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The Senate Judiciary Committee held a hearing this week after Visa and Mastercard in late April enacted a $1.2 billion increase in swipe fees for credit and debit cards.

FMI, NGA, NRF speak out against higher swipe fees in Senate testimony

Giant Eagle’s Laura Karet says chain has been ‘paying higher and higher fee costs’

Grocery trade groups FMI-The Food Industry Association (FMI) and the National Grocers Association (NGA), along with the National Retail Federation (NRF), this week blasted a hike in credit/debit card interchange fees by Visa and Mastercard in testimony for a U.S. Senate Judiciary Committee hearing.

The May 4 hearing, titled “Excessive Swipe Fees and Barriers to Competition in the Credit and Debit Card Systems” and convened by Judiciary Committee Chairman Richard Durbin (D., Ill.), came after Visa and Mastercard instituted a $1.2 billion increase in so-called “swipe” fees in late April. The card issuers had postponed the fee changes over the past two years amid the economic disruption caused by the pandemic.

FMI Vice Chair Laura Karet, president and CEO of Giant Eagle, testified to the committee that higher swipe fees are exacting an rising financial toll on her supermarket chain and its customers. She also called for more competition in the credit card arena.

“Visa and Mastercard together control 85% of the market. On April 22, 2022, both Visa and Mastercard increased the fees retailers pay, and they also created new categories of fees. Every bank that issues credit and debit cards adopted these fee increases without deviation or exception. In my estimation, this cannot possibly comply with either the letter or the spirit of our nation’s antitrust laws,” Karet explained. “This latest price increase fits the pattern we have seen for years. Giant Eagle has been paying higher and higher payment fee costs.”

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'This latest price increase fits the pattern we have seen for years,' FMI Vice Chair and Giant Eagle CEO Laura Karet told the Senate committee.

At Giant Eagle, electronic tender sales — including credit, debit, open-loop gift cards, SNAP, fleet cards, and various online and emerging tender types — represent about 82% of sales transactions, according to Karet. Of those, 37% are Visa and Mastercard transactions, but the two issuers account for over 62% of the grocer’s total card processing fees, up from 57% four years ago. At the same time, Visa and Mastercard sales as a percentage of Giant Eagle’s overall sales have declined about 2%, she said. Giant Eagle estimates that, with last month’s swipe fee increases, the retailer and its customers will be paying another $1.3 million to use Visa and Mastercard cards.

“Visa and Mastercard used the pandemic as an opportunity to effectively increase swipe fees. While Giant Eagle went to great lengths to insure that our customers and employees were safe by providing curbside pickup and online ordering, Visa and Mastercard used this shift in shopping behavior to charge us a higher ‘card not present’ rate for these services. This alone effectively increased the swipe fees that Giant Eagle paid,” Karet said. “The other members of our industry also witnessed an explosion in the growth of online sales, which are principally limited to credit or debit cards, in part due to Visa and Mastercard’s efforts to insure that their cards were essentially the only form of payment that could be used for such transactions. Even before the pandemic, FMI research shows card transactions accounted for nearly 80% of grocery sales across the industry. The rise in card payments due to the pandemic remains elevated to this day, meaning the cost of swipe fees on grocery stores is higher than ever before.”


“U.S. merchants pay the highest swipe fees in the industrialized world, but they have no ability to affect these costs." — Greg Ferrara, NGA President & CEO


Citing figures from the Nilson Report, NGA said in written testimony to the Judiciary Committee that U.S. merchants paid $137.83 billion in overall credit and debit card processing fees in 2021, up 24.3% from 2020 and more than double the amount paid a decade ago. Swipe fees in the United States average 2.2% of a transaction but can vary from 1% to 4%, depending on the type of credit card used. FMI reported in written testimony to the committee that, for most retailers, swipe fees are the highest operating cost after labor and rent.

In an industry with annual profit margins of 1% to 2%, grocery retailers — especially small operators — are feeling the squeeze of climbing swipe fees, according to NGA.

“U.S. merchants pay the highest swipe fees in the industrialized world, but they have no ability to affect these costs,” NGA President and CEO Greg Ferrara said in a statement. “These anticompetitive fees imposed on independent grocers drive up the costs of food and other goods at a time when Americans are already reeling from a level of inflation not seen in a generation.”

NGA said the average U.S. family pays over $700 annually in swipe fees, based on data from merchant payment consultancy CMSPI.

“The two global networks centrally set the pricing and structure of swipe fees,” stated Robert Yeakel, vice president of government relations at NGA. “In any other market, be it grocery or elsewhere, if prices were centrally set by two companies for the rest of the industry’s participants, there would be significant antitrust concerns. In the credit card space, however, this has been industry practice for more than a decade.”

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Besides Giant Eagle's Laura Karet (far left), panelists giving testimony at the Senate hearing included (from left) Visa's Bill Sheedy, Mastercard's Linda Kirkpatrick, U.S. PIRG's Ed Mierzwinski, Commerce Bancshares' Charles Kim and National Association of Convenience Stores' Doug Kantor.

NRF said Nilson Report data show that swipe fees charged to merchants by Visa and Mastercard credit cards hit a record high of $77.5 billion in 2021, up 26% year over year and 180% over the previous decade. Swipe fees for Visa and Mastercard credit cards average 2.22% of the transaction. NRF noted that small retailers with a few dozen transactions a day pay a higher rate than national retailers with millions of transactions, and fees are higher for e-commerce transactions, which have escalated amid the shift to more online shopping triggered by the pandemic.

“It is small retailers who are calling for swipe fee reform more than any other segment of our industry,” NRF Chief Administrative Officer and General Counsel Stephanie Martz said in a letter to the Senate Judiciary Committee. “They pay the highest swipe fees and have the fewest resources to fight back against global credit card networks and Wall Street banks. They want the card industry to compete the same as they do.”

The fee hike by Visa and Mastercard came despite a letter sent earlier this month by Durbin, Sen. Roger Marshall (R., Kan.), Rep. Beth Van Duyne (R., Texas) and Rep. Peter Welch (D., Vt.) that urged Visa and Mastercard to withdraw the increase.

“Their fees have more than doubled in the past decade, and just last week they pushed through another billion-dollar increase that will make inflation even worse,” NRF Vice President for Government Relations, Banking and Financial Services Leon Buck stated in advance of the committee hearing. “Lack of competition is why swipe fees keep skyrocketing, and it’s good to see Congress demanding answers that will lay the groundwork for a solution.”

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