National Grocers Association (NGA) President and CEO Greg Ferrara wrote a letter to U.S. Senate Majority Whip Dick Durbin (D-IL), U.S. Sen. Roger Marshall (R-KS), and U.S. Reps. Peter Welch (D-VT) and Beth Van Duyne (R-TX) to thank them for their bipartisan, bicameral efforts to urge Visa and Mastercard to forego planned April 2022 swipe fee rate increases on merchants.
Ferrara also called on Congress and the Biden administration to address the market failures and lack of competition that have allowed the card networks to profiteer off of American consumers and Main Street businesses.
According to the Nilson Report, independent grocers and merchants paid more than $100 billion in swipe fees to accept credit cards in 2021. Visa and Mastercard’s anti-competitive duopoly has allowed these networks to increase swipe fees annually for decades without any ability for grocers or other Main Street businesses to affect those costs.
“Independent grocers do all they can to absorb swipe fees. The competitive nature of the grocery industry demands this but absorbing these out-of-control increases is simply not sustainable for any businesses, especially small businesses. This means that some amount gets passed on to consumers in the form of higher prices. Whether they have a credit card or not, the average American family already pays more than $700 per year in swipe fees,” Ferrara wrote.
“Your letter to the card networks echoes the concerns that independent grocers have been hearing for months now from consumers within the communities they serve. Food inflation is at a 40-year high, and one of the most frequent places that Americans notice these price increases is at the grocery store. When both the supply chain and local communities face increased costs, the last thing grocers or their customers need is swipe fee hikes.”
Ferrara noted that swipe fees in the United States are higher than in any other country in the industrialized world. “Independent community grocers and wholesalers support your efforts and call on Congress and the Biden administration to follow in your footsteps to address the failures of the broken card payments market,” he wrote.
If fee increases go into effect, Mastercard and Visa will charge around 0.05 to 0.10 of a percentage point extra to merchants when consumers pay with credit cards.
The fees go to the bank that issued the card.
Though mostly invisible to shoppers, interchange fees have been a consistent thorn in the side of merchants, especially as they have seen their costs go up in recent years amid the popularity of rewards credit cards, which often come with higher fees to offset the cost of benefits, such as travel rewards, the National Small Business Association said.
Swipe fees mean merchants receive less than 98 cents on the dollar when customers pay by credit card, and merchants must set prices higher to make up for the loss.