A Good Lesson for the U.S.: Europe Votes to Slash Credit and Debit Card Fees to Less than a Seventh of What American Merchants Pay
Washington, D.C. (April 3, 2014)—American merchants, gouged by banks on exorbitant credit- and debit-card fees, applaud the European Union for Thursday voting to cap card fees at a seventh of what U.S. retailers pay their banks.
The European Parliament approved a 0.3 percent cap on the “swipe” fee paid by merchants when a customer uses a credit card.
In the U.S., by contrast, Americans pay the highest swipe fees in the world, between 2 and 4 percent per transaction, or between $2 and $4 on every $100 worth of groceries, gasoline and everything else they buy.
The actual cost to the bank is a few pennies, which means a huge windfall for the banks.
Members of Parliament also put a seven-Euro-cents cap (a dime in U.S. currency) on debit card transaction, or 0.2 percent of the transaction value, whichever is lower.
For U.S. debit cards the banks in the U.S. can charge almost a quarter, which means Americans also pay the highest debit-card swipe fees in the world.
“European merchants and consumers will benefit from the vote for years to come,” said Douglas Kantor, counsel to the Merchants Payments Coalition, a national group of retailers that opposes these outrageous swipe fees. “For too long, Visa and MasterCard have centrally fixed fees that their banks charge and that has cost people throughout the world billions.
“European Union regulators and Parliament have worked hard for years to understand the problems that price-fixed swipe fees cause and to find real-world solutions. The United States should learn from their example.”
Because Visa and MasterCard fix swipe fees in secret without competing, their fees have tripled in the past decade in the U.S. Swipe fees have metastasized to become for many Main Street merchants their second-highest operating cost after labor and before rent and utilities, choking hiring and expansion.
The European Commission, the executive branch of the European Union, wrote the legislation to protect consumers who, the commission said, wound up paying the higher fees (just as American consumers do.)
The commission estimates the caps will cut European swipe fees in half when the law becomes final after the 28 European Union countries ratify it, which news service Agence France Presse reported is expected soon.
The European Parliament also voted to make the card business more transparent, so that consumers can see how much they pay in swipe fees in the form of higher prices in stores.
For more information about unfair credit-card swipe fees, go to the Merchants Payments Coalition website: http://www.unfaircreditcardfees.com/
The Merchants Payments Coalition - UnfairCreditCardFees.com - is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees.
Contact: Michael Flagg / 202 253-4164 / .(JavaScript must be enabled to view this email address)