Price-fixing Behind Higher Credit Card Swipe Fees: Retailer Group
Price-fixing by Visa and MasterCard on behalf of big banks leads to increasingly higher swipe fees on credit cards, according to the Merchants Payment Coalition (MPC), a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, online merchants and other businesses that are pushing for a more competitive and transparent card system.
The coalition’s assertions were laid out in a document it made available to its members.
Although banks set their own prices on all of their other fees and rates, they charge the same swipe fees together with Visa or MasterCard, MPC maintains. Swipe fees, which have tripled in the past decade, are the fastest-growing expense that retailers face, as well as their second-highest operating fee, after labor costs. The cost of these increased fees is then passed on to consumers in the form of higher prices.
“Visa and MasterCard have a stranglehold on the market,” said Doug Kantor, MPC counsel. “They set the fees in secret, and banks all charge the same thing rather than competing on price. If they price-fixed consumer fees, they would probably go to jail, but because the fee is charged to businesses and hidden, they have managed to get away with it.”
Last week marked the seventh anniversary of the first congressional hearing on swipe fees, before the House Energy and Commerce Committee’s Subcommittee on Commerce, Manufacturing and Trade. Since 2006, 10 hearings have taken place, resulting in major reforms of debit card fees, but little has been done as yet to end the practice of price-fixing credit card fees, according to MPC.
The coalition’s member associations collectively represent about 2.7 million stores, with about 50 million employees.