- Every time a customer uses their credit card to pay, the seller must cover a transfer fee that ranges between 1% and 3% of the value of the purchase. Retail giants like Walmart, Target and Kroger see it as a trigger for inflation
A group of large retailers, including Walmart, Target and Kroger, are seeking to reduce the so-called transfer fees they must pay each time a customer uses their credit card to make a purchase.
This group of companies has given its full support to a couple of bipartisan projects that are in the United States Congress that seek to reduce the so-called slippage fees.
In addition to large retail brands, convenience stores and independent supermarkets are also joining the effort, which, they say, are also affected by what they consider to be high percentages of commission charges.
Transfer, interchange, or swipe fees are commissions that businesses must pay each time a customer swipes their credit card when making a purchase.
Highest in industrialized countries
Transaction fees generate high costs, say companies seeking change; which have indicated that the amounts they must pay are significantly higher than those paid in other economies.
“Credit card transfer fees are higher in the United States than anywhere else in the industrialized world, more than seven times higher than in Europe,” they said in a letter to Congress last week.
Current fees range between 1% and 3%, which is calculated based on the final price of a sale, according to current data, in a market that is 80% controlled by VISA and Mastercard.
The escalation of prices due to inflationary pressures is one of the challenges that retailers have overcome in recent months in the United States.
To the harmful effects of inflation, companies in these markets add the collection of commissions such as those of transaction by operation, finally it ends up feeding inflation.
They explain that the high rates of up to 3% end up being transferred as higher prices for consumers, which could contribute as an additional inflationary factor.
Transaction fee amounts vary based on factors such as the amount of the transaction, the type of credit card used and the bank, according to a CNN report.
According to a Nielsen report, the nation’s retailers paid $138 billion in fees for credit card swipes.
VISA and Mastercard defend charges
The two big players in the credit card collection networks, VISA and Mastercard, assure that the transfer fees have benefits for the market.
Both companies have indicated that with these amounts it is possible to finance reward programs and banking services, in addition to reducing the risk of fraud for sellers.
VISA and Mastercard stated that the legislation they are discussing in Congress will not have the effect of improving or reducing prices for final consumers and, on the contrary, would affect them by limiting the scope of reward programs.
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