Congress should better control swipe fees

Krista and Nicholas Marshall


As a merchant who sees my pocket picked every day by Visa, Mastercard and the big banks, I strongly believe it’s time for Congress and the nation’s banking regulators to do something about the growing problem of “swipe” fees.

The term “swipe” fee comes from the days when credit cards were swiped on a card reader instead of inserted or tapped. But the U.S. card industry still “swipes” about 2 percent of the transaction amount every time a credit card is used. That’s the highest rate in the industrialized world and seven times the amount allowed in Europe.

These fees add up quickly, amounting to almost $100 billion a year nationwide, up from less than $20 billion two decades ago. They are most retailers’ second-highest cost after labor and drive up prices paid by the average family by hundreds of dollars a year.

Banks charge swipe fees to cover their cost of processing card transactions. But with improving technology, those costs are a fraction of what they once were and the fees have become a huge profit center instead.

The amount collected has soared because of lack of competition. Visa and Mastercard set fees that are followed in lockstep by virtually every bank that issues their cards – a practice legal experts say is a violation of antitrust law. And transactions on Visa and Mastercard credit cards can only be processed over their own respective networks, unlike debit cards that can be processed over a dozen competing networks.

Banks and card networks don’t want anyone to know about the cash cow they have with swipe fees. They are making misleading claims that are long on scare tactics and short on facts. Hopefully, the lawmakers we have sent to Washington will see through that bluster and finally do something about these soaring fees by making the card industry compete like any other business.


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