EBay Move to Drop Amex Shows Need to Address Swipe Fees

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

WASHINGTON, June 5, 2024 – This week’s announcement that eBay will stop accepting American Express credit cards because of high “swipe” fees charged to merchants to process transactions shows the need for Congress to address swipe fees, the Merchants Payments Coalition said today.

“Amex is just a symptom of the underlying problem,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “Visa and Mastercard each centrally price-fix high swipe fees that are uniformly charged by all banks that issue cards under their brands rather than letting the banks compete for merchants’ business. That cartel pricing by the nation’s two largest card networks sets a baseline of high swipe fees. The solution is to pass the Credit Card Competition Act to bring competition to swipe fees and fix this broken market for all card brands.”

“While a rare merchant might have the option to drop Amex, the vast majority of retailers are small businesses and can’t do that, especially with Visa and Mastercard,” Kantor said. “The way those two large companies organize banks into two huge pricing cartels is too much for small businesses to turn away.”

EBay told customers in an email this week that it will stop accepting Amex cards effective August 17 “due to the unacceptably high fees American Express charges for processing credit card transactions.” While focused on Amex, the online marketplace also addressed swipe fees more broadly, adding ““At a time when payment-processing costs should be declining because of technological advancements, investments in fraud capabilities, and customer protections by merchants like eBay, credit card transaction fees continue to rise unabated because of a lack of meaningful competition.”

Banks and the two card networks charge merchants an average 2.26 percent of the transaction to process Visa and Mastercard credit cards, according to the Nilson Report. Amex charges an average 2.29 percent. While Amex’s fees are higher, it makes up only about 15 percent of the market and its swipe fees totaled $26.2 billion last year while swipe fees for Visa and Mastercard credit cards, which amount to over 80 percent of the market, totaled $100.8 billion.

Swipe fees have more than doubled over the past decade and hit a record $172 billion last year when debit cards and all brands of credit cards are included. The fees are most merchants’ highest operating cost after labor and drive up prices for the average family by more than $1,100 a year.

The eBay move comes as sponsors are working to pass the Credit Card Competition Act, which is intended to fix the nation’s broken payments market.

In addition to centrally setting swipe fees charged by all banks that issue cards under their brands, Visa and Mastercard also restrict processing to their own networks even though other networks have lower fees and better security.

Under the legislation, banks with over $100 billion in assets would enable credit cards to be processed over at least two unaffiliated networks. One could still be Visa or Mastercard but the other would be a competing network such as NYCE, Star or Shazam. Banks would choose which two to enable but merchants would choose which to use, forcing networks to compete over fees, security and service. Payments consulting firm CMSPI estimates that competition would save businesses and their customers over
$16 billion a year.

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. Follow MPC on Twitter, Facebook or LinkedIn for the latest on swipe fees.