A lump of fees in your stocking

But with inflation running at the highest level in 40 years, a survey from the consulting firm Deloitte finds that the average person expects to buy nine Christmas gifts this year, down from 16 last year.

Many of those purchases, whether made online or in the store, will involve using debit or credit cards. This is an area where members of Congress, who talk a good game about taming inflation, could do something to curb the impact of rising prices for retail businesses and consumers.

Credit and debit card swipe fees are applied to millions of daily transactions. These hidden fees have grown from $20 billion a year in 2001 to $137.8 billion last year. For retailers, they are the highest operating cost after labor.

The problem is that two companies — Visa and Mastercard — control enough of the credit card market that they can direct transactions to their own networks. This restricts competition and drives up fees for retailers and, ultimately, consumers.

Congress passed legislation in 2010 that required banks to enable debit cards to be processed over at least two unaffiliated networks. (This is why you have to type in your PIN at the checkout).

This increases transparency and reduces fees, but only for in-store debit purchases. The Federal Reserve recently approved regulations clarifying that banks and credit card networks are legally required to give retailers the same network choices for online purchases. This would further benefit consumers, but only for swipe fees associated with debit purchases.

Those transactions made with credit cards, both online and in the store, are subject to the same Mastercard/Visa dualopoly that has stifled competition for years.

The Credit Card Competition Act, introduced by Sens. Richard Durbin, D-Ill., and Roger Marshall, R-Kan., would require that the nation’s largest banks enable credit cards to be processed over at least two unaffiliated networks — Visa or Mastercard plus an independent network like NYCE, Star or Shazam.

That means banks would have to compete over fees, service and security. The NRF estimates that this could save retailers and their customers up to $11 billion a year.

It’s something Congress should be willing to do if it’s really interested in giving consumers a break from rising prices.