Merchants Call on Congress to Examine Swipe Fees

A House committee is looking into bank fees, and merchants want swipe fees to be added to the list.

March 31, 2022

Woman swiping a credit card

WASHINGTON—Merchants are calling on Congress to add swipe fees to their examination of bank fees, according to a news release.

The Merchants Payments Coalition (MPC) sent a letter to the House Financial Services Committee, asking the committee to go beyond examining overdraft fees.

“MPC applauds the committee’s action, but we believe a full examination of fees costing consumers billions should also include the billions of dollars big banks and card companies charge to process credit and debit card transactions,” wrote MPC in the letter. “The banking industry collects seven times as much in swipe fees as it does in overdraft fees and the impact on American families is far more widespread. Swipe fees are a hidden tax paid every day by nearly every American consumer, not just those who overdraw their accounts.”

MPC asked the committee to investigate “the broken and uncompetitive market in which swipe fees are set,” noting that Visa and Mastercard centrally price-fix the swipe fees charged by banks that issue their cards. The banks then all charge consumers the same fees rather than competing to give merchants and consumers the best deal.

“Any fee that costs everyday Americans billions while offering little in return should be the object of utmost scrutiny by those with oversight over the banking industry,” MPC wrote.

Merchants paid $110.3 billion in credit and debit card swipe fees in 2020, according to the Nilson Report. By comparison, overdraft fees totaled $15.5 billion in 2019, according to the Consumer Financial Protection Bureau. At an average of just over 2% of the transaction amount, U.S. credit card swipe fees are the highest in the industrialized world.

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. The increase in consumer prices amounts to more than $700 a year for the average American family. 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 fees will soon get higher, with Visa and Mastercard scheduled to complete implementation of $1.2 billion in increases in April.

The Merchants Payments Coalition has called on Congress to investigate Visa and Mastercard’s anticompetitive dominance over the U.S. credit and debit card markets.

The MPC represents retailers, supermarkets, convenience stores, gasoline stations, online merchants and others fighting for a more competitive and transparent card system that is fair to consumers and merchants.

NACS is actively advocating on the convenience and fuel retailing industry’s behalf against outrageous swipe fees. Read more about NACS advocacy efforts regarding swipe fees.