The One Way Walmart And Target Are Working Together

Walmart, Target, and a slew of other retailers are petitioned Congress to pass a bipartisan bill aimed at lowering credit card swipe fees.

By Crystal Murdock | Published

Related:
Why Shipping Packages Will Soon Cost Incredibly More Money

With only sixty-five days until the busiest holiday shopping day of the year, inflation-pinched consumers are about to have some relief, thanks to cost-saving strategies being implemented by Walmart and Target. There are currently a couple of bipartisan bills on the table in Congress that are specifically aimed to lower credit card interchange fees, also known as swipe fees. These fees are passed down to consumers and mega retail giants such as Kroger, Target, and Walmart are advocating for these bills to pass. 

Recently, a coalition of businesses wrote in a letter to lawmakers last week stating, “Swipe fees for credit cards are higher in the United States than anywhere else in the industrialized world,” reported CNN Business. Businesses such as Walmart and Target are fed up with the high rising cost of interchange fees that are applied to consumer transactions when they pay using a debit or credit card. The charges are varied depending on the transaction amount, the type of card being used, and of course, the financial institution the funds are debited from.  

Last year alone, Merchants such as Walmart and Target paid out over $138 billion in these swipe fees based on the varied consumer transactions using credit or debit cards. Many consumers are not even aware of these swipe fees that are in the range of 1% to 3% of the total transaction price. This is due to Merchants quietly passing them on to their consumers by simply raising the cost of the prices. 

Back in July the United States Senator of Illinois, Dick Durbin stated, “Credit card swipe fees inflate the prices that consumers pay for groceries and gas.” Durbin continued on to say, “Bringing real competition to credit card networks will help reduce swipe fees and hold down costs for Main Street merchants and their customers.”

walmart target buy now pay later credit card fraud consumer spending visa and mastercard

Merchants, such as Walmart and Target are pushing for these bills to pass and allow for the creation of more competition in the credit card network and help dissolve the hold Visa and Mastercard have on the retail industry. The major credit card companies dominate over 80% of the credit card market within the United States alone. The proposed bills would allow consumers to route payments via other network options that are not processed by Visa or Mastercard. 

Visa and Mastercard are pushing back against the efforts of Walmart and Target stating the proposed bills will not lower the prices or swipe fees being passed down to consumers. Instead, consumers would face unexpected consequences, such as possible higher risks associated with data security breaches and fewer returned consumer rewards provided to loyal customers. Additionally, consumers might find it more difficult to qualify for credit cards, and if they do, at the expense of higher interest rates. 

Mega retailers like Walmart and Target may have to face new challenges with lower possible sales as some credit unions that are within bank-served communities may reduce or cut their consumer’s credit limits and sources of credit. Either way, Swipe fees or the higher cost of goods associated with these fees being passed down from Merchants to consumers just might be an issue of the past if the bills are passed.