Visa Lowers Swipe Fees in Europe But Stiffs US Merchants & Consumers

Billions of dollars are paid each year in swipe fees, and merchants accepting credit cards and paying the fees are not the only victims. We all cover the cost of credit card fees in the form of higher prices. There’s no competition in the U.S. swipe fees market, and all banks agree to charge the same amounts dictated by credit card companies. Nobody is stopping Visa or MasterCard from this price-fixing, which results in fees that are outrageously and unjustifiably high.

Now we learn that Visa Europe has proposed lowering swipe fees in Europe by 40% to 60%. This significant reduction would bring Visa’s fees down to only 0.3 percent of every purchase and would be very beneficial to European merchants and consumers.

So, why should U.S. merchants and consumers pay up to 4 percent of a purchase to swipe credit cards? What's different from U.S. purchases and Europe purchases?

Nothing.

Fees in U.S are eight times higher than existing European rates. Americans pay the highest fees in the world but while other countries took measures to limit the fees, in U.S. a credit card swipe fee reform is still desperately needed.

In the latest press release by the Merchants Payments Coalition, Dough Kantor, group’s counsel, says:

“European regulators are holding Visa’s feet to the fire for their outrageous swipe fees – even though the fees in Europe are a tiny fraction of what they are in the United States. There is no reason for rates to be as high as they are. This should be a wake-up call that credit card swipe fee reform is long overdue here.”

You can read the entire release here.

Why Visa/MC Settlement Didn’t Fix Swipe Fee Problem

There’s no need for consumers to worry about swipe fees being pushed onto them by retailers just because Visa/MasterCard antitrust settlement allows merchants to do so in some states, says consumer advocate Ed Mierzwinski at the U.S. Public Interest Research Group in an article. He says the “checkout fee” or surcharge would be a sure way for business owners to lose customers, and they definitely don’t want this to happen.

The settlement has not fixed the broken swipe fee market, Mierzwinski argues. Merchants don’t think it’s fair to punish their customers for using a credit card and they will continue footing extremely high credit card fee bills.

Mierzwinski explains that the $6 billion payout in the settlement is a drop in the bucket compared to the amount retailers pay in swipe fees, especially since the settlement does not prevent Visa and MasterCard from raising the fees.

Moreover, it took away merchants’ right to ever sue the credit card companies over the fees or any payment technologies, even those that are not being used yet, no matter how unjust or illegal they might be. This gives Visa and MasterCard even more power in a market they already control.

Read this article by Ed Mierzwinski, Consumer Program Director at the U.S. Public Interest Research Group to find out more about why the settlement did not fix the swipe fee problem.