States Need to Make Sure "Nobody Is Swiping Our Lunch"

Merchants refuse to pass constantly growing swipe fees onto customers paying with credit cards even though in most states they are allowed to do so. In today’s highly competitive retail market nobody can afford to push customers away.
 
In many places, like NJ, lawmakers have been very quick to introduce bills that would ban surcharging. In a recent article The Record columnist John Cichowski says such law would be a purely cosmetic fix to a problem that doesn’t exist. It might prevent sellers from adding an additional fee to credit card paying customers’ bills but it doesn’t stop credit card companies from charging merchants pre-set and unreasonably high fees that significantly reduce their profits and force them to raise prices for all customers. In the end, even customers paying with cash end up paying more.
 
To fix the swipe fee market, lawmakers need to look closer at the way those fees are set by Visa and MasterCard and force them and banks issuing the cards to compete for merchants’ business just like retailers compete for a customer.
 
“The people who pay these fees – either directly or indirectly — need lawmakers to dig deeper than cosmetic solutions to make sure nobody is swiping our lunch.” Cichowski says.
 
Read the rest of the article here.

Visa and MasterCard’s Secret Price-Fixing Keeps Swipe Fees Unreasonably High

Last year merchants paid $30 billion in swipe fees. That money could have gone back to the customers in form of lower prices if it weren't for credit card companies and banks that work together to set swipe fees in secret and make them unjustly high. Visa and MasterCard control the market and have all the power to dictate the prices the banks charge retailers when customers use their credit cards. The fee system is complicated and confusing. Merchants have no way of telling how much they will be charged in swipe fees until they get the bill. Visa and MasterCard have up to 240 different types of charges.

“Visa and MasterCard have a stranglehold on the market. They set the fees in secret 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.” said Doug Kantor,  a counsel to Merchants Payments Coalition in MPC latest press release on price fixing and hidden fees.

For more facts on price-fixing read this fact sheet by Merchants Payments Coalition.

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.