U.S. Senate Committee To Examine Anticompetitive Practices By Credit Card Industry
The U.S. Senate Judiciary Committee will hold a hearing May 4 on anticompetitive practices by the credit card industry that have led credit card “swipe” fees to more than double over the past decade and are driving up prices as consumers face near-record inflation.
The announcement comes less than two weeks after Durbin, Senator Roger Marshall (R-KS); Representative Peter Welch (D-VT), and Representative Beth Van Duyne (R-TX), wrote to Visa and Mastercard asking that they withdraw $1.2 billion in credit card swipe fee increases set to take affect this month.
Credit card swipe fees are still hidden and centrally fixed by the card companies. Fees have more than doubled over the past decade despite technological improvements that have driven down processing costs.
The rates charged to U.S. retailers are among the highest in the world, seven times the maximum allowed in Europe.
In 2019, card processing fees totaled $116.4 billion, according to the Nilson Report. That was up 88 percent over the previous decade. Additionally, swipe fees are the second highest operating cost for convenience store retailers.
In 2019, the industry’s pre-tax profit was $11.9 billion and card fees paid by the industry were $11.8 billion.
For small business energy marketers, swipe fees are the highest expense other than payroll. Because swipe fees are a percentage of the purchase, the amount collected goes up as prices go up, creating a multiplier effect for inflation and giving the card industry an unearned windfall even if rates stay the same.