Even as inflation cools, small businesses across the country are feeling the heat from credit card swipe fees as more consumers pay with plastic. “Swipe fees” is the catchall term for businesses’ payments to banks and card companies each time customers use their credit or debit cards to pay.
While a federal rule caps debit card swipe fees at 21 cents per transaction, fees for credit card swipes can be much higher. Businesses have seen credit card transactions only go up as more and more people opt to link their card to mobile payment apps.
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According to the Nilson Report, which tracks the card and mobile payment industry, in 2023 the U.S. saw $172 billion in swipe fees. Nilson Report said merchants paid Visa and Mastercard an average of 2.26% in swipe fees, accounting for more than $100 billion.
Visa accounted for 52% of all spending on the U.S.’ four major credit card networks, which also includes Mastercard, American Express and Discover.
On top of that, some of Visa’s fees just went up on Jan. 1. That move comes amid growing pushback from critics, including some lawmakers, who say swipe fees are excessive and frequently get passed on to shoppers.
In September, the Justice Department filed a lawsuit accusing Visa of maintaining an illegal monopoly over debit card payment networks, which Attorney General Merrick Garland said has impacted the price of “nearly everything.”
Visa and Mastercard also agreed to a $30 billion settlement in March, meant to reduce their swipe fees by four basis points for three years. However, a federal judge rejected the settlement in June, saying they could afford to pay more.
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Congress has taken up the fight, proposing the Credit Card Competition Act. The bipartisan bill, which has stalled, would boost competition among credit card processing companies, which advocacy group Merchants Payments Coalition says is essential.
Tags: Credit card, credit card debt, Merrick Garland, Money, Monopoly, Settlements, shopping, small business, U.S. Congress, U.S. Department of Justice, Visa
[Karah]
NEW YEAR, SAME FEES.
EVEN AS INFLATION COOLS – SMALL BUSINESSES ACROSS THE COUNTRY ARE FEELING THE HEAT FROM CREDIT CARD SWIPE FEES AS MORE CONSUMERS PAY WITH PLASTIC.
“SWIPE FEES” IS THE CATCHALL TERM FOR BUSINESSES’ PAYMENTS TO BANKS AND CARD COMPANIES EACH TIME CUSTOMERS USE THEIR CREDIT OR DEBIT CARD TO PAY.
WHILE A FEDERAL RULE CAPS DEBIT CARD SWIPE FEES AT 21 CENTS PER TRANSACTION – FEES FOR CREDIT CARD SWIPES CAN BE MUCH HIGHER.
AND BUSINESSES HAVE SEEN CREDIT CARD TRANSACTIONS ONLY GO UP AS MORE AND MORE PEOPLE OPT TO LINK THEIR CARD TO MOBILE PAYMENT APPS.
ACCORDING TO THE NILSON REPORT – WHICH TRACKS THE CARD AND MOBILE PAYMENT INDUSTRY – IN 20-23, THE U-S SAW 172 *BILLION* DOLLARS IN SWIPE FEES.
THEY SAY MERCHANTS PAID VISA AND MASTERCARD AN AVERAGE OF 2 POINT 26 PERCENT IN SWIPE FEES…
ACCOUNTING FOR MORE THAN 100 BILLION OF THAT BY THEMSELVES.
NILSON SAID VISA ACCOUNTED FOR MORE THAN HALF OF ALL SPENDING ON THE U-S’ FOUR MAJOR CREDIT CARD NETWORKS – WHICH ALSO INCLUDES MASTERCARD, AMERICAN EXPRESS AND DISCOVER.
ON TOP OF THAT – SOME OF VISA’S FEES JUST WENT UP JANUARY 1-ST.
THAT MOVE COMING AMID GROWING PUSHBACK FROM CRITICS – INCLUDING SOME LAWMAKERS – WHO SAY SWIPE FEES ARE EXCESSIVE AND FREQUENTLY GET PASSED ON TO SHOPPERS.
IN SEPTEMBER – THE JUSTICE DEPARTMENT FILED A LAWSUIT ACCUSING VISA OF MAINTAINING AN ILLEGAL MONOPOLY OVER DEBIT CARD PAYMENT NETWORKS, WHICH ATTORNEY GENERAL MERRICK GARLAND SAID HAS IMPACTED THE PRICE OF QUOTE “NEARLY EVERYTHING.”
ALSO, VISA AND MASTERCARD AGREED TO A 30 BILLION DOLLAR SETTLEMENT IN MARCH MEANT TO REDUCE THEIR SWIPE FEES BY FOUR BASIS POINTS FOR THREE YEARS – BUT A FEDERAL JUDGE REJECTED THE SETTLEMENT IN JUNE, SAYING THEY COULD AFFORD TO PAY MORE.
CONGRESS HAS TAKEN UP THE FIGHT – PROPOSING THE CREDIT CARD COMPETITION ACT.
THE BIPARTISAN BILL – WHICH HAS STALLED – WOULD BOOST COMPETITION AMONG CREDIT CARD PROCESSING COMPANIES… WHICH ADVOCACY GROUP THE MERCHANTS PAYMENTS COALITION SAYS IS ESSENTIAL.
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