The Merchants Payments Coalition recently said that price-fixing by Visa and MasterCard on behalf of big banks has led to the rise in swipe fees, which has negatively affected both consumers and merchants.
While banks establish their own fees, they agree to charge the same amount in swipe fees as Visa and MasterCard. The MPC said that while banks express concern that merchants may reveal the fees to consumers, they hide the swipe fee price-fixing themselves, PYMNTS.com reports.
Swipe fees, which are fees charged to merchants by banks and credit card companies to process credit transactions, have tripled over the last 10 years. The fees are the fastest-growing expense for merchants and account for the second-highest operating fee after labor costs. The fees may also be as high as four percent of the total transaction—the highest swipe fees paid in the industrialized world.
“Visa and MasterCard have a stranglehold on the market,” Doug Kantor, counsel for the MPC, said, according to PYMNTS.com. “They set the fees in secrete and banks all charge the same thing rather than competing on price. If they price-fixed consumer fees they would probably go to jail, but because the fee is charged to businesses and hidden they have managed to get away with it.”