Retailers Say Hearing Will ‘Focus a Spotlight’ on Credit Card Swipe Fees That Add to Inflation

"This hearing will focus a spotlight on constantly rising fees and unfair practices that show clear disregard for small businesses and American families."

NRF Vice President Leon Buck

WASHINGTON – The National Retail Federation said a Senate Judiciary Committee hearing announced today will give Congress an opportunity to closely examine anticompetitive practices that are adding to inflation through billions of dollars in “swipe” fees charged to process credit card transactions.

“This hearing will focus a spotlight on constantly rising fees and unfair practices that show clear disregard for small businesses and American families,” NRF Vice President for Government Relations, Banking and Financial Services Leon Buck said. “Visa and Mastercard have price-fixed swipe fees for years and have repeatedly moved to block any innovation or fair play that threatens their hold on the payments market. Their fees have more than doubled in the past decade. and just last week they pushed through another billion-dollar increase that will make inflation even worse. Lack of competition is why swipe fees keep skyrocketing, and it’s good to see Congress demanding answers that will lay the groundwork for a solution.”

The May 4 hearing announced today by Judiciary Committee Chairman Richard J. Durbin, D-Ill., comes after Visa and Mastercard pushed through a $1.2 billion increase in swipe fees last Friday. The hike came despite a letter sent earlier this month by Durbin, Senator Roger Marshall, R-Kan.; Representative Beth Van Duyne, R-Texas, and Representative Peter Welch, D-Vt., asking Visa and Mastercard to withdraw the increase. The letter said the card networks are “simply taking advantage of vulnerable Americans” and that raising fees “will undoubtedly increase the already high costs consumers are facing and add to inflationary pressure.”

Visa and Mastercard, which control 80 percent of the U.S. credit card market, centrally price-fix the swipe fees charged by banks that issue their cards despite ongoing litigation claiming the practice violates federal antitrust law. They don’t allow credit card transactions to be processed over competing independent networks that could do the job more securely and at lower cost. And recent rule changes would put financial pressure on merchants to use proprietary services from the two networks even if they prefer to use services from competitors.

Swipe fees average 2.22 percent of the transaction amount for Visa and Mastercard credit cards and are most merchants’ highest operating cost after labor. The fees drive up consumer prices, amounting to more than $700 a year for the average American family. As a percentage of the transaction, they go up as prices go up, creating a multiplier effect for already-soaring inflation.

With little to hold them in check, swipe fees have been climbing for years, and the amount charged for Visa and Mastercard credit cards reached a record high of $77.5 billion in 2021, up 25 percent in one year alone and up 180 percent over the previous decade, according to the Nilson Report. Swipe fees for all types and brands of cards totaled $137.8 billion last year, more than double over 10 years, according to Nilson.

About NRF
The National Retail Federation, the world’s largest retail trade association, passionately advocates for the people, brands, policies and ideas that help retail thrive. From its headquarters in Washington, D.C., NRF empowers the industry that powers the economy. Retail is the nation’s largest private-sector employer, contributing $3.9 trillion to annual GDP and supporting one in four U.S. jobs – 52 million working Americans. For over a century, NRF has been a voice for every retailer and every retail job, educating, inspiring and communicating the powerful impact retail has on local communities and global economies.