Credit Card ‘Swipe’ Fees Could Cost Consumers Nearly $578 Million on Valentine’s Day

Contact: J. Craig Shearman
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Average Swipe Fees Equal a Greeting Card or 2-3 Pieces of Chocolate

WASHINGTON, February 7, 2024 – Rising swipe fees banks charge merchants to process credit and debit card transactions could cost consumers almost $578 million in higher prices as they celebrate Valentine’s Day this year, the Merchants Payments Coalition said today.

“Valentine’s Day is one of the busiest days of the year for restaurants, but that special meal out is going to cost a little more for the restaurant and the customer this year, thanks to higher swipe fees,” MPC Executive Committee member and National Restaurant Association Director of Technology and Innovation Policy Brennan Duckett said. “Whether it’s eating out, buying flowers, or choosing an engagement ring, soaring swipe fees drive up the price of everything U.S. consumers buy and impact what couples can afford.”

Consumers are expected to spend an average $185.81 on Valentine’s Day items such as candy, flowers, jewelry, greeting cards, clothing and evenings out this year for a total of $25.8 billion, according to the National Retail Federation’s annual survey. Based on the average 2.24 percent rate for Visa and Mastercard, that would include $4.16 per person in swipe fees – as much as a typical Valentine’s greeting card or two or three pieces of chocolate from a mid-range gift box – and would add up to $577.9 million if all purchases were made with credit cards.

Valentine’s Day spending will give banks and card networks a lucrative bonus as they take a percentage of each purchase made with a card. A $120 “Classic Love” red rose bouquet can include $2.70 in swipe fees. The swipe fees on a $60 box of chocolates amount to about $1.30. A $200 dinner for two can run over $5 for swipe fees on the meal and tip, and a $50 bottle of wine or champagne adds another $1 in swipe fees.

The biggest swipe fee cost can come for couples who get engaged on the most romantic day of the year. BRIDES magazine says couples spent an average $6,500-plus on an engagement ring in 2022, which would include a swipe fee of $145.

By category, swipe fees could account for $143.4 million of the $6.4 billion consumers are expected to spend on jewelry, $109.8 million of $4.9 billion spent on evenings out, $67.2 million of $3 billion spent on clothing and $58.2 million of $2.6 billion spent on flowers.

Exact figures are difficult to calculate because not all purchases are paid for with credit cards. But about 75 percent of in-person purchases are made with plastic, according to the Federal Reserve, and card industry rules make cash discounts difficult. Online, virtually all purchases are paid for by debit or credit card, and swipe fees are even higher than in-store.

Credit and debit card swipe fees – which have risen 50 percent since the pandemic and reached a record $160.7 billion in 2022 – are most merchants’ highest operating cost after labor. The fees are far too high to absorb, especially for small merchants, and drive up consumer prices by over $1,000 a year for the average family.

The impact of swipe fees comes as sponsors of the Credit Card Competition Act are waiting for a vote in the Senate.

The legislation would end Visa and Mastercard’s longstanding monopoly over how transactions on cards issued under their brands are routed for processing. Instead, cards from the nation’s largest banks would be required to be able to be routed over at least one competing network like NYCE, Star or Shazam in addition to Visa or Mastercard’s networks. Banks would choose which networks to enable but merchants would then choose 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
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.