WASHINGTON–A group representing merchants is praising attention being given to credit card processing fees by the chairman of the Senate Judiciary Committee.
The Merchants Payments Coalition praised Richard J. Durbin (D-IL) for his statements made during an antitrust hearing. Durbin, the author of the amendment named after him that was included in 2010 legislation, cited Visa and Mastercard’s plans for a nearly $1.2 billion increase in credit card swipe fess scheduled to take effect in April.
“They didn’t forget,” Durbin said, referring to his earlier legislation. “They’re waiting for an opportunity to get even again. Where is the policing authority to stop this duopoly from doing this to every merchant and retailer in America?”
Added Doug Kantor, counsel with the Merchant Payments Coalition, “This draws attention to a vitally important issue – that credit card swipe fees are already too high and Visa and Mastercard are trying to use their power to raise them even higher on the backs of small businesses during the middle of a pandemic. Senator Durbin’s concern that Visa and Mastercard are trying to ‘get even’ is right on the mark and his question of what can be done to bring them under control is one that needs to be answered by Congress and the enforcement agencies. These fees are among the highest in the world and neither merchants nor their customers can afford to pay more.”
‘Not Negotiated, Mandated’
Durbin’s comments came during a subcommittee hearing on antitrust reform, and he expressed concern about “the power of Visa and Mastercard.”
“They were not negotiated – they were mandated,” he said, referring to what he learned about swipe fees during previous hearings, Durbin said. “Visa and Mastercard said this is what you will pay for each transaction at your restaurant or shop and you have no bargaining power whatsoever. If you don’t want to pay it, don’t use Visa or Mastercard. See how long you last.”
Durbin said the fees are “far in excess of any reasonable measure of cost” and far higher than they would be in a competitive market. Visa and Mastercard are “so dominant in the payments market that merchants couldn’t stay in business without using their cards,” he said.
Durbin said the April increase will come “just in time for your little restaurant that somehow managed to survive and reopen in a pandemic to go into business and have your credit card company say now you’re going to pay us even more.”
The cost of swipe fees is “ultimately borne by consumers across America” because they drive up prices, the senator added.
More Than $1 Billion in Estimated Costs
The merchants’ group noted the hearing came a week after Durbin and Representative Peter Welch sent Visa and Mastercard a letter asking them to cancel the April fee increases, saying they would “undermine efforts to help the economy recover.”
As CUToday.info reported earlier, Visa and Mastercard are reportedly set to implement a wide-ranging restructuring of the “swipe” fees charged.
“While the matrix of fees is complex, the net impact is estimated at increases of $768 million a year for Visa and $383 million for Mastercard, or a total of $1.15 billion, according to analysis by global payments consulting firm CMSPI,” the Merchant Payments Coalition said. “Increases are expected for Visa and Mastercard’s most prominent credit card programs, and for online transactions, which have grown sharply during the pandemic and already carry higher fees than in-store transactions. In addition to paying higher fees, merchants shoulder a vast majority of fraud costs online.”