This week, American Express reached a settlement agreement with businesses that will allow merchants to surcharge customers who pay with the company’s cards. While American Express is touting this as a “win” for merchants since it gives them the ability to lower their costs by adding a “checkout” fee, the settlement actually does precious little to address the root of the problem: the skyrocketing cost of the swipe fees themselves.
Right now, swipe fees cost merchants and consumers upwards of $50 billion a year. This new settlement does nothing to rein them in and doesn’t begin to address the secrecy in which they are set. Moreover, merchants will not be eager to tack on this fee and create a two-tier payment system in which customers paying by credit will be charged more than those paying with cash. The potential consumer backlash could drive customers away and as merchants scramble for business in this fragile economic environment, it’s hard to fathom that they would take such a big risk.
This settlement does not do anything to fix a payments market that is fundamentally broken. All it does is ensure that the status quo will remain in tact and merchants and consumers will continue to feel the pinch.
Below is a statement by the Merchants Payments Coalition in response to American Express' announcement.
“This agreement is a tragic mistake that will hurt merchants and their customers,” MPC Chairman and National Retail Federation Senior Vice President and General Counsel Mallory Duncan said. “The settlement does nothing to lower credit card swipe fees while making sure the fees will continue to be hidden from consumers and that the big credit card companies can continue to fix prices without competition. The result is that swipe fees will continue to be the fastest-growing expense for merchants and that consumers will keep paying overinflated fees without even knowing it.”
To read more about the settlement, read here.
No comments:
Post a Comment