If you are a business owner, you know this. The fees are way too high, but you don't have much of a choice. Would this even happen with the 'Government is for sale' candidate? DOJ files antitrust suit against Visa over debit card business : NPR The Justice Department sued Visa on Tuesday, accusing the company of illegally monopolizing the debit card market and therefore driving up prices for businesses and consumers. "We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market," Attorney General Merrick Garland said in a statement. "Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service. As a result, Visa's unlawful conduct affects not just the price of one thing — but the price of nearly everything." Since late 2011, banks that issue debit cards have been required to allow multiple payment networks to handle the transactions. But Visa — and to a lesser extent Mastercard — continues to dominate the market. The Justice Department says Visa prices its services in a way that makes it prohibitively expensive for merchants to use rival networks and also pays would-be competitors to stay out of the market. Merchants welcome the lawsuit Retailers, who have long complained about excessive costs for processing both debit and credit card payments, welcomed the DOJ action. "You can mandate competition," says Stephanie Martz, chief administrative officer and general counsel for the National Retail Federation. "But if what's happening behind the point-of-sale is inhibiting that, then you don't actually have competition." "There's no question that it affects consumers as well," Martz added. "You're paying for these cards in the form of higher prices." Mastercard was also accused of using illegal tactics to limit competition in the debit card market. The company settled a complaint brought by the Federal Trade Commission last year. The Justice Department Challenges Visa’s Predatory Power - The American Prospect Today on TAP: The giant credit card company offers a textbook case in abuse of market power to buy off or crush potential competitors and reap excess profits at consumer expense. The Biden Justice Department and Federal Trade Commission keep breaking new ground in their efforts to revive antitrust enforcement against a capitalist system that grows ever more concentrated and abusive. The latest major action is a Justice Department suit filed Tuesday against Visa, which along with Mastercard has an effective duopoly in credit card networks. Visa’s market share in merchant debit payments is about 60 percent. It takes in around $7 billion a year in swipe fees, in a credit card market that totals about $4 trillion in annual transactions. The suit documents how Visa uses a combination of illegal carrots and sticks to suppress competition and maintain the market dominance that allows it to charge the excess fees. Whenever you use your credit card, the merchant gets only about 97 to 98 cents on the dollar. The rest is kicked back to Visa and the bank that issued the card. This amount would be a lot lower if there were more competition among credit card companies. You might not notice the extra two or three cents, but Visa sure does. The antitrust laws exist because much of this brand of strategy comes at the expense of consumers, businesses, potential competitors, and innovation. When the history is written of the Biden administration (one hopes continued by a Harris administration), one of its landmark achievements will be the resurrection and innovative use of antitrust enforcement and its creative application to a new era of predatory capitalism.
I'm not trying to be disingenuous, but if there is a reduction in service charges, do you think this will lower prices at restaurants movie theater's and so on? I'm all for this, but color me skeptical that any savings will be reflected in reduced prices. I will state that this is good for the small business owners. Let them keep the extra dollar or so. Thank you for this information.
Small biz usually eats the difference. It's why you'll sometimes see gas stations charging less per gallon for cash. This only targets debit card txns. Their fees are much higher than CC.
Large businesses can absorb the swipe fees (which used to be up to 44 cents per swipe/transaction but were capped at 21 cents per swipe in 2011) and other processing and equipment fees. Small businesses used to not accept credit cards or had a minimum charge before accepting them due to these fees (some still do this). Most can’t do that anymore—consumers are so accustomed to using cards that businesses would lose customers if they didn't accept them, so they have to absorb the cost. The added cost to our retail business is thousands per month. This will benefit small businesses more than large ones. Individual consumers won’t be impacted. Any pass-through savings, even if 100%, are too small for them to notice. Large purchasers could see savings.
Many have minimum purchases as well. I volunteer as a bartender at my Ancient order of Hibernians here in Albany for political fundraisers. We have a minimum charge of 30 bucks for us to run a card. I sometimes fill in for bartenders on cornhole night. The dang hipsters NEVER carry cash. They want to purchase every beer or drink individually. Very frustrating to try and make a Cosmo while dealing with the credit card machine for a 4-dollar PBR, which seems to be the beer of choice amongst that specific crowd. I show them the minimum purchase sign and send them to the ATM 10 steps away.
You now see a lot more merchants charging higher prices for use of card. Sometimes pretty hidden. I know I go to a few restaurants that charge a CC fee, but don't make you aware until the bill comes. I pay my CC processor 2.7% for CC swipes (and I do eat the cost). I don't think my processor is going to drop my cost if Visa drops their fees. If someone wants to pay with debit, I encourage them to pay with ACH instead, which costs me 50 cents. They should be subject to inside trading laws and investigated. People in high ranking government offices, that are setting regulations and privy to insider information should not be owning/trading significant investments in individual stocks. Use blind trusts or invest in mutual funds and broad ETFs.
