The Merchants Payments Coalition said recently that if the European Commission passes a proposal to cap credit and debit swipe fees, the cost difference between swiping a card in the U.S. and in Europe will be even higher.
The European Commission has proposed to cap credit card interchange fees at 0.3 percent and debit swipe fees at 0.2 percent for EU member states. The MPC said the U.S. should follow the EU’s lead.
“Credit card companies and their issuing banks are ripping off not only merchants but consumers as well with swipe fees eight times higher in the United States than in Europe and other countries,” the coalition said. “The sad truth is the credit card industry is charging more in the U.S. simply because they are allowed to price-fix the fees here.”
The MPC said credit card swipe fees are the second highest expense for merchants, adding that slim profit margins make it nearly impossible for merchants to absorb the expense.
“Consequently, some portion of the fees is passed down to consumers who end up paying more for goods and services, even if they pay by cash or check,” the coalition said. “Swipe fees have tripled in the U.S. in the past ten years, generating around $50 billion in fees for banks annually, when the actual cost of card transactions has been falling due to technological advances. Meanwhile, Visa and MasterCard control 80 percent of the marketplace and are allowed to set the fees in secret with no accountability for competitiveness and transparency.”