WASHINGTON– The Merchants Payments Coalition, which is currently lined up in support of the Credit Card Competition Act that credit unions oppose, said the “soaring profits” just reported by Visa and Mastercard “are further evidence the credit card market is broken and not competitive.”
Last week, Visa reported its fourth-quarter net income rose 19% year over year to $4.7 billion on revenue of $8.6 billion, which would equal a profit margin of 55%. For the full year, net income rose 15% to $17.3 billion on revenue of $32.7 billion for a profit margin of 53%, the company reported.
Meanwhile, Mastercard said last week its third-quarter net income rose 28% year over year to $3.2 billion on revenue of $6.5 billion, a profit margin of 49%.
“By contrast, 2022’s average net profit margin for general retail was only 2.4%,” noted the MPC.
‘No Competition or Fairness’
“Visa and Mastercard’s profit margins are more than 20 times what merchants make and their megaprofits are still rising,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said in a statement. “Businesses in competitive markets just don’t make those profit margins. With no competition or fairness, this is a broken market that only Congress can fix. It’s time to pass the Credit Card Competition Act so credit card companies will have to compete the same as small businesses.”
The MPC further stated, citing an analysis by New York University, MPC said banks that issue credit cards have the highest profit margins of any industry in the United States, higher than oil companies, pharmaceutical companies, investment banks and every other industry.
“The two giant credit card companies aren’t tracked as an industry but their margins are double what banks make,” the MPC added.
New Fed Proposal
As the Credit Card Competition Act remains before Congress, the Federal Reserve last week proposed lowering the amounts financial institutions of more than $10 billion in assets can charge to process debit card transactions, as CUToday.info reported here.
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