March 29, 2021
Credit card processing fees have more than doubled over the past decade despite technological improvements that have driven down processing costs. This is clear evidence that the U.S. card payments market is broken and lacks competition. Unfortunately, domination of the payments market by its two largest players – Visa and Mastercard – has prevented any real competition that would provide a market-based solution. Banks and the card networks have ignored merchants’ demands that they negotiate fees or compete to offer lower fees. Two decades of litigation has failed to resolve the issues.
MPC firmly believes in opening up the payments market and introducing competition, which would lower costs and drive innovation. Making fees transparent would be a first step toward bringing about competition. Rather than following Visa and Mastercard in lockstep, banks should set fees independently and compete to offer the lowest fees.