Credit Card Fees Could Cost Consumers Almost $800 Million for Mother's Day

Contact: J. Craig Shearman
(202) 257-3678

WASHINGTON, May 1, 2023 – Rising “swipe” fees big banks and credit card networks charge merchants to process transactions could cost consumers nearly $800 million this Mother’s Day, the Merchants Payments Coalition said today.

“Everything from greeting cards and flowers to dining out and jewelry will cost more this Mother’s Day because swipe fees drive up prices,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “Motherhood is a sacred institution to most Americans but for the credit card industry it’s just another opportunity take an inflated percentage of every sale. The credit card industry is literally swiping two of the roses out of Mom’s bouquet this year. That’s not fair to families trying to honor moms on this special day, especially since swipe fees multiply the impact of inflation that’s already making it more expensive to take Mom out to brunch or buy her a gift. It’s time for Congress to bring competition to the payments market by passing the Credit Card Competition Act.”

The National Retail Federation’s annual survey found that consumers celebrating the May 14 holiday plan to spend an average $274 per person for a total of $35.7 billion.

Based on those numbers and the 2.24 percent average swipe fee for Visa and Mastercard credit cards, MPC estimates that $6.14 per shopper will go to banks and card networks rather than the merchant when customers pay by credit card. That’s the equivalent of two roses out of a typical 24-stem Mother’s Day bouquet where each flower costs about $3.

If all Mother’s Day purchases were made with credit cards, swipe fees would account for $799.7 million of the total. The actual amount is difficult to calculate because purchases are split between credit cards and debit cards, which have a lower swipe fee, and some are made with cash. But cash accounted for only 19 percent of purchases in 2021, according to the Federal Reserve, and its use is rapidly declining as more spending moves online and more consumers use plastic for in-store purchases.

MPC estimates that the total would include $174.7 million in swipe fees on $7.8 billion in jewelry, $125.4 million on $5.6 billion in “special outings” like dining out, $71.2 million on $3.18 billion in flowers and $25.8 million on $1.15 billion in greeting cards.

On a per-person basis, swipe fees would amount to about 20 cents on the average $8.88 expected to be spent on greeting cards. The average $24.43 for flowers would include 55 cents in swipe fees, but the fees would come to $1.79 on an $80 bouquet of carnations widely considered the “official” Mother’s Day flower. Consumers plan to spend an average $59.90 on jewelry, which would mean swipe fees of $1.34. But jewelry prices can vary widely, with swipe accounting for about 25 cents on a $10 costume jewelry ring or necklace to $7.66 on a $342 “Mom” 14K gold necklace to hundreds of dollars on high-end fine jewelry. Special outings are expected to average $43.29, which would mean swipe fees of just under $1, but Mother’s Day brunch can easily run $200 for a family of four, including swipe fees of about $5 – and can be far more at high-end restaurants in major cities.

Credit and debit card swipe fees have more than doubled over the past decade and soared 17 percent last year alone to a record $160.7 billion, according to the Nilson report. They are most merchants’ highest operating cost after labor and are too much to absorb, driving up prices paid by the average family by an estimated $1,024 last year.

The impact on Mother’s Day comes as Senators Richard Durbin, D-Ill., and Roger Marshall, R-Kan., are working to pass the Credit Card Competition Act. First introduced last year, the legislation would require that banks with over $100 billion in assets enable credit cards to be processed over at least two unaffiliated networks. One could still be Visa or Mastercard but the other would be a competing network such as NYCE, Star or Shazam. Banks would choose which two to enable but merchants would choose which to use, forcing networks to compete over fees, security and service. Payments consulting firm CMSPI estimates that competition would save businesses and their customers at least $11 billion a year.

Visa and Mastercard – which control 80 percent of the market – currently price fix the swipe fees charged by banks that issue cards under their brands rather than the banks competing to offer merchants the best deal. They also block competition by restricting processing to their own networks even though most competing networks charge lower fees and, according to the Federal Reserve, have less fraud.

About MPC
The Merchants Payments Coalition represents retailers, supermarkets, convenience stores, gasoline stations, online merchants and others fighting for a more competitive and transparent card system that is fair to consumers and merchants. Follow MPC on Twitter, Facebook or LinkedIn for the latest on swipe fees.