WASHINGTON D.C. — Right now, families are already dealing with the worst inflation in decades. Some businesses worry they may soon have to raise their prices even higher if credit card companies go through with plans to increase ‘swipe fees.’
In a bipartisan letter, four federal lawmakers stated they believe an increase in these fees would impact small businesses and families that are already dealing with high prices.
The group told specifically Visa and Mastercard to withdraw those plans because “your profits are already high enough.”
“This shows that this is an issue that crosses political lines. This is about the card industry continuing to profit on the backs of Main Street merchants and hard-working American families at a time when they can least afford it,” said Anna Ready Blom, a member of the Merchants Payments Coalition Executive Committee and director of government relations at the National Association of Convenience Stores.
The Merchants Payments Coalition represents retailers, online shops, supermarkets, gas stations and convenience stores nationwide.
The group says swipe fees are the highest operating cost for more small businesses after labor.
“With every dollar of inflation, the fees the merchant pays goes up and what that means for us as consumers is it multiplies the problem with inflation for all of us,” said Doug Kantor, general counsel at the National Association of Convenience Stores. “As fees go up, the merchants have to keep chasing that loss of revenue, and make sure their prices are high enough, so they don’t go out of business.”
A Mastercard spokesperson said the changes will affect a select group of credit interchange rates. The company added that some businesses will notice a decrease in costs.
But some retailers say they aren’t convinced.
“A single store gas station, for example, won’t qualify for the so-called cuts that the credit card companies are talking about,” said Kantor. “And they’ve set it up so that the little business has to know about these cuts, and contact Visa or Mastercard and say, Please let me have these lower rates, they could just cut people’s rates, but instead they want to hide it and use it as a PR tool, rather than actually cutting anybody’s costs.”
A Visa spokesperson said it’s lowering in-store and online consumer credit interchange rates by 10% for many American businesses.
Full statement from Mastercard:
Electronic payments play a critical role every day and have proven even more valuable since the start of the pandemic. And that’s why we’re seeing merchants encouraging their customers to use electronic forms of payment due to the significant value that they receive in return – a safe, convenient experience and a guaranteed payment.
But, let’s be clear – the changes that will be made to a select group of credit interchange rates are the first such changes in more than a decade. Our changes include some increases and some decreases. For example, we’re decreasing costs for all merchants with transactions below $5. As people are living increasingly on-the-go digital lives, we’re looking to help support merchants in providing their customers the best choices and shopping experiences possible.
Full statement from Visa:
Since the start of the pandemic, Visa has taken a series of actions to support American businesses, including a number of reductions in interchange rates since the start of the pandemic. We are now taking an additional step to help U.S. small businesses compete and grow by lowering key in-store and online consumer credit interchange rates by 10% for more than 90% of American businesses.
Visa will also implement previously announced interchange modifications that had been originally planned for April 2020 but were delayed during the pandemic. Any rate increases are largely avoidable and apply to transactions that are sent to Visa with insufficient data, are coded incorrectly, carry increased risk or are processed without using a Visa EMV payment token. These rates are designed to maintain high data quality and integrity across our network to prevent fraud.
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