WASHINGTON—NACS will testify at a Senate Judiciary Committee 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 Merchants Payments Coalition (MPC) Executive Committee and NACS’ director of government relations. NACS is a founding member of MPC.
“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-IL) will hold the hearing “Excessive Swipe Fees and Barriers to Competition in the Credit and Debit Card Systems” on Wednesday, May 4.
Doug Kantor, NACS general counsel, will testify on behalf of NACS and MPC at next week’s Senate hearing.
The Judiciary Committee’s announcement comes less than two weeks after Durbin, Sen. Roger Marshall, (R-KS), Rep. Peter Welch, (D-VT) and Rep. Beth Van Duyne, (R-TX) 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% 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,” MPC wrote in the release.
Credit card swipe fees remain one of the highest operating costs for convenience store retailers after labor, according to NACS State of the Industry data. Consumer preferences for more touch-free transactions and the coin circulation challenge in summer 2020 led to record debit and credit card usage at convenience stores. In 2021, overall card fees paid by the convenience store industry were $13.5 billion, up 25.6% in 2021 versus 2020 ($10.7 billion), NACS SOI data indicate.