Card Swipe Fees Under Scrutiny

Hub CEO Scheeler explains how Mastercard and Visa fee hikes hurt small retailers.

April 10, 2020

DICKINSON, N.D.—If fighting the coronavirus isn’t enough, Visa and Mastercard will probably stick with their planned increase to swipe fees for many smaller merchants sometime this year, the Wall Street Journal reports. While neither card company would say clearly whether the hikes would go forward in July, the companies said they were offering financial assistance to small businesses, specifically $210 million (Visa) and $250 million (Mastercard).

Jared Scheeler, CEO of the Hub Convenience Stores, said his six-location company shelled out close to $400,000 in card fees, including swipe fees, for 2019. Credit- and debit-card fees gobbled up 2.12% of the chain’s total 2019 sales, up from 1.99% in 2018 and 1.93% in 2017.

“It is pretty discouraging as a business owner to see that much money going out,” said Scheeler, who serves on the NACS Board of Directors Executive Committee. “The only line items bigger than that are rent and payroll.”

For NACS members and retailers across the country, swipe fees are retailers’ second highest operating expense behind labor. These fees are set by the major card networks and collected by the banks who issue the cards. Most consumers do not realize retailers are charged a huge fee on every credit card transaction.

“The last thing our economy needs is for Visa and MasterCard to increase credit and debit card swipe fees. Raising these fees is a terrible idea that would hurt small businesses, workers, & consumers who are already facing enormous challenges,” Senator Dick Durbin (D-IL) tweeted yesterday in sharing the Journal article.

Senator Durbin and Congressman Peter Welch (D-VT) last month sent a letter to Visa and Mastercard asking them to delay their new fee schedule. As reported in NACS Daily, Visa and Mastercard agreed to delay until July the planned April release of their new swipe fee structure in response to the economic slowdown due to the coronavirus but didn’t commit to calling off the new fees altogether.

One commentator on the Journal’s story observed that “at a time when we’re all (?) trying to support small businesses, MC and Visa's proposed changes clearly seem to favor large business. If MC wants to ‘increase swipe fees...for most in-store retail purchases,’ this would obviously benefit online retailers. This means you'll no longer be able to blame Amazon for the death of brick and mortar stores.

“It's great PR for MC and Visa to say they're ‘committing $210 million and $250 million, respectively, to helping small businesses’ during the [COVID-19] crisis, but it sounds like they'll be recouping that many times over, on the backs of the businesses that will be hurt the most. And maybe even drive the final nail into their coffins,” the commentator concluded.