Independent grocers and merchants alike paid more than $100 billion in swipe fees to accept credit cards last year, according to The Nilson Report.
In a letter to U.S. Senate Majority Whip Dick Durbin, D-Ill.; U.S. Sen. Roger Marshall, R-Kan.; and U.S. Reps. Peter Welch, D-Vt.; and Beth Van Duyne, R-Texas, Greg Ferrara, president and CEO of the National Grocers Association (NGA), the Washington, D.C.-based trade association representing the independent sector of the food distribution industry, thanked the federal lawmakers for their bipartisan, bicameral efforts to prevent Visa and Mastercard from implementing planned April 2022 swipe fee rate increases on merchants.
Ferrara also requested that Congress and the Biden administration address “Visa and Mastercard’s sheer market power … coupled with the lack of competitive forces in the credit card market,” a state of affairs that has enabled the two global card networks to centrally set the pricing and structure of interchange fees, the largest part of merchants’ swipe fee costs.
“In any other market, be it grocery or elsewhere, if prices were centrally set by two companies for the rest of the industry’s participants, there would be significant antitrust concerns,” observed Ferrara in the letter. “In the credit card space, however, this has been industry practice for more than a decade.”
According to The Nilson Report, a publication covering the global card and mobile payment industry, independent grocers and merchants alike paid more than $100 billion in swipe fees to accept credit cards last year.
“Independent grocers do all they can to absorb swipe fees – the competitive nature of the grocery industry demands this – but absorbing these out-of-control increases is simply not sustainable for any businesses, especially small businesses,” wrote Ferrara. “This means that some amount gets passed on to consumers in the form of higher prices. Whether they have a credit card or not, the average American family already pays more than $700 per year in swipe fees.”
He added: “Your letter to the card networks echoes the concerns that independent grocers have been hearing for months now from consumers within the communities they serve. Food inflation is at a 40-year high, and one of the most frequent places that Americans notice these price increases is at the grocery store. At a time when both the supply chain and local communities are faced with increased costs, the last thing grocers or their customers need is swipe fee hikes.”
Pointing out that swipe fees in the United States are higher than in any other industrialized country, Ferrara noted: “Independent community grocers and wholesalers support your efforts and call on Congress and the Biden administration to follow in your footsteps to address the failures of the broken card payments market.”
Last year, the grocery industry described itself as “extremely pleased” by a letter sent by federal lawmakers encouraging major credit card companies to cancel planned swipe fees, which food retailers maintained would be detrimental to businesses and consumers still struggling during the pandemic.