An agreement made in Canada to lower credit card “swipe” fees shows that the fees could be reduced in the U.S. as well, according to the Merchants Payments Coalition (MPC)
“If Visa and Mastercard can afford to reduce their swipe fees in Canada, there’s no reason they can’t do the same here,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “U.S. merchants and their customers pay twice as much as Canadians and seven times as much as Europeans. It doesn’t make sense that the country that invented the credit card and is home to the two largest card networks on the planet has the highest swipe fees in the industrialized world. It’s time for Congress to act and at least bring competition to U.S. swipe fees.”
The Canadian Department of Finance announced a deal with Visa and Mastercard that will lower the average fee to process most in-store credit card transactions to an average of 0.95% from the current 1.4% average. The move is expected to save Canadian merchants $1 billion over five years and “make credit card transactions fairer for small businesses,” the government said in a news release. Canada is the latest government to address swipe fees, which the European Union capped at 0.3% for credit cards and 0.2% for debit cards in 2015.
By comparison, swipe fees for Visa and Mastercard credit cards average 2.24% in the U.S. and can be as high as 4%. U.S. credit and debit card swipe fees have more than doubled over the past decade and soared 17% last year alone to a record $160.7 billion. They are most merchants’ highest operating cost after labor and drive up consumer prices by more than $1,000 a year for the average U.S. family.
Visa and Mastercard currently control 80% of the market. They price fix the swipe fees charged by U.S. banks that issue cards under their brands rather than the banks competing to offer merchants the best deal, according to MPC, and block competition by restricting processing to their own networks.
The Merchants Payments Coalition represents retailers, supermarkets, convenience stores, gasoline stations, online merchants and others fighting for a more competitive and transparent card system that is fair to consumers and merchants.
