Credit Card Fees Could Swipe a Dozen Easter Eggs and Cost Consumers More Than $500 Million

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

WASHINGTON, March 15, 2024 – Rising “swipe” fees big banks and credit card networks charge merchants to process transactions could total more than $500 million this Easter and cost the average consumer more than the price of a dozen eggs, the Merchants Payments Coalition said today.

“Swipe fees will add to the cost of Easter baskets and everything in them once again this year,” MPC Executive Committee member and National Grocers Association Senior Vice President of Government Relations and Counsel Christopher Jones said. “Whether it’s Easter eggs, chocolate bunnies or Peeps, the credit card industry takes a piece of every purchase. If merchants agreed on the price of Easter eggs we’d be accused of price fixing, but that’s exactly what Visa and Mastercard do in setting the swipe fees charged by banks that issue cards under their names. It’s time for Congress to end swipe fee price fixing and require the credit card industry to compete the same way merchants compete every day. Parents and the Easter Bunny can’t afford for this broken market to continue.”

The National Retail Federation’s
annual survey estimates that consumers will spend an average $177 on Easter-related items this year for a total of $22.4 billion.

Based on the 2.24 percent average swipe fee for Visa and Mastercard credit cards, $3.96 per shopper will go to banks and card networks rather than the merchant when customers pay by credit card. That easily exceeds the
$2.99 average price for a dozen eggs, a $2.69 tie-dye egg decorating kit or a $3 bamboo Easter basket, is more than twice the cost of a $1.47 10-count pack of Peeps, and takes a big bite out of a $4.99 hollow chocolate bunny. Swipe fees can be as much as 4%, so the actual impact could be even higher.

If all Easter purchases were made with credit cards, swipe fees would account for $501.8 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 2022, 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.

Swipe fees would account for $163.5 million of the $7.3 billion NRF says consumers are expected to spend on food, $78.4 million of $3.5 billion spent on clothing, $76.2 million of $3.4 billion spent on gifts, $69.4 million of $3.1 billion spent on candy and $35.8 million of $1.6 billion spent on flowers.

Credit and debit card swipe fees have more than doubled over the past decade and soared to a record $160.7 billion in 2022. They are most merchants’ highest operating cost after labor and are too much to absorb, driving up prices paid by the average family by over 1,000 a year.

The impact on Easter comes as Senate Judiciary Committee Chairman Richard Durbin, D-Ill., one of the lead sponsors of the Credit Card Competition Act,
plans to hold a hearing April 9 on lack of competition over swipe fees.

Visa and Mastercard – which control 80 percent of the market – each centrally set the swipe fees charged by banks that issue cards under their brands, and also block transactions from being processed over other networks that could do the job with lower fees and better security. The legislation would require banks with at least $100 billion in assets to enable cards they issue to be processed over at least two unaffiliated networks – Visa or Mastercard plus a competitor like NYCE, Star, Shazam or Discover. The ban on running transactions over a competing network means none of the networks could be added without passage of the CCCA, including Discover despite the recent announcement of its merger with Capitol One.

Banks would choose which networks to enable but merchants would then decide which to use, resulting in competition over fees, security and service that is expected to save merchants and consumers over $15 billion a year. Rewards would not be affected, security would be improved, consumers would still use the same cards, and community banks and all but one credit union would be exempt.

About MPC
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.