The Hidden Force Pushing Up Gas Prices
Customers don’t see it, but there is a hidden factor pushing up the price of gasoline — and virtually everything else that Americans buy.
That hidden force is credit card swipe fees.
With the average price of gasoline across the nation at $3.32 per gallon, big banks and credit card companies swipe about 8 cents per gallon of every fill-up.
Average credit card swipe fees on a fill-up have increased by about 1 cent per gallon over the past week alone.
Why are swipe fees on gasoline higher this week?
- Do credit card transactions get routed through the Strait of Hormuz? Um, no.
- Is there a sudden shortage of electrons? No.
The reason swipe fees are higher is the similarity between credit cards and oil — cartels impact prices.
- On oil, OPEC sets production targets that many oil-producing nations follow. This is a key factor in global prices and can keep those prices artificially high.
- On credit cards, Visa and Mastercard have each organized banks that issue credit cards into separate cartel structures.
- Visa and Mastercard directly set the prices that competitor banks all agree to charge.
- That is even more egregious than OPEC because Visa and Mastercard flat-out set the price rather than setting production levels for an item that helps determine its price.
Those per-gallon swipe fees really add up. With more than $600 billion per year in motor fuel sales, the 2.35% average swipe fee would be more than $14 billion in inflationary fees if all those sales were on credit cards.
If you care about the high prices consumers pay — especially for gasoline — you need to care about what President Donald Trump calls “the out of control Swipe Fee ripoff.”
COMPETITION IS BETTER FOR EVERYONE
IT'S TIME TO PASS THE CREDIT CARD COMPETITION ACT