Delaware credit card swipe fees
2 minutes read
Small retailers across Delaware are facing multiple pressures these days. Inflation drives up all of a company’s costs, while high interest rates make it more expensive to borrow to cover operations or expansion. Adding to the list of rising costs is the state minimum wage, which rose again this month.
But there is a growing cost factor that most of our customers are unaware of.
The hidden “swipe” fees that card networks like Visa and Mastercard, as well as Wall Street megabanks, charge to process credit and debit card transactions have doubled over the past decade and are up 24% in 2021 alone to a national record increased from $138 billion. For most merchants, these fees are the top after-work operating expenses, driving prices up by $900 a year for the average Delaware family, according to the Merchants Payments Coalition.
Averaging over $2 per $100, US credit card swipe fees are the highest in the industrialized world, and that’s due to a lack of competition. With an 80% market share, Visa and Mastercard set the rates charged by banks issuing cards under their brands and block other networks that offer lower fees and better security from processing transactions made with them cards are transacted.
Fortunately, legislation pending in Congress could begin to fix this broken market. Credit card competition law would require credit cards from the country’s largest banks to be routed through at least one competing network alongside Visa or Mastercard. Banks would choose which networks to activate, but merchants would choose which ones to use, meaning the networks would have to compete on fees, security and service.
Under this carefully crafted bipartisan legislation, US retailers could save $11 billion annually – funds that could be invested in keeping prices down for their customers. Consumers would use the same cards, rewards would not be impacted, security would improve, and the local community banks and small credit unions that consumers and small businesses rely on would be exempt.
I help run a second generation family owned grocery store and I can attest that the 2% to 3% fee we pay in swipe fees is double the profit we make on each sale what a gallon of milk or a dozen eggs equals every $200 of groceries.
Grocery retail is the most competitive industry in the economy and it is a challenge for independent companies like ours to compete with global companies with enormous purchasing power. To stay competitive we pass every penny of our savings on to our customers because if we don’t, the next store will. But swipe fees are the one area where a merchant cannot negotiate. With few shoppers using cash today, not taking cards is not an option.
Banks claim that paying for credit card rewards requires high swipe fees, but other countries offer robust rewards with far lower fees. They also say they cover scams, but most scams are eaten up by merchants – and we still have to pay swipe fees.
Because credit card fees are a percentage of each transaction, swipe fees increase as prices increase. Indeed, Visa executives have boasted about how inflation has helped boost their profits at a time when many Americans are struggling to support their families.
Delaware is a small state dominated by small businesses. Sen. Tom Carper and Sen. Chris Coons, would you please help support the Credit Card Competition Act and ensure that global card networks and Wall Street banks must compete just as small businesses across Delaware do every day?
Melissa Kenny is executive vice president of Wilmington’s Delaware Supermarkets Inc., also known as the Kenny Family ShopRites of Delaware, which operates six ShopRite supermarkets in New Castle County.