Retailer Group Urges Congress to Call Off April Interchange Fee Hike

The Merchants Payments Coalition is launching an advertising campaign urging policymakers to block a change in credit card interchange fees set to take effect next month.

The move comes as Visa and Mastercard prepare to implement an increase in network interchange fees for credit and debit cards that was delayed by a year because of the pandemic. The plan calls for increasing the fee on a traditional Visa card for a $100 transaction to $1.99 from $1.90, which the MPC estimates would result in a total $1.2 billion increase in interchange fees.

Existing interchange fees Visa and Mastercard charge on credit cards are on average about 2.22% of the purchase, adding up to $110 billion in total processing fees for all types and brands of cards in 2020, the MPC said in a press release.

Millions of consumers shifted from cash to card transactions during the pandemic, with cash accounting for only 23% of purchases in 2020, down from 32% in 2018.

The Federal Reserve last year proposed new debit-routing regulations to ensure that interchange rates were still fair in light of the recent surge in digital transactions.

The proposal — which hasn’t advanced further — aims to clarify provisions within the Durbin amendment to the 2010 Dodd-Frank Act, which requires card issuers to give merchants the choice of at least two unaffiliated debit networks for routing transactions.