The National Retail Federation, the nation’s largest retail trade group, is calling on Visa and Mastercard to cancel swipe fee increases as consumers battle skyrocketing inflation.
Both companies are slated to increase swipe fees, or fees imposed on merchants every time a consumer makes a purchase with their credit or debit card, this month after delaying plans last year.
Oftentimes, though, these fees get pushed onto the consumer, Leon Buck, vice president for NRF Government Relations, Banking and Financial Services, told FOX Business.
According to the NRF, these increases “drive up consumer prices, amounting to more than $700 a year for the average American family.”
If swipe fee increases are implemented, Buck said retailers are forced to raise prices on consumers in order to make up for the losses. However, this comes at a time when consumers are already “struggling under the worst inflation in four decades,” Buck said in a statement.
Buck lambasted the move on Tuesday saying Visa and Mastercard, which control 80% of the credit card market, will already get more money this year even if rates stay the same.
“Since swipe fees are a percentage of the transaction, the cards automatically get more money whenever prices go up,” Buck said. “So they’re making billions more this year even without the increase.”
With the rate of inflation at 8.5%, these bank cards will see 8.5% more swipe revenue this year, according to Buck.
Visa has not responded to FOX Business’ request for comment.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Last year, the companies delayed the estimated $1.2 billion in increases, which were slated to take effect in April, due to the economic fallout from the coronavirus pandemic.
Now, the industry is trying to create awareness of this issue in hopes of staving off these increases again amid continued “economic uncertainty, inflation and with COVID,” according to Buck.
Mastercard told FOX Business in a statement that “electronic payments play a critical role every day and have proven even more valuable since the start of the pandemic.”
Still, “the changes that will be made to a select group of credit interchange rates are the first such changes in more than a decade,” according to the company.
Mastercard said it’s decreasing costs for merchants with transactions that are below $5.
“As people are living increasingly on-the-go digital lives, we’re looking to help support merchants in providing their customers the best choices and shopping experiences possible,” the company said.
However, Congress has already sent a letter to Visa and Mastercard asking the companies to withdraw plans to implement the fees.
VISA, MASTERCARD POSTPONE INTERCHANGE RATE HIKE ON MERCHANTS
In the letter, senators from both sides of the aisle argued that raising interchange fee rates “will undoubtedly increase the already high costs consumers are facing and add to inflationary pressure, which is the last thing American families deserve right now.”
Buck hopes the letter “raises the importance of these skyrocketing fees as members of Congress are involved.”
The Associated Press contributed to this report.