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.