WASHINGTON—Ahead of a planned swipe-fee increase set for April by Visa and Mastercard, the Merchants Payments Coalition (MPC) launched an advertising campaign to educate Congress and other policymakers on the swipe fees and the impact they have on consumers, small businesses and the U.S. economy.
“Swipe fees charged in the United States are the highest in the industrialized world, and a lack of competition, transparency and scrutiny has allowed them to get that high,” said Leon Buck, MPC’s executive committee member and National Retail Federation vice president for government relations, banking and financial services. “These fees are largely hidden, even from those in power to do something about them. We want members of Congress to know how much money big banks and global card networks are taking out of their constituents’ pockets and how these fees are harming small businesses across the nation.”
Visa and Mastercard—which control nearly 80% of the U.S. credit card market—are implementing a $1.2 billion increase in swipe fees next month. The increase was delayed from a year ago after members of Congress said it would “undermine efforts to help the economy recover.”
Swipe fees for Visa and Mastercard credit cards average 2.22% of the transaction amount and totaled $61.6 billion in 2020, up 137% over the previous decade, according to the Nilson Report. When all types and brands of cards are included, processing fees totaled $110.3 billion in 2020, up 70% over 10 years.
In the U.S., 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 2020, 74.6% of all transactions were paid by plastic, and overall card fees paid by the convenience store industry were $10.7 billion, NACS SOI data indicate.
The ads will be featured on social media and traditional media across Washington targeting members of the House and Senate and their staffs, as well as policymakers at agencies such as the Federal Reserve, Consumer Financial Protection Bureau, the Federal Trade Commission and the Department of Justice. The ads, which will run through this spring, direct readers and listeners to the MPC website.
“Large U.S. credit card companies and banks take hard-earned money out of consumers’ pockets every day. What’s worse, they want to take even more,” one ad reads. “Stop unfair fees. Tell Congress to reform credit card swipe fees.”
“While the country is still on the road to recovery, credit card companies and banks are still raising fees that already cost businesses and consumers billions,” says another. “Support small businesses. Tell Congress to reform credit card swipe fees.”
As prices rise with inflation, swipe fees go up proportionately because the percentage is based on a larger amount, giving even more to the card industry.
The fees have been a growing concern as consumers have shifted from cash to plastic during the pandemic, with the Fed saying cash accounted for only 23% of purchases in 2020, down from 32% just two years earlier in 2018, while credit and debit cards grew to 65% from 59% in the same period. A recent Visa study found 53% of consumers expect to stop using cash within the next 10 years.
In February, MPC asked U.S. officials to address credit card swipe fees following the announcement that Amazon has agreed to continue accepting Visa credit cards in the United Kingdom. Amazon and Visa announced that the companies have reached a “global agreement” under which Amazon will continue accepting Visa credit cards. In addition to taking the cards in the U.K., Amazon will reportedly drop a surcharge that had been imposed on Visa credit card transactions in Singapore and Australia.