retail news in context, analysis with attitude

The Wall Street Journal this morning reports that Visa and Mastercard "are planning to raise swipe fees for some types of credit-card purchases in April, adding to the squeeze felt by restaurants, retailers and other merchants already struggling through the Covid-19 pandemic.

"What’s more, customers’ switch to online shopping during the pandemic - a trend heralded for keeping businesses afloat when people are reluctant to venture inside stores - is also creating extra costs for merchants. Swipe fees, which merchants pay when a customer pays by card, are often higher on online purchases."

The Journal points out that "the swipe fees, known as interchange fees in industry parlance, are a perpetual source of contention between merchants and card companies. Though invisible to consumers, they are glaring to merchants, which often end up paying fees of about 2% of their customers’ credit-card purchases. The fees are set by the card networks, such as Visa and Mastercard. Merchants pay them to the banks that issue the cards."

The story makes the point that while the use of cash dropped in 2020 and people shopped far more often online, the revenue generated by swipe fees actually was down 17 percent last year, largely because many people curbed their spending on major purchases such as travel.

KC's View:

It is extraordinary the degree to which people have moved away from cash, especially since 18 months ago there was a lot of blowback against retailers that did not want to accept it.  Times change.

I'm guessing that if retailers and their trade associations can find a reason to sue the credit card companies over increased swipe fees, they'll take it.  I'm not sure the degree to which greed can be litigated ... but it would be nice if the credit card companies gave retailers - which have had a tough year - a break.