Credit card companies Visa and Mastercard are planning to increase the network fees that merchants pay when they accept customers’ cards, as reported by The Wall Street Journal.
The fee increases are scheduled to start in October and April, and many of the increased fees will be for online purchases, according to the Journal.
Merchants could end up paying an additional $502 million annually in fees, half of which will come from the increased network fees while the rest would originate from the interchange fees, also known as swipe fees., according to CMSPI, a consulting company that works with merchants. Network fees go to Visa and Mastercard while interchange fees go to the banks that issued the card, according to the Journal.
Credit and debit card swipe fees have more than doubled over the past decade and are now at $160.7 billion a year, according to the Nilson Report, a common source on statistics in the payments industry. These fees cost the average American family more than $1,000 a year.
Doug Kantor, general counsel of NACS, said that many businesses are already being hurt by both high interest rates and inflation, and many are still recovering from the pandemic.
“It’s just a bad combination and bad timing for any of these fee increases to happen,” said Kantor.
Following the reports of Visa and Mastercard’s plan to increase rates, leaders of the Credit Card Competition Act U.S. Senator Roger Marshall, M.D. (R-KS) and U.S. Senate Majority Whip Dick Durbin (D-IL), chair of the Senate Judiciary Committee, released a statement encouraging the companies to withdraw their plan.
“We strongly urge Visa and Mastercard to withdraw their plan to raise credit card fees on small business owners and hard-working American families,” stated the press release.
NACS and the Merchants Payments Coalition (MPC) fully support the bipartisan Credit Card Competition Act.
“Our stores compete every day for consumers’ business—as does every other business in the country. In the broken credit card market, no competition means an open invitation for these large multinational corporations to continually increase rates and to only focus on what benefits them, as opposed to the customer,” said NACS President and CEO Henry Armour.
Armour added that credit card swipe fees for the convenience retailing industry have increased a staggering 82% between 2020 and 2022 and now stand at $19.5 billion.
NACS members are encouraged to reach out to their members of Congress and ask that they support the Credit Card Competition Act. NACS makes it easy for retailers and suppliers to send a message to their legislators via the NACS Grassroot Portal.