ALEXANDRIA, Va.—Under pressure from lawmakers, retailers, NACS and other trade groups, Visa and Mastercard have agreed to delay planned increases in swipe fees until April 2022. Many of the increases would have impacted online transactions, but the credit card firms also had planned to raise fees on convenience stores, grocery stores and other bricks-and-mortar retailers.
Swipe fees, which merchants pay when a customer pays by card, are often higher for merchandise bought online. The fee changes were originally slated to take effect in April 2020, but the credit card networks twice delayed the increases, citing the COVID-19 pandemic.
The nearly $1.2 billion in fee increases would apply to several types of transactions, including online card payments made to convenience stores, restaurants and grocery stores.
Convenience stores paid about $11.8 billion in credit card swipe fees in 2019, making it the second highest operating cost after labor, according to NACS State of the Industry data. NACS has battled the big card networks for years to reduce swipe fees.
“Convenience and fuel retailers welcome the news that Visa and Mastercard are taking into account the impact that their swipe-fee increases will have on essential businesses that have stayed open throughout the pandemic,” said Lyle Beckwith, NACS senior vice president of government relations. “With Americans already paying the highest swipe fees in the world, it is time for Visa and Mastercard to step back and let banks set their own prices.”
Senator Richard Durbin (D-IL) has been a vocal opponent of Visa and Mastercard’s swipe-fee increases. During an antitrust meeting of the Senate Judiciary Committee last week, Durbin expressed concern about the unchecked power of Visa and Mastercard when it comes to charging merchants fees for consumer credit card transactions.
As NACS Daily reported, Sen. Durbin said the fees are “far in excess of any reasonable measure of cost” and far higher than they would be in a competitive market. Visa and Mastercard are “so dominant in the payments market that merchants couldn’t stay in business without using their cards.”
The hearing came a week after Sen. Durbin and Rep. Peter Welch (D-VT) sent Visa and Mastercard a letter asking them to cancel the April fee increases, saying they would “undermine efforts to help the economy recover,” the letter said.
Visa and Mastercard cited the challenges of the pandemic in tapping the brakes on their planned swipe-fee increases.
“Visa is committed to maintaining stability in our payments system and will not make any future rate changes in the U.S. for another year while the economy recovers,” the company said in a statement to Bloomberg.
“Mindful that some merchants are still facing unprecedented circumstances, we are delaying our previously announced interchange adjustments,” Mastercard said in its statement.
NACS is a plaintiff in the long-running merchant litigation against the card networks challenging their “honor all cards” rule, price-setting and other practices on the grounds of antitrust violations. Roughly 63 merchants, including Amazon, Lowes, Gap and Starbucks are suing Visa, Mastercard and card-issuing banks, claiming that their actions violate antitrust laws and prevent any competitive market for swipe fees.