Retailer group urges Congress to call off April swipe fee hike

The Merchants Payments Coalition is launching an advertising campaign urging policymakers to block a change in credit card interchange fees set to take effect next month.

The move comes as Visa and Mastercard prepare to implement an increase in network interchange fees for credit and debit cards that was delayed by a year because of the pandemic. The plan calls for increasing the fee on a traditional Visa card for a $100 transaction to $1.99 from $1.90, which the MPC estimates would result in a total $1.2 billion increase in interchange fees paid by merchants and consumers.

The MPC ads, running on LinkedIn and Twitter with plans to expand to political-news websites, argue that interchange fees Visa and Mastercard assess are already among the highest in the world and should be reined in, not increased.

“While the country is still on the road to recovery, credit card companies and banks are still raising fees that already cost businesses and consumers billions. … Tell Congress to reform credit card swipe fees,” says an ad from the coalition, a Washington-based nonprofit that represents hundreds of U.S. retailers.

Visa and Mastercard did not respond to a request for comment by deadline.

Existing interchange fees Visa and Mastercard charge on credit cards are on average about 2.22% of the purchase, adding up to $110 billion in total processing fees for all types and brands of cards in 2020, the MPC said in a press release.

Millions of consumers shifted from cash to card transactions during the pandemic, with cash accounting for only 23% of purchases in 2020, down from 32% in 2018, according to the MPC.

The recent inflation has exacerbated the cost of handling credit cards for businesses and consumers, the MPC noted.

Interchange fees

Card brands postpone fee hike, but merchants want interchange reform

March 16, 2021 2:02 PM

The Federal Reserve last year proposed new debit-routing regulations to ensure that interchange rates were still fair in light of the recent surge in digital transactions.

The proposal — which hasn’t advanced further — aims to clarify provisions within the Durbin amendment to the 2010 Dodd-Frank Act, which requires card issuers to give merchants the choice of at least two unaffiliated debit networks for routing transactions.

“We want members of Congress to know how much money big banks and global card network are taking out of their constituents’ pockets, and how these fees are harming small businesses across the nation,” Leon Buck, a member of the MPC executive committee and vice president for government relations, banking and financial services at the National Retail Federation, said in a press release.