Tell Congress to Reform Credit Card Swipe Fees
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Hidden Credit Card Swipe Fees Cost Average Family Over $1,000 a Year
The Merchants Payments Coalition is working to educate Congress, policymakers and the public about the billions of dollars in high “swipe” fees big banks and credit card networks charge merchants to process transactions and the impact these fees have on consumers, small businesses and the U.S. economy. Most consumers don’t know about swipe fees since they’re not shown on cash register receipts or monthly bank statements. But every time someone uses a credit card to make a purchase, Wall Street banks and card networks skim more than 2 percent of the transaction amount off the top, leaving Main Street merchants with less than 98 cents on the dollar.
Highest Swipe Fees in the World — And Going Higher
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Swipe fees totaled $160.7 billion in 2022 when debit cards are included, up 17 percent in a single year.
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That’s 12 times pre-pandemic Hollywood box office receipts and almost nine times total NFL football team revenues.
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Because the fees are a percentage of the purchase amount, they automatically go up every time prices go up, even without an increase in rates. Banks stand to see swipe fee revenue go up over 3 percent at current inflation rates without lifting a finger. That creates a multiplier effect for inflation paid for on the backs of consumers and local merchants.
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Swipe fees are most merchants’ highest operating cost after labor, and drive up prices paid by consumers, working out to more than $1,000 a year for the average American family at a time when they can least afford it. That’s a huge hidden card fee, far higher than the annual fee for even the fanciest premium credit card.
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Swipe fees have more than doubled over the past decade because of lack of competition. Visa and Mastercard – which control 80 percent of the market – centrally price-fix swipe fees for the credit cards issued under their names. The thousands of banks that issue the cards then charge those rates in lockstep rather than competing to give merchants the best deal. Legal scholars say that’s a violation of federal antitrust law.
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Local community banks and credit unions see little of the windfall, with the top eight card-issuing banks accounting for 80 percent of the market. And small Main Street merchants are hit the hardest, paying higher rates than larger competitors.
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U.S. swipe fees are the highest in the industrialized world, more than seven times the 0.3 percent maximum charged in Europe.
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The fees went even higher when Visa and Mastercard completed implementation of $1.2 billion in increases in 2022. Changes are also coming that would give Visa and Mastercard unfair advantages over competitors for many card-related services provided to merchants.
“Visa and Mastercard are going to hike fees. At a time of inflation, that just seems like insult to injury to a lot of businesses out there. We don’t have a competitive (payments) system and many businesses cannot survive if they stop accepting Visa and Mastercard. So it’s something that we’re looking at carefully.”
Consumer Financial Protection Bureau Director Rohit Chopra on CNBC
Merchants believe card industry price fixing has gone on far too long. We are asking that banks and card networks compete like any other business. The Merchants Payments Coalition works to educate the public about swipe fees. But it’s up to the public to educate Congress. Click below to be connected with your members of the U.S. House and Senate so you can tell them how you are impacted by rising credit card swipe fees as a business owner or consumer.