WASHINGTON–The Merchants Payments Coalition said it welcomes a letter from bipartisan members of the House and Senate who have asked Visa and Mastercard to withdraw credit card swipe fee increases set to take effect this month.
In their letter, the members of Congress stated that the increases would drive up prices paid by consumers already facing high inflation.
“It’s very significant that lawmakers from both parties and both chambers of Congress have come together to stand up against the global card giants to protect small businesses and consumers,” said Anna Ready Blom, a member of the MPC Executive Committee and director of government relations at the National Association of Convenience Stores. “This shows that this is an issue that crosses political lines. This is about the card industry continuing to profit on the backs of Main Street merchants and hard-working American families at a time when they can least afford it.
“Inflation is handing big banks and card networks an unearned windfall because their fees go up as prices go up,” Blom continued. “On top of that, they are trying to impose additional anticompetitive rules and practices that will allow them to continue their domination of the payments market while shutting out innovators who would bring transparency and competition. Small businesses want the card industry to compete the same as they do, and it’s good to see that members of Congress from both parties agree.”
The letter was sent by Sens. Richard J. Durbin (D-IL) and Roger Marshall (R-KS) and Representatives Peter Welch (D-VT) and Beth Van Duyne (R-TX) to Visa Chairman Alfred F. Kelly, Jr. and Mastercard CEO Michael Miebach asking them to withdraw plans to increase swipe fees this month.
‘Your Profits are Already High’
“As Americans are dealing with the highest rate of inflation in decades, your profits are already high enough and any further fee increase is simply taking advantage of vulnerable Americans,” the letter said. “Raising your interchange fee rates even higher will undoubtedly increase the already high costs consumers are facing and add to inflationary pressure, which is the last thing American families deserve right now.
“Visa and Mastercard could actually play a constructive role in reducing inflation by cutting your interchange fee rates,” the letter continued. The fees are a percentage of each transaction, meaning the amount collected goes up as prices rise with inflation. At current rates, card networks and banks stand to see nearly 9% more swipe fee revenue this year even if rates stay the same.”
Delay in Increase
As CUToday.info reported, Visa and Mastercard last year postponed an estimated $1.2 billion in swipe fee increases that were set to take effect in April 2021 after Durbin and Welch said they were ill-timed as the economy was struggling to recover from the pandemic.
The card networks said the increases would take effect in April 2022 instead.
The letter from the members of Congress further stated that even without the increases, Visa, Mastercard and the banks that issue their cards were “enormously profitable” in 2021, noting that the fees are set in a way that “insulates the rates from normal market pressures” and that the fees “already significantly exceed the actual cost” of processing transactions.
Billions in Charges
The letter noted that Visa, Mastercard and their banks charged merchants a total of $77.5 billion in credit card processing fees and $28.1 billion in debit card fees in 2021, according to the Nilson Report. Those numbers were part of $137.8 billion in processing fees when all types and brands of cards are included, a total that more than doubled over the previous decade, according to the Merchants Payments Association.
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