holidays, when many families are stretching their dollars, and these fees amount to an unfair private tax on every present and decoration they buy.”

The 30-second commercial, sponsored by NACS, is the latest to air as part of a seven-figure advertising campaign. One previous commercial highlighted Visa’s sponsorship of competition at the FIFA World Cup while refusing to allow competition over swipe fees. Another addressed how lack of competition means Visa and Mastercard “can charge whatever they want.”

The campaign comes as the Credit Card Competition Act—sponsored by Senators Richard Durbin (D-Ill.) and Roger Marshall (R-Kan.), and Representatives Peter Welch (D-Vt.) and Lance Gooden (R-Texas)—is pending in Congress. Last month, the MPC sent two letters urging lawmakers to support the bipartisan legislation, including one signed by 1,802 merchants and another signed by 236 merchant trade associations.

The legislation would end Visa and Mastercard’s longstanding monopoly over how transactions on cards issued under their brands are routed for processing. Instead, cards from the nation’s largest banks would be required to be able to be routed over at least one competing network in addition to Visa or Mastercard’s networks.

Banks would choose which networks to enable, but merchants would then choose which to use, meaning networks would have to compete over fees, security and service, saving merchants and their customers an estimated $11 billion a year. Rewards points would not be affected, security would be improved, consumers would still use the same cards and community banks and small credit unions would be exempt.

Swipe fees centrally set by Visa and Mastercard currently average over 2% of each credit card transaction. Credit and debit card swipe fees have more than doubled over the past decade, soaring 25% last year alone to a record $137.8 billion. They are most merchants’ highest operating cost after labor and drove up consumer prices by about $900 for the average family last year. As a percentage of the transaction, the amounted collected automatically goes up as prices rise, creating a multiplier effect on inflation that will drive the number even higher this year.

Convenience store swipe fees were $14 billion in 2021, a 26% increase over the year prior and were about 33% higher than that over the first half of 2022.

In May 2022, Kantor testified before the U.S. Senate Committee on the Judiciary, underscoring the exorbitant swipe fees levied on retailers and how those fees are the direct result of price-fixing by Visa and Mastercard.

NACS is asking its members to contact their members of Congress and ask them to co-sponsor the Credit Card Competition Act, S. 4674 and H.R. 8874, using the NACS Grassroots Portal. Congress must act to ensure that there is price competition on swipe fees and enable the U.S. to have an innovative and efficient credit card market.
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