Retailers and Lawmakers Call on Visa and Mastercard to Scrap Fee Increase Plans
The National Retail Federation urged Visa and Mastercard to cancel credit card swipe fee increases scheduled to take effect this month. They also cited a letter from both Republican and Democratic members of Congress saying higher fees would add to a already high inflation.
“American consumers are struggling under the worst inflation in four decades and these increases would only make the situation worse,” NRF Vice President for Government Relations, Banking and Financial Services Leon Buck said in the announcement. “Swipe fees are a percentage of the transaction, so banks and card networks are already receiving an unearned windfall as they piggyback on higher prices. They’re going to see billions of dollars more in revenue this year even if rates stay the same, so an increase would only add insult to injury.”
On Friday, Senators Roger Marshall, R-Kan., and Richard J. Durbin, D-Ill., and Representatives Beth Van Duyne, R-Texas, and Peter Welch, D-Vt., sent a letter to Visa and Mastercard asking that they withdraw plans to implement a package of swipe fee increases this month. These fee increases were scheduled to take effect in April 2021 but were postponed by a year due to the pandemic.
Visa, Mastercard and banks that issue their cards charged retailers $77.5 billion in credit card swipe fees last year and $28.1 billion in debit card swipe fees. Swipe fees for all credit and debit cards in the market reached a total of $137.8 billion in 2021. That’s more than double the amount 10 years earlier, according to the Nilson Report. Swipe fees, which average 2.22 percent of the transaction amount for Visa and Mastercard credit cards, are most merchants’ highest operating cost after labor.
These fees normally drive up consumer prices as retailers pass on the added cost to consumer. They amount to more than $700 a year for the average American family.