FMI, NRF and others push back on reports of rising credit card fees

News on Wednesday that Visa and Mastercard are planning to raise credit-card network and interchange fees is “another finger in the eye in this economic climate” to the grocery industry and other retailers, FMI – The Food Industry Association Chief Public Policy Officer Jennifer Hatcher said.

The fee increases, first reported by The Wall Street Journal, are scheduled to take place in October and April. Both interchange fees and network fees are expected to increase roughly $250 million, for a total of at least $500 million annually, Hatcher said.

“We’ve seen over the last 10 years, credit card fees have almost tripled and have grown 10% year over year,” she told WGB.

Currently, credit card fees average 2.24% per transaction, outpacing average profit margin for grocers of 1% to 2%, she noted.

FMI and other industry associations have put their support behind the bipartisan Credit Card Competition Act, which was reintroduced in Congress in June. Hatcher said the timeline for movement on the legislation is unclear.

“It’s going to depend on what the opportunities are for getting a vote on the Senate floor,” she said. “We’re encouraging our members to weigh in with their Senators. They’ve sent literally thousands of messages to legislators.”

Some grocers, she said, have offered incentives to shoppers who pay via debit cards, which have a significantly lower transaction fee.

The National Retail Federation (NRF) is among the industry groups advocating for the passage of the Credit Card Competition Act.

“The fee increases on fuel and grocery are just another example of Visa and Mastercard leveraging their market duopoly to increase their revenue regardless of the economic realities faced by businesses and consumers,” NRF Senior Director of Government Relations Dylan Jeon said in a statement to WGB. “Main Street merchants are being crushed by these rising fees, which have forced them to pass along a share of the costs to their customers. Reform in the credit card market is long overdue and the Credit Card Competition Act provides a balanced solution that could save $15 billion per year in interchange fees.”

Card networks such as San Francisco-based Visa Inc. and Purchase, New York-based Mastercard set the fees that the retailers pay. Network fees go to Visa and Mastercard, while swipe fees go to the bank that issued the card. Visa, Mastercard and the banks have said the fees help cover costs related to fraud prevention and innovation. The banks often use the money they get from swipe fees to fund rewards programs, the WSJ report said.

Doug Kantor, general counsel of the National Association of Convenience Stores (NACS), Alexandria, Virginia, said that many businesses are already being hurt by inflation and high interest rates, or still recovering from the pandemic. “It’s just a bad combination and bad timing for any of these fee increases to happen,” Kantor told the Journal.

CSP Daily News Editor Greg Lindenberg contributed to this report.