WASHINGTON– The Merchants Payments Coalition (MPC) is calling on officials in the United States to do something about credit card “swipe” fees following an announcement that Amazon has agreed to continue accepting Visa credit cards in the United Kingdom.
“The challenge is even greater in the U.S., where swipe fee rates and the total amount collected are far higher than in the U.K.,” MPC said. “U.S. authorities need to look at what has happened between Amazon and Visa in the U.K. and realize that many retailers here feel the same. It’s time to bring about competition that will require the card industry to play under the same rules as other business.
“The big-picture significance of this dispute is that it has drawn attention to these high fees,” MPC continued. “It has shown that even the largest retailers are frustrated, and the situation is even worse for small retailers who don’t have the size and resources of Amazon that are required to stand up to an entity as powerful as Visa.”
In January, MPC sent a letter to Congress and federal agencies asking them to “look closely” at Amazon’s November announcement that it would stop accepting Visa credit cards issued in the U.K. because of high fees charged to process transactions. Amazon dropped the ban just before it would have taken effect in January, saying it was “working closely with Visa on a potential solution.”
The two companies have now announced they have reached a “global agreement” under which Amazon will continue accepting Visa credit cards. In addition to taking the cards in the U.K., Amazon will reportedly drop a surcharge that had been imposed on Visa credit card transactions in Singapore and Australia.
‘Impact is Far Greater’
The average swipe fee charged on Visa credit cards in the U.K. is 0.55% of the transaction amount, or nearly double the maximum 0.3% allowed under European Union rules before Brexit, and totaled $369 million in 2020, according to payments consulting firm CMSPI.
“The impact is far greater in the United States, where the market is larger and cards are more widely used,” MPC said. “Swipe fees on U.S. Visa credit card transactions totaled $43.5 billion in 2020, more than 100 times the amount collected in the U.K., according to CMSPI. And Visa’s 2.22% average swipe fee in the United States is four times the U.K. rate.”
The MPC also cited Nilson Report data showing processing fees for all types and brands of U.S. cards totaled $110.3 billion in 2020, up 70% over 10 years.
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