Merchants Tell Congress Credit Card ‘Swipe’ Fees Place Small Businesses at a ‘Distinct Disadvantage’

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

WASHINGTON, February 17, 2022 – The Merchants Payments Coalition urged Congress to protect small businesses against rising credit card “swipe” fees as the House Financial Services Committee held a hearing today on ensuring that small and minority-owned businesses share in the nation’s economic recovery.

“One area that impacts all merchants, particularly small businesses, is the cost of accepting credit and debit cards,” MPC said. “Credit card swipe fees have skyrocketed over the past decade due to the underlying lack of competition in the market. In fact, U.S. small businesses pay the highest swipe fees in the industrialized world, placing them at a distinct disadvantage to their global competitors.”

“Small merchants and the entire economy thrive in an open and competitive market,” MPC said. “Unfortunately, today’s credit card market is anything but open or competitive. Congress can and should act quickly to implement reforms to bring competition and transparency to the U.S. credit card market. Main Street businesses are looking to Congress to address the broken card market that continues to stunt our national economic recovery and threatens to do even more harm in the immediate future.”

MPC’s comments came in a letter to the committee, which is holding a Consumer Protection and Financial Institutions Subcommittee hearing titled “Small Businesses, Big Impact: Ensuring Small and Minority-Owned Businesses Share in the Economic Recovery.” The hearing is looking at five pieces of legislation related to lending to small businesses. Witnesses include representatives of the National Urban League, the National Association for Latino Community Asset Builders and other groups.

Big banks and card networks charged merchants $110.3 billion to process credit and debit card transactions in 2020, according to the letter, up 70 percent since 2010. The fees are most merchants’ highest cost after labor and drive up consumer prices by hundreds of dollars a year for the average family.

Swipe fees for Visa and Mastercard credit cards – which account for nearly 80 percent of the U.S. credit card market – average 2.22 percent of the purchase price. The exact fee depends on transaction volume, among other factors, so small businesses often pay more than larger competitors. The majority of U.S. merchants are small businesses, with 98 percent of U.S. retailers having fewer than 50 employees while 18 percent of small businesses are minority-owned.

Despite the high costs, small merchants have “no option but to pay the overinflated fees to participate in today’s economy,” particularly since the use of card payments has accelerated during the pandemic, the letter said. While some small businesses have turned to selling online during the pandemic, fees to process online transactions are even higher than those for in-store transactions.

Visa and Mastercard have already announced a $1.2 billion increase in swipe fees set to take effect in April. “The unilateral ability of these two networks to increase fees without regard to the impact they have at a time when small businesses are facing record inflation and supply chain challenges is a clear demonstration of a broken market,” MPC said.

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.