Merchants can't survive! Credit card transaction fees are too high. Visa and Mastercard are accused by the US Senate and House of Representatives of being accomplices to inflation.

The U.S. Senate Judiciary Committee held a judicial hearing and targeted Visa and Mastercard. Two credit card companies have been accused of exploiting retailers' "duopoly" and charging excessive "interchange fees," or swipe fees.

Interestingly, both conservatives and liberals believe that the problem of small businesses being charged excessive transaction fees by credit card companies must be addressed. The Democratic and conservative parties jointly formed a committee to combat Visa and Mastercard, and introduced the Credit Card Competition Act, aimed at providing retailers with more diverse payment options to solve the long-standing duopoly of Visa and Mastercard in the credit card market. Currently, most banks in the United States only have specific contracts with Visa or Mastercard, and other payment methods are not accepted by banks, causing Visa and Mastercard to have long-term commercial monopoly in Financial Service, and diluting the profits of merchants, which are taken away by credit card companies.

Visa CEO Bill Sheedy and Mastercard President of the Americas Linda Kirkpatrick raised their hands and took an oath at the Senate Judiciary Committee hearing in Washington, D.C. on November 19, 2024, to accept senators' consultations and negotiate. The purpose of the hearing is to break the duopoly of Visa and Mastercard, and to open up more payment methods and drop transaction fees.

Illinois Democratic Senator Dick Durbin and Republican Senator Roger Marshall are co-sponsors of the Credit Card Competition Act. Senator Dubin said it's a strange combination, even the most conservative right-wing supports taking measures to protect small businesses.

Before the hearing, the National Retail Federation told the committee that excessive transaction fees for credit cards resulted in the need to raise prices for goods, and high credit card transaction fees have added "inflationary pressure" to the U.S. economy.

More than 2,000 retailers and e-commerce companies, including Amazon, Best Buy, Kroger, Shopify, Target, and others, are actively supporting the bill in the hope of its passage.

Senator Dick Durbin said that in 2023 alone, Visa and Mastercard collected over $100 billion in fees from merchants, most of which were Swipe Fees.

The National Retail Federation has written to the Judiciary Committee ahead of the hearing to say that the high fees retailers pay for credit card transactions mean higher costs for consumers. The Credit Card Competition Act would bring fairness and transparency to the payment system and help both American businesses and consumers.

Visa and Mastercard agreed in March to settle for $30 billion and reduce Swipe Fees by 4 basis points over three years, but a federal judge rejected the settlement in June, believing that the credit card companies are capable of paying more.

What are Swipe Fees (Interchange Fees)

Whenever customers use their credit cards for shopping, the company's account of the retailer will be charged a Swipe Fee, ranging from 2% to 3%, by the credit card company. This fee is the retailer's 'hidden expense', and the retailer usually cannot estimate how much of their revenue is taken by the bank and credit card companies until they receive the bank statement.

This article merchants can't survive! The credit card transaction fee is too high. Visa and MasterCard are accused by the US Senate and House of Representatives of being accomplices to inflation. First appeared on Chain News ABMedia.