The hope is that the European Union’s action will influence U.S. policy makers as well.
According to a report from the Merchants Payments Coalition, European merchants and consumers will now see some relief from the exorbitant fees paid to the credit card companies and banks to process debit and credit card transactions. This relief from such fees will help retailing prosper and save consumers a lot of money.
Visa and MasterCard dominate the European market and have fixed the prices that banks charge retailers to process the transaction when a customer swipes a card.
The 28 countries of the European Union (EU) concluded that Visa, MasterCard and their banks were gouging consumers and merchants. The EU made the market more open and competitive, including setting a maximum “swipe fee” of 0.2% on debit cards and 0.3% on credit.
Americans, by contrast, can pay as much as a dozen times more, or 4%, in swipe fees on their credit cards. The U.S. has the highest swipe fees in the industrialized world.
“The EU’s just and thoughtful action should spur policymakers in the U.S. to take a closer look at these bloated fees which, without competition, just keep growing,” said Lyle Beckwith, a senior vice president at NACS, the National Association of Convenience Stores, and a member of the Merchants Payments Coalition. “We applaud the EU for standing up to the credit-card giants who continue to fleece American merchants and consumers.”
A bank, for instance, might charge a grocery store that sells $100 worth of groceries as much as $4 off the top if the customer uses a credit card. Now, that same transaction will cost the grocery store 30 cents in Europe.
Swipe fees increase the cost of everything from dinner in a restaurant to gasoline. On average, these fees are merchants’ second-largest operating cost, after labor. They are also the fastest-growing cost merchants face, growing faster than health-care costs.