WASHINGTON–The Merchants Payments Coalition is continuing its messaging around credit card swipe fees, saying the record first-quarter revenue and near-record profits at JPMorgan Chase, the nation’s largest credit card issuer, show the need for Congress to pass the Credit Card Competition Act.
“JPMorgan’s new record for revenue coming at the same time as record-high swipe fees is no coincidence,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said in a statement. “JPMorgan and other card-issuing megabanks all agree to charge the same swipe fees – whatever Visa and Mastercard say. That’s one reason why swipe fees are skyrocketing at the expense of small businesses across the country and the consumers who ultimately pay them. JPMorgan and other credit card giants should at least have to compete before they can take record amounts of Americans’ money.”
Big Returns at Big Issuer
The organization noted that JPMorgan reported earlier this month that first-quarter net income soared 52% to $12.6 billion on revenue of $38.3 billion while credit and debit card sales rose 10%. That was the second-highest quarterly profit after a record $13.85 billion in the first quarter of 2021, and the quarterly revenue total was the highest in the bank’s history. With 149.3 million cards in circulation and over $950 billion in purchase volume as of 2021, JPMorgan is the largest U.S. issuer of credit cards, accounting for nearly a third of cards issued. The bank issues nearly twice as many cards as No. 2 Citi, and its 11.3 billion transactions in 2021 were more than Citi and No. 3 Capital One combined, the MPC said.
‘Enormous Profits’
“High swipe fees have contributed to enormous profits for the card industry. Visa reported net profit of 50% last year while Mastercard saw 45% and money center banks like JPMorgan that issue the majority of credit cards averaged 27%,” the Merchants Payments Coalition said. “Merchants paid $126.4 billion in processing fees for credit cards in 2022, an increase of 20%. Fees for Visa and Mastercard credit cards, which dominate the market and have an average swipe fee of 2.24%, increased 21% to $93.2 billion. The increases came even though 2022 purchase volume was up only 12.3%, showing that fees are rising faster than card spending. Debit card swipe fees came to $34.4 billion, up 6% from 2021.”
Among Merchants’ Highest Costs
According to the MPC, swipe fees are most merchants’ highest operating cost after labor and are too much to absorb, driving up prices paid by consumers. Based on the Nilson data, credit and debit card swipe fees cost the average household an estimated $1,024 in higher prices in 2022, topping the $1,000 mark for the first time, the organization said.
The MPC reiterated its support for the Credit Card Competition Act, which has yet to be introduced in the new Congress. That Act would require that banks with over $100 billion in assets enable credit cards to be processed over at least two unaffiliated networks.