WASHINGTON – The Financial Times and other news media reported last week that the European Commission is proposing a cap on credit card swipe fees at 0.3%, drastically lower than the current cost for U.S. consumers to swipe their cards. The EU also is proposing a ceiling on debit card swipe fees of 0.2%.
The Merchants Payments Coalition (MPC), of which NACS is a founding member, issued a statement in response to the news:
The European Commission is dealing with what some U.S. regulators and federal officials are ignoring. Credit card companies and their issuing banks are ripping off not only merchants but consumers as well with swipe fees eight times higher here than in Europe and other countries. The cost to swipe in Boise is the same in London or Paris or Munich. The sad truth is the credit card industry is charging more here simply because they are allowed to price-fix the fees.
Credit card swipe fees, which can be as high as four percent of the transaction, are now the second highest expense for merchants and are especially burdensome for small businesses at a time when many are still trying to recover from the recession. While businesses eat some of the costs and sometimes make no profit on sales because of swipe fees, it’s no secret that every time credit card companies and banks hike the fee, consumer prices are impacted.
Swipe fees have tripled in the U.S. in the past ten years, generating around $60 billion in fees for banks annually, when the actual cost of card transactions has been falling due to technological advances. Meanwhile, Visa and MasterCard control 80% of the marketplace and are allowed to set the fees in secret with no accountability for competitiveness and transparency.
The European Commission has acted rightly in response to concerns about the impact of swipe fees on consumers and the lack of transparency in how the fees are set. Our federal officials need to follow their lead.
The MPC is a group of U.S. merchants and retailers concerned about the rising cost of swipe fees and the lack of competitiveness and transparency in the credit card industry.
