July 29, 2022
Retail organizations have come out in favor of new legislation that would allow retailers and other merchants to choose which companies process credit card transactions. There “Credit Card Competition Act 2022introduced yesterday by Senators Dick Durbin (D-IL) and Roger Marshall (R-KS), if passed, promises to open up the payment processing market and remove barriers that retailers have long maintained. to higher prices for them and their customers.
The Association of Retail Industry Leaders (RILA), which represents the largest retailers in the United States, spoke out in favor of the legislation.
“For too long, Visa and MasterCard, along with Wall Street’s biggest banks, have robbed American consumers and main street businesses with interchange fees,” said Austen Jensen, executive vice president of business. of RILA, in a press release. “It was abundantly clear earlier this year when Visa and MasterCard chose profits over American families when they raised interchange rates during the highest inflation in more than forty years.”
The National Trade Federation (FRN) also expressed his support.
“Processing credit card transactions shouldn’t be limited to two companies when there are a dozen that can do the job just as well,” said Leon Buck, NRF vice president for relationships. government, banking and financial services. “Routing choice has saved retailers and their customers billions in the debit card market and can do even more in the much larger credit card market.”
NACS, which represents convenience stores and gasoline retailers, added its support. The organization said the average “swipe fee” was 2.25% of the transaction price when processed by Visa and Mastercard. That’s seven times more than retailers in Europe pay and five times more than those in China.
“While our retailers can negotiate the cost of other goods and services in their stores, they are powerless when it comes to negotiating with the credit card industry,” said Anna Ready Blom, director of government relations. , NACS.
MFIwho represents grocery retailers, adds to those describing the negative effects of card processing fees on their businesses and the customers they serve.
Jennifer Hatcher, the IMF’s public policy director and senior vice president for government relations, said swiping fees “represent the largest operating costs for many retailers after labor,” which poses a a challenge for “an industry that has historically operated with profit margins of 1-2%.
DISCUSSION QUESTIONS: Will the “Credit Card Competition Act of 2022” result in lower swipe fees for retailers? What do you think most retailers will do if their processing fees go down?
“The card processing fees are outrageous. Hopefully the effort to increase competition won’t be undone by senators who appreciate the big two’s campaign contributions.”