WASHINGTON — You may not know it but when you swipe your credit card, it comes at a cost to business owners.
It’s called an interchange fee and companies pay it to banks so you can use credit cards to buy goods and services.
But small business owners say these fees have gotten way too high.
“Visa and Mastercard effectively control over 80% of the market and they are the only vendor with which we cannot negotiate with and it’s a ‘take it or leave it’ proposition, ‘’ said Laura Shapira Karet, chair and CEO of Giant Eagle Inc.
Some small businesses say swipe fees are their highest expense after labor and rent.
They believe more credit card competition could make Mastercard and Visa lower their fee prices.
“People have more money in their pockets when there’s competition and lower prices they can spend more and that consumer spending helps drive the economy,” said Doug Kantor, general counsel for the National Association of Convenience Stores.
This hearing comes after a bipartisan group of lawmakers urged those credit card companies not to increase fees last month because it would negatively impact small businesses.
The top executives from Mastercard and Visa told federal lawmakers they aren’t just competing with checks and cash anymore.
“We also compete today with digital wallets, ‘buy now pay later’ solutions, fintech and big tech, real-time payment systems and crypto-currency,” said Bill Sheedy, senior advisor to the chairman at Visa Inc.
Mastercard and Visa say they don’t make any money off these interchange fees and they say setting this fee rate is a balancing act.
“We are incentivized to create balance between all stakeholders both merchants and banks, if we set interchange fees too high, merchants won’t accept. If we set interchange fees rates too low, banks won’t issue,” said Linda Kirkpatrick, president for Mastercard North America.
Some lawmakers want credit card companies to become more transparent with customers about interchange fees.
This includes showing how much is spent on those fees in a customer’s monthly statement.
“Maybe if consumers knew how much of their cards were costing their favorite restaurants and retailers they’d used less costly cards,” said Sen. Dick Durbin, (D) Illinois.
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