Eye on RETAIL: 'Swipe fee' blowback

NRF claims that credit and debit card swipe fees can cost retailers and customers more than $170 billion per year—and that these charges can drive up consumer prices by over $1,000 a year. As you might imagine, the terms, rules and implementation of these fees has been extremely contentious, and there is legislation in the works designed to lower swipe costs and increase competition among credit cards and banks. The battle of swipe fees also led to “the largest private antitrust class-action settlement in history.” 

However, this week, a judge has rejected that settlement—which NRF believes is the right call, as it didn’t address the root problems of the U.S. payment ecosystem. Namely, Visa and Mastercard charging too much for credit and debit card use.

“This settlement was never agreed to by the retail industry as a whole and would have done nothing to end anticompetitive practices and fix our nation’s broken payments market,” NRF chief administrative officer and general counsel Stephanie Martz said in a news release. “The proposed reduction in swipe fees was tiny and temporary and ignored the underlying issue of how these fees are centrally set rather than allowing banks to compete to offer the best rates,” she added.

From NRF’s view, any sort of agreement should address the issue of Visa and Mastercard essentially setting the rules of the game and deciding how much of a cut they get from each swipe. Those two companies alone charged U.S. merchants over $100 billion in swipe fees in 2023. And with the current average swipe fee being 2.26% of the transaction price (per NRF’s estimation), those numbers will continue to soar.

Congress could change the rules of the swipe fee game by passing the Credit Card Competition Act., a move promoted by the NRF.