FOR IMMEDIATE RELEASE
West Bloomfield, MI, April 2024 – A proposed agreement announced for Visa and Mastercard to reduce “swipe” fees charged to merchants to process credit card transactions would fall drastically short of providing any relief to retailers. Leadership from the Midwest Independent Retailers Association (MIRA) explained that it does not end the need for Congress to pass legislation.
MIRA and other retail groups including NACS, pushed back on Visa and Mastercard’s claims that the $30 billion settlement to limit swipe fees will help retailers—and stated that it may prevent real change from happening in the marketplace.
“This settlement would make minimal impact for independent retailers,” said Bill Wild, president, and CEO of MIRA. “A few years of minimal relief followed by business as usual is not a good outcome from 20 years of litigation. “This weak attempt to appease the merchants offers only temporary relief. It continues to allow the card companies to raise rates yet again. Congress must return to the table and draft real reform to benefit retailers and their customers.”
Under a proposed settlement in long-running class action litigation, Visa and Mastercard would lower credit card swipe fees – which currently average 2.26 percent of the transaction amount – by at least four basis points for at least three years. For five years, swipe fees would not increase above the rates at the end of 2023. Also, the average rate for five years would be at least seven basis points below the current average.
Those reductions are within the range that Visa and Mastercard have raised swipe fees over the last few years but fall far short of the relief needed. According to the Nilson Report, the average Visa-Mastercard swipe fee rate has grown, rising from 2.02 percent in 2010 to 2.26 percent in 2023.
Credit and debit card swipe fees have more than doubled over the past decade and soared to $172.05 billion in 2023, up from $160.7 billion in 2022, according to the Nilson Report. They are most merchants’ highest operating cost after labor and are too much to absorb, driving up prices paid by the average family by over $1,000 a year.
Visa and Mastercard credit card swipe fees totaled $100.77 billion in 2023, rising from $93.2 billion the year before and topping the $100 billion mark for the first time.
The settlement proposal comes as Senate Judiciary Committee Chairman Richard Durbin, D-Ill., one of the lead sponsors of the Credit Card Competition Act, plans to hold a hearing on lack of competition over swipe fees. The CEOs of Visa and Mastercard have refused to appear at the hearing. Durbin was reported as saying that the refusal to publicly defend “skimming of every credit card transaction in America speaks volumes.”
Visa and Mastercard – which control 80 percent of the market – each centrally set the swipe fees charged by banks that issue cards under their brands and block transactions from being processed over other networks that could do the job with lower costs and better security. The legislation would require banks with at least $100 billion in assets to enable cards they issue to be processed over at least two unaffiliated networks – Visa or Mastercard plus a competitor like NYCE, Star, Shazam, or Discover. The ban on running transactions over a competing network means none of the networks could be added without passage of the CA, including Discover, despite the recent announcement of its merger with Capitol One.
Banks would choose which networks to enable, but merchants would then decide which to use, resulting in competition over fees, security, and services expected to save merchants and consumers over $15 billion annually. Rewards would not be affected, security would be improved, consumers would still use the same cards, and community banks and all but one credit union would be exempt.
About MIRA
MIRA, which has served as “The voice for the food, beverage, and petroleum industries” since 1910, is the premier multi-state trade association representing thousands of independent retailers operating in Michigan, Ohio, Illinois, and the rest of the Midwest. MIRA maintains its Executive Offices in West Bloomfield, Michigan.
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