Merchants Renew Call for U.S. Action on Credit Card ‘Swipe’ Fees After Amazon and Visa Resolve Dispute in UK

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

WASHINGTON, February 17, 2022 – The Merchants Payments Coalition renewed its call for U.S. officials to address credit card “swipe” fees following today’s announcement that Amazon has agreed to continue accepting Visa credit cards in the United Kingdom.

“The challenge is even greater in the U.S., where swipe fee rates and the total amount collected are far higher than in the U.K.,” MPC said. “U.S. authorities need to look at what has happened between Amazon and Visa in the U.K. and realize that many retailers here feel the same. It’s time to bring about competition that will require the card industry to play under the same rules as other business.”

“The big-picture significance of this dispute is that it has drawn attention to these high fees,” MPC said. “It has shown that even the largest retailers are frustrated, and the situation is even worse for small retailers who don’t have the size and resources of Amazon that are required to stand up to an entity as powerful as Visa.”

MPC last month sent a letter to Congress and federal agencies asking them to “look closely” at Amazon’s November announcement that it would stop accepting Visa credit cards issued in the U.K. because of high fees charged to process transactions. Amazon dropped the ban just before it would have taken effect in January, saying it was “working closely with Visa on a potential solution.”

The two companies announced today that they have reached a “global agreement” under which Amazon will continue accepting Visa credit cards. In addition to taking the cards in the U.K., Amazon will reportedly drop a surcharge that had been imposed on Visa credit card transactions in Singapore and Australia.

The average swipe fee charged on Visa credit cards in the U.K. is 0.55 percent of the transaction amount, or nearly double the maximum 0.3 percent allowed under European Union rules before Brexit, and totaled $369 million in 2020, according to payments consulting firm CMSPI.

The impact is far greater in the United States, where the market is larger and cards are more widely used. Swipe fees on U.S. Visa credit card transactions totaled $43.5 billion in 2020, more than 100 times the amount collected in the U.K., according to CMSPI. And Visa’s 2.22 percent average swipe fee in the United States is four times the U.K. rate.

Processing fees for all types and brands of U.S. cards totaled $110.3 billion in 2020, up 70 percent over 10 years, according to the Nilson Report. At current rates, merchants receive less than 98 cents on the dollar when a credit card is used and have to adjust prices accordingly. Swipe fees are most merchants’ highest cost after labor and equate to an estimated $724 a year for the average U.S. family, according to CMSPI.

About MPC
The 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.