Merchants Welcome Senate Hearing on Anticompetitive Credit Card Industry Practices Fueling Inflation

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

WASHINGTON, April 27, 2022 – The Merchants Payments Coalition welcomed today’s announcement that the Senate Judiciary Committee will hold a hearing next week on anticompetitive practices by the credit card industry that have led credit card “swipe” fees to more than double over the past decade and are driving up prices as consumers face near-record inflation.

“Visa and Mastercard have been allowed to price-fix swipe fees and shut out competition in the payments market for far too long,” said Anna Ready Blom, a member of the MPC Executive Committee and director of government relations at the National Association of Convenience Stores. “With their actions contributing significantly to the inflation facing American families, it’s time for an in-depth examination of their blatant anticompetitive practices. If we had a competitive payments market that guaranteed merchants and their customers were treated fairly, we wouldn’t need this hearing, but the U.S. payments market is broken and this is an important step toward fixing it. Visa and Mastercard need to compete like any other business.”

Senate Judiciary Committee Chairman Richard J. Durbin, D-Ill. announced today that the committee will hold a hearing May 4 on “excessive swipe fees and barriers to competition in the credit and debit card systems.”

The announcement comes less than two weeks after Durbin, Senator Roger Marshall, R-Kan.; Representative Peter Welch, D-Vt., and Representative Beth Van Duyne, R-Texas, wrote to Visa and Mastercard asking that they withdraw $1.2 billion in credit card swipe fee increases set to take affect this month. Despite the lawmakers’ warning that the increases would “add to inflationary pressure” and are the “last thing American families deserve right now,” the two card networks refused and the increases went into effect last Friday as scheduled.

“It’s disappointing that Visa and Mastercard blatantly ignored the concerns of bipartisan members of Congress who were standing up for Americans and small businesses across the country at a time when they desperately need relief,” Blom said.

Averaging 2.22 percent of the transaction amount, Visa and Mastercard’s U.S. credit card swipe fees are the highest in the industrialized world. Swipe fees are most merchants’ highest operating cost after labor and drive up consumer prices, amounting to more than $700 a year for the average American family.

Because swipe fees are a percentage of the purchase, the amount collected goes up as prices go up, creating a multiplier effect for inflation and giving the card industry an unearned windfall even if rates stay the same.

Unlike merchants who each set their own prices for goods and services, Visa and Mastercard centrally price-fix swipe fee rates that are then charged by all banks that issue their credit and debit cards, a practice many legal experts say is a violation of federal antitrust law. Other rules and practices make it difficult for other payment networks to compete and discourage merchants from using third-party service providers. Together, Visa and Mastercard control 80 percent of the U.S. credit card market.

Visa, Mastercard and their banks charged U.S. merchants $77.5 billion in credit card processing fees in 2021, up 25 percent over the year before, according to the Nilson Report. That was part of $137.8 billion in processing fees when all types and brands of cards are included, a total that more than doubled over the previous decade.

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.