WASHINGTON–The nation’s retailers are hailing an announcement by Visa and Mastercard that they plan to delay an estimated $1.2 billion increase in credit card swipe fees but said the delay should be made permanent.
The announcement of the delay came shortly after the Merchants Payments Coalition praised a statement made by Sen. Richard Durbin (R-IL) 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?”
Now, with the announcement by Visa and Mastercard of the delay, the National Retail Federation (NRF) is echoing the sentiment.
‘Last Thing Needed’
“The last thing retailers needed in the middle of a pandemic was higher credit card swipe fees,” said NRF Vice President for Government Relations, Banking and Financial Services Leon Buck. “We’re glad to see this delayed, but the increase should really be canceled altogether. This increase would have hit virtually all merchants at a time when they could least afford it, and we were particularly concerned by higher fees for online transactions when so many retailers have relied on ecommerce to get through COVID-19. The only thing good about this increase is that it has focused the attention of Congress on the market power of Visa and Mastercard. We look forward to working with lawmakers as they address this issue this.”
Visa and Mastercard said they are delaying a complex restructuring of credit card swipe fees that was set to take effect in April by one year, to April 2022. The plan included higher fees for the card networks’ most prominent programs and for many online transactions, with estimated increases of $768 million a year for Visa and $383 million for Mastercard, the NRF said, citing data from payments consulting firm CMSPI.
Varying Fees
The NRF noted processing fees vary according to type of card and transaction and size of merchant, but average 2.25% of the purchase price for Visa and Mastercard credit cards, according to the Nilson Report. The fees have more than doubled from $25.6 billion a year in 2009 to $67.6 billion in 2019 for Visa and Mastercard credit cards alone, according to Nilson, the NRF added, noting overall processing fees paid by U.S. merchants to accept all card payments totaled $116.4 billion in 2019.