WASHINGTON– The Merchants Payments Coalition continues to keep up the pressure behind its efforts to get the Credit Card Competition Act enacted, with its latest argument being that an agreement in Canada to lower credit card “swipe” fees shows that the fees could be reduced in the United States as well.
Credit unions firmly oppose the legislation.
“If Visa and Mastercard can afford to reduce their swipe fees in Canada, there’s no reason they can’t do the same here,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said in a statement. “U.S. merchants and their customers pay twice as much as Canadians and seven times as much as Europeans. It doesn’t make sense that the country that invented the credit card and is home to the two largest card networks on the planet has the highest swipe fees in the industrialized world. It’s time for Congress to act and at least bring competition to U.S. swipe fees.”
The organization noted that last week the Canadian Department of Finance announced a deal with Visa and Mastercard that will lower the average fee to process most in-store credit card transactions to an average 0.95% from the current 1.4% average.
The move is expected to save Canadian merchants $1 billion over five years and “make credit card transactions fairer for small businesses,” the government said in a news release.
What Other Governments Have Done
The organization noted Canada is the latest government to address swipe fees, which the European Union capped at 0.3% for credit cards and 0.2% for debit cards in 2015.
“By comparison, swipe fees for Visa and Mastercard credit cards average 2.24% in the United States and can be as high as 4%,” th MPC stated. “U.S. credit and debit card swipe fees have more than doubled over the past decade and soared 17% last year alone to a record $160.7 billion. They are most merchants’ highest operating cost after labor and drive up consumer prices by more than $1,000 a year for the average U.S. family.”
What Legislation Would Do
The Credit Card Competition Act, which failed to pass the prior Congress, has yet to be introduced in the current Congress, but its co-sponsors remain Sens. Richard Durbin (D-IL) and Roger Marshall (R-KS). The prior legislation would require that U.S. banks with over $100 billion in assets enable credit cards to be processed over at least two unaffiliated networks. One could still be Visa or Mastercard but the other would be a competing network such as NYCE, Star or Shazam. Banks would choose which two to enable but merchants would choose which to use, forcing networks to compete over fees, security and service.
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