Retail group renews call for swipe fee legislation

The Merchants Payment Coalition (MPC) is renewing calls for Congress to pass the Credit Card Competition act (CCCA) to address swipe fees amid record profits from card-issuing banks.

The bill, which was reintroduced in June by a bipartisan coalition, is aimed at credit card swipe fees, which average 2.24% of the transaction but can be as high as 4%. MPC says that credit and debit card swipe fees have more than doubled over the past decade and have increased 50 percent since the pandemic alone, hitting a record $160.7 billion in 2022.

According to the group, which represents retailers, supermarkets, convenience stores, online merchants and more, swipe fees are most merchants’ highest operating cost after labor.

The swipe fees are impacting merchants while big banks post profit increases. JPMorgan Chase reported that third-quarter net income rose 35% year-over-year (YoY) to $13.2 billion on revenue of $40.7 billion, which was up 21% YoY, while credit and debit card sales rose 8%. Citi recently reported third-quarter net income of $3.5 billion, up 2% YoY, with revenue growing 9% to $20.1 billion.

“Wall Street megabanks are making enormous profits by gouging consumers and Main Street merchants at the same time,” MPC executive committee member and National Association of Convenience Stores general counsel Doug Kantor said. “This is a recurring pattern. Giant banks pretend that high fees on Main Street help consumers but just the opposite is true. The credit card industry charges everyone as much as it can all the time, which is why normal market forces are long overdue for swipe fees. Even with swipe fees up more than 50 percent since 2020 and the average family paying $1,000 per year to cover them, consumers are being gouged for more money.”

Visa and Mastercard, which control over 80% of the market, each centrally set swipe fees charged by banks that issue cards under their brands, and also restrict processing to their own networks. The CCCA would require banks with at least $100 billion in assets to enable cards to be processed over at least two unaffiliated networks – Visa or Mastercard plus well-established, high-security competitors like NYCE, Star or Shazam.

MPC says this would make networks compete over fees, security and service and is expected to save merchants and their customers $15 billion a year. The group added that in addition to lower fees, fraud would be reduced because the Federal Reserve says the competing networks have one-fifth the fraud of Visa and Mastercard’s networks. MPC says that credit card rewards would not be affected, nor would anything change about which cards consumers use or how they use them, and community banks and small credit unions would be exempt.