Source: CSA
March 19, 2021
Visa and Mastercard’s decision to delay an estimated $1.2 billion increase in credit card interchange fees was cheered by the retail industry, which wants the companies to cancel the planned increase altogether.
Visa and Mastercard postponed a complex restructuring of credit card swipe fees that was set to take effect in April 2020 to April 2022. The plan includes higher fees for the card networks’ most prominent programs and for many online transactions, with estimated increases of $768 million a year for Visa and $383 million for Mastercard, according to payments consulting firm CMSPI. The National Retail Federation applauded the delay, but said increase should really be canceled altogether.
“This increase would have hit virtually all merchants at a time when they could least afford it, and we were particularly concerned by higher fees for online transactions when so many retailers have relied on e-commerce to get through COVID-19,” stated NRF VP for government relations, banking and financial services Leon Buck. “The only thing good about this increase is that it has focused the attention of Congress on the market power of Visa and Mastercard.”
Senate Judiciary Committee Chairman Dick Durbin, D-Ill., and Representative Peter Welch, D-Vt., asked Visa and Mastercard earlier this month to cancel the increases, saying they would “undermine efforts to help the economy recover.” Last week, Durbin said at an antitrust hearing that the increases were an attempt to “get even” for earlier congressional action on swipe fees.
Processing fees vary according to type of card and transaction and size of merchant, but average 2.25% of the purchase price for Visa and MasterCard credit cards, according to the Nilson Report. The fees have more than doubled from $25.6 billion a year in 2009 to $67.6 billion in 2019 for Visa and MasterCard credit cards alone, according to Nilson. Overall processing fees paid by U.S. merchants to accept all card payments totaled $116.4 billion in 2019, up 88 percent since 2009.