Big Banks Should Not Be Priming the Pump to Gouge Consumers and Main Street as Card Volume Rises

Contact: J. Craig Shearman
(202) 257-3678

WASHINGTON, July 14, 2021 – The Merchants Payments Coalition today decried outrageous swipe fees pocketed by big banks, which have reported dramatic increases in credit and debit card volume this week as Main Street still struggles to recover from the COVID-19 pandemic.

“The giant card companies and banks may be rejoicing that their scheme of fixing huge credit card swipe fees is paying off, but their gain is Main Street’s pain,” NACS General Counsel and MPC Executive Committee member Doug Kantor said. “We need competition to reduce swipe fees so bank CEOs aren’t the only ones celebrating.”

Kantor’s comments came after JPMorgan Chase CEO Jamie Dimon enthusiastically welcomed signs of increased consumer spending during an earnings call on Tuesday, saying “the pump is primed” for the year ahead.

While increased spending benefits merchants and the entire economy, it also means a swipe fee windfall for card-issuing banks, which receive a percentage of the transaction each time a card is used. The windfall has become even larger during the pandemic, when accelerated online spending and consumer worries over handling cash have meant almost every retail purchase is paid for with a credit or debit card. The shift to more card payments means higher costs for merchants and increased profits for banks.

During the earnings call, JPMorgan reported that its combined credit and debit card volume during the second quarter totaled $344.3 billion, up 45 percent from a year ago and up 22 percent from the pre-pandemic second quarter of 2019.

The figure included $223.7 billion in transactions made on credit cards, up 51 percent year-over-year. The bank, which is the nation’s largest credit card issuer by volume and third-largest debit card issuer, did not report swipe fee revenue. But at an industry-wide average rate of 2.25 percent of the transaction for Visa and Mastercard, the credit card volume reported would yield $5 billion. Debit card swipe fees for large banks are charged on a per-transaction basis and cannot be calculated from dollar volume alone.

Meanwhile, Bank of America – the nation’s largest debit card issuer and fourth-largest credit card issuer – today reported earnings of $9.22 billion in the second quarter, a dramatic increase from the $3.53 billion it reported for the quarter in 2020. BOA credit and debit card volume was up 40 percent year-over-year at $200.3 billion.

Lack of competition has allowed swipe fees to skyrocket in recent years even as banks’ cost of processing transactions has fallen. Swipe fees for Visa and Mastercard credit cards alone more than doubled from $25.6 billion a year in 2009 to $67.6 billion in 2019, according to the Nilson Report. When debit cards and all brands of credit cards are included, processing fees totaled $116.4 billion in 2019, up 88 percent over the previous decade, according to Nilson.

Card processing fees are most merchants’ second-highest cost after labor and drive up prices paid by the average household by hundreds of dollars a year. U.S. merchants pay the highest swipe fees in the industrialized world, more than seven times the 0.3 percent for credit cards and 0.2 percent for debit cards allowed in Europe.

About MPC
Merchants Payments Coalition represents retailers, supermarkets, convenience stores, gasoline stations, online merchants and others fighting for a more competitive and transparent card system that is fair to consumers and merchants.