NRF: Mastercard, Visa Hold Off on Planned Credit Card Swipe Fee Increases
The National Retail Federation (NRF) has joined bipartisan U.S. lawmakers calling for Mastercard and Visa to hold off on their planned credit card swipe fee increases, which are scheduled to go into effect later this month, the trade group announced in a press release. The group cited a letter sent to Visa and Mastercard from both Republican and Democratic members of Congress that said higher fees would add to already increasing inflation levels.
“American consumers are struggling under the worst inflation in four decades and these increases would only make the situation worse,” said Leon Buck, vice president for government relations, banking and financial services, NRF, in the release. “Swipe fees are a percentage of the transaction, so banks and card networks are already receiving an unearned windfall as they piggyback on higher prices. They’re going to see billions of dollars more in revenue this year even if rates stay the same, so an increase would only add insult to injury.”
In the referenced letter, Senators Roger Marshall, R-Kan., and Richard J. Durbin, D-Ill., and Representatives Beth Van Duyne, R-Texas, and Peter Welch, D-Vt., asked Visa and Mastercard to withdraw plans to implement a package of swipe fee increases this month. The estimated $1.2 billion in increases were scheduled to take effect in April 2021, but were postponed by a year after Durbin and Welch said they were ill-timed as the economy was struggling to recover from the pandemic.
Total Retail's Take: Good work, NRF. The inflation all consumers are feeling right now is definitely having a negative effect on consumer spending and subsequently retail sales, and an increase in swipe fees would be just anther nail in the coffin. After all, swipe fees, which average 2.22 percent of the transaction amount for Visa and Mastercard credit cards, are most merchants’ highest operating costs after labor, and drive up consumer prices — amounting to more than $700 a year for the average American family.
What's more, Visa, Mastercard and the banks that issue their cards charged retailers $77.5 billion in credit card swipe fees last year and $28.1 billion in debit card swipe fees, according to the NRF release. Swipe fees for all types and brands of cards totaled $137.8 billion in 2021, more than double the amount 10 years earlier.
The payment processors, however, believe the fee increase is warranted. Seth Eisen, senior vice president of communications at Mastercard, told PYMNTS.com that the swipe fee increases “are the first such changes in more than a decade ... Our changes include some increases and some decreases. For example, we’re decreasing costs for all merchants with transactions below $5. As people are living increasingly on-the-go digital lives, we’re looking to help support merchants in providing their customers the best choices and shopping experiences possible.”