MPC Hill Blast: The State of the Industry? Not Good

The State of the Industry? Not Good

A global payments advisory firm just released its annual State of the Industry Report on payments. It demonstrated how broken the credit card market is. With Visa and Mastercard setting cartel prices for all bank competitors to charge the same thing, card fees keep going up – and profits for card companies and banks are outrageously high. Without some action, Main Street doesn’t stand a chance.

Findings from the report include:

• U.S. merchants paid $236 billion in card fees in 2024 – up $14 billion from the $222 billion paid in 2023.
  • Visa credit card fees alone jumped from $76.66 billion in 2023 to $81.53 billion in 2024 – a 6.3% increase.
  • Mastercard credit card fees alone jumped from $37.77 billion in 2023 to $40.79 billion in 2024 – a 7.9% increase.
  • Both Visa and Mastercard increases were more than 200% the rate of inflation (which was 2.9% in 2024).
     
• “Not only has the overall cost of network fees risen, but the total number of scheme fees has risen significantly.”
  • “From 2018 to 2024, CMSPI estimates that the total number of network fees have more than doubled for each global network, with behavioral/penalty-based network fees representing the majority of the increases.”
     
• U.S. credit card fees – at nearly 3% – were the highest in the world.
   
• Banks that issue credit cards “saw 35%-plus operating margins consistently between 2019 and 2023.”
   
• “The average operating margin for the two largest card networks [Visa and Mastercard] in 2023 was 60%.”
   
• “A general retailer in the U.S. receives an average net profit margin of 3.09%.”

With fees going up more than double the rate of inflation, multiple fees increases and Main Street hurting, the report shows that the state of the payments industry is not good at all.

COMPETITION IS BETTER FOR EVERYONE

IT'S TIME TO PASS THE CREDIT CARD COMPETITION ACT