Rein in the power of Visa, Mastercard

Proposed law would stop companies from fee-ing consumers, businesses into despair

AS MASSACHUSETTS RESIDENTS face higher and higher costs of living and stubbornly high prices for gas, food, beverages, and other staple items, a bi-partisan coalition of senators is looking to give consumers and small businesses some much-needed relief.

The Credit Card Competition Act would stop Visa and Mastercard from exacerbating inflation and hurting small business operators by reining in predatory swipe fees that are among the highest in the world. Americans pay more than double what Canadians pay in credit and debit purchase fees and seven times more than consumers in Europe. The two credit card conglomerates have a duopoly in the retail industry, cashing in on extra fees that force retailers to hike prices to cover ever escalating costs.

Swipe fees paid by store merchants soared 17 percent in 2022 to $160 billion, and cost families on average $1,000 per year, all while the credit card companies raked in more than $25 billion in net profits. Visa Chief Financial Officer Vasant Prabhu recently boasted on an earnings call with stockholders that inflation has been a “positive” for the credit giant.

These oppressive fees force retailers to increase prices as Visa and Mastercard set the rate, without any negotiation. The Credit Card Competition Act would stop these conglomerates from fee-ing consumers and small business owners into financial despair. It would drive down the cost to merchants and lead to lower prices at the pump and in grocery and convenience stores.

Our industry is made up of small business owners, many of whom are immigrants, and more than 60 percent who are single store operators. These are not wealthy corporations, they are our neighbors and friends and they’re being squeezed relentlessly by over-regulation and constantly escalating costs of insurance, utilities, taxes, and fees. This legislation is one simple step that Congress can take to throw these entrepreneurs and job creators a lifeline – especially as they face historic inflation – and show consumers that their hard-earned dollars matter.

These non-negotiable, non-transparent swipe fees average 2-3 percent of purchases for Americans, while Europeans pay only a tenth of that at roughly .2-.3 percent. The US fees are five times higher than in China.

Worse is that the fees are set by Visa and Mastercard in secret, without public input, and thrust onto banks. They are anti-competition, violate antitrust laws, and harm merchants and owners.

Retailers have no choice but to accept the terms set by Visa and Mastercard, which control roughly 83 percent of all credit card volume in the United States. Overall, card fees paid by the convenience store industry were up 44 percent last year and 82 percent in 2022. For many retailers, the cost of these fees is higher than their rent and utilities and represents their second highest cost, after only labor. Where does it end?

There are more than 150,000 convenience stores in the United States with annual sales of more than $900 billion. Driving these costs down would be an immediate stimulant to the economy.

The Credit Card Competition Act would improve cybersecurity by requiring the largest US banks that issue Visa or Mastercard credit cards to allow transactions to be processed over at least two unaffiliated card payment networks, creating a safety net for our cashless system and providing protection from massive hacks or payment outages. It would also close a security gap by barring networks run by foreign governments, such as China’s UnionPay, from operating in the US.

Meet the Author

Peter Brennan

Executive director, New England Convenience Store & Energy Marketers Association
We stand with our partners at the National Association of Convenience Stores in calling on every member of Congress to vote to rein in costs for small businesses by eliminating these hidden fees. Doing so, will allow Americans to keep a few more dollars in their own pockets, at a time when they need it most.

Congress is set to vote on this important consumer relief package soon, and Sens. Ed Markey and Elizabeth Warren have the chance to be on the right side for consumers. We in the convenience store industry urge our senators to vote in favor of the bill and stop credit card companies from predatory fees that are driving up costs, hurting businesses, and making life more expensive for their constituents.

Peter Brennan is executive director of the New England Convenience Store and Energy Marketers Association.