WASHINGTON– The Merchants Payments Coalition is saying it welcomes a new executive order from President Biden and wants to see it applied to address what it said is a “lack of competition” in the payments market.
As CUToday.info reported here,
President Biden’s recent sweeping executive order is aimed at increasing competition and includes a number of provisions related to financial services.
“The clear message is that the Biden administration supports competition across all sectors of the economy and wants to tear down barriers to fair and open markets,” NACS General Counsel and MPC Executive Committee member Doug Kantor said. “Swipe fees charged by the credit and debit card industry are anti-competitive and harmful to Main Street businesses. With this executive order, we welcome action by the Department of Justice, Federal Trade Commission, banking regulators and other agencies to bring an end to anticompetitive practices in the payments industry.”
The organization noted that while the order’s six-dozen specific initiatives affecting a wide range of industries did not directly address payments, lack of competition in banking was cited and regulators were directed to “provide more robust scrutiny of mergers” and allow consumers changing banks to download their banking data and take it with them.
‘Enforce Laws Vigorously’
More broadly, the DOJ and FTC were urged by the group to “enforce the antitrust laws vigorously,” the MPC added.
The MPC added, “Lack of competition has allowed credit card swipe fees to skyrocket in recent years. Banks that issue Visa and Mastercard credit cards charge merchants an average 2.25% of the purchase price to process transactions, according to the Nilson Report. Multiplied across millions of transactions each day, those fees more than doubled from $25.6 billion a year in 2009 to $67.6 billion in 2019. When all brands of credit and debit cards are included, processing fees totaled $116.4 billion in 2019, up 88% over the previous decade, according to Nilson. Debit card swipe fees are limited to 21 cents per transaction for the nation’s largest banks if they follow Visa and Mastercard’s fee schedules, but smaller banks can charge more.”
Second-Highest Cost
The Merchants Payments Coalition noted card processing fees are most merchants’ second-highest cost after labor and “drive up prices paid by the average household by hundreds of dollars a year. U.S. merchants pay the highest swipe fees in the industrialized world, more than seven times the 0.3% for credit cards and 0.2% for debit cards allowed in Europe.”