Swipe fees

by David Klemt David Klemt No Comments

Merchants Support Credit Card Act

100s of Merchants Support Credit Card Competition Act

by David Klemt

Customer paying via Square terminal

Perhaps at least somewhat unsurprisingly, support for the Credit Card Competition Act is growing rapidly among merchants.

In fact, 1,802 merchants are making their position on the bill clear. Those hundreds of merchants drafted, signed, and set a letter to the House and Senate.

The crux of that letter? To tell our lawmakers to support and pass the Credit Card Competition Act.

To view the letter, sent by the Merchants Payments Coalition (MPC), please click here. For the bill and its status, follow this link.

The Credit Card Competition Act: A Quick Summary

According to the MPC, credit and debit card transactions just in the US reached $3.49 trillion in 2021. Along with those transactions came $77.48 billion in merchant fees—just for Visa and MasterCard.

Why call those out those two processors in particular? Well, it’s because they’re behind about 576 million credit cards. Oh, and they also control 87 percent of the processing market.

In the span of just one decade, Visa and MasterCard swipe fees have risen 137 percent. So, it’s not surprising that merchants are supportive of the Credit Card Competition Act.

There are, indeed, restaurant and hospitality groups attached to the MPC’s letter to Congress. Taking a quick glance, Denny’s franchisees, Dutchman Hospitality Group, and Mandalay Hospitality Group are among the signees.

Obviously, this makes sense—swipe fees are among the highest costs operators face every day.

Where’s this Bill Currently?

It shouldn’t be too shocking to find that this has yet to make much progress. The bill’s sponsors, Sens. Richard Durbin (D-IL) and Richard Marshall (R-KS), introduced it in the senate at the end of July.

Three months later, October 28, an attempt was made to include the bill in the National Defense Authorization Act (NDAA). For those who are unfamiliar, the NDAA is known as a “must-pass” bill. After all, it specifies the US Department of Defense’s (DoD) budget and expenditures each year.

Along with a reported 900 other “riders,” Sens. Durbin and Marshall tried to get their bill passed within the NDAA. Unfortunately for the senators and supporters of the bill, the NDAA vote was pushed until the middle of November…which we’re now past.

Of course, the US did just undergo a mid-term election cycle. So, I suppose it’s reasonable to be a bit more patient with the Senate and the progress of this bill.

Those who work in or support our industry can make their opinion of this bill known. Just follow this link to the National Restaurant Association Credit Card Competition Act portal.

Image: Clay Banks on Unsplash

by David Klemt David Klemt No Comments

Swipe Fees Cost Over $77 Billion in 2021

Swipe Fees Cost Merchants Over $77 Billion in 2021

by David Klemt

Close up of stack of credit cards

A bill that intends to lower the credit card fees merchants pay by creating more competition within the industry is before Congress.

This bill, the Credit Card Competition Act of 2022, has bipartisan support. The two sponsors behind it are Sens. Richard Durbin (D-IL) and Richard Marshall (R-KS).

Of particular note, the bill seeks to amend the Electronic Fund Transfer Act. Specifically, the amendment targets the networks that merchants use to process electronic credit card transactions.

In short, banks that issue credit cards would have to merchants at least two processing networks. According to experts in this space, the bill prohibits banks from making those networks Visa and MasterCard.

Billions in Fees

So, why are Visa and MasterCard in the crosshairs of this bill?

According to the Merchants Payments Coalition (MPC), Visa and MasterCard control 87 percent of credit (and debit) card markets. Per the MPC, Visa and MasterCard account for about 576 million credit cards.

In the U.S. alone, transactions amounted to $3.49 trillion in 2021. Eye-wateringly, those transactions were accompanied by $77.48 billion in merchant fees for the two processing behemoths in the same year.

For additional context, Visa and MasterCard swipe fees totaled $61.6 billion in 2020. That represents an increase of 137 percent over the decade prior. Adding the merchant fees for all cards, the 2020 total was $110.3 billion, which is an increase of 70 percent from the previous ten years.

As veteran operators are well aware, swipe fees are among the highest costs for restaurants and bars.

Merchants Payments Coalition Sends Letter to Congress

Compellingly, the MPC is urging Congress to investigate the Visa-MasterCard duopoly. In their view, the two processors’ dominance is stifling competition; harming business owners and consumers; and contributing to inflation.

“The two giant card networks and their partner mega-banks routinely use their market power to stifle competition and charge merchants the highest swipe fees in the industrialized world,” reads the MPC’s letter to Congress.

Further, the letter states, “It is difficult to imagine any other market in the U.S. economy in which two entities set prices for thousands of businesses that should be competitors. That lack of competition or downward pricing pressure has resulted in out-of-control swipe fees and increases inflation throughout the economy.”

The MPC is urging Congress to act quickly and effectively: “It is crucial for Congress to act swiftly and implement real reforms to bring true competition, transparency and equity to the U.S. payments market.”

National Restaurant Association Supports the Bill

Interestingly, the National Restaurant Association says they’re working with the MPC.

The NRA is also working with other organizations to drum up support for the the Credit Card Competition Act of 2022.

You can read about their support for the bill on their website. Additionally, you can tell Congress to pass the bill here. As it stands currently, no action beyond the bill’s introduction to the Senate on July 28 has taken place.

Image: Pixabay

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