FOR IMMEDIATE RELEASE
Contact: J. Craig Shearman
(202) 257-3678 craig@shearmancommunications.com
Fees for Average U.S. Family Are the Highest in the World and Swipe the Cost of a Barbie Doll or Lego Set
WASHINGTON, December 4, 2024 – Swipe fees banks charge merchants to process credit card transactions are continuing to rise and could cost consumers well over $20 billion in higher prices this holiday season, the Merchants Payments Coalition said today.
“Inflation is coming down but swipe fees keep going up, taking a bigger slice out of what it takes to put presents under the tree,” MPC Executive Committee member and National Retail Federation Chief Administrative Officer and General Counsel Stephanie Martz said. “With swipe fees higher here than in other countries, our children get fewer presents for the money than kids in Great Britain, France or even China. The best present Congress can give children this year is passage of the Credit Card Competition Act.”
Consumers are expected to spend an average $902 during the November-December holiday season for a total as high as $989 billion, according to NRF. Based on the average 2.26 percent rate for Visa and Mastercard, that would include just over $20 in swipe fees for the average family – enough to buy a Barbie doll or Lego set, the two most-popular holiday toys, or a ham or turkey for a holiday dinner.
Total figures are difficult to calculate because not all purchases are paid for with credit cards. But independent payments consulting firm CMSPI estimates that 85% of holiday purchases will be made with credit or debit cards or digital wallets and that swipe fees will total at least $20 billion this year even after allowing for cash purchases. That’s up from $18.6 billion last year. If all purchases were made with cards, swipe fees would total $27.7 billion, up from $26 billion, according to CMSPI.
With either figure, swipe fees are most merchants’ highest operating cost after labor throughout the year and too much to absorb, driving up prices they have to charge their customers. Swipe fees are up 50 percent since the pandemic and hit a record $172 billion last year, costing the average family over $1,100.
The holiday impact of swipe fees comes as the Credit Card Competition Act is pending in Congress.
The bill 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, meaning networks would have to compete over fees, security and service, saving merchants and their customers over $16 billion a year.
Under the legislation, rewards points would not be affected, consumers would still use the same cards, and security would be improved because the Federal Reserve says the competing networks have one-eighth the fraud rate of Visa and Mastercard. Financial institutions with less than $100 billion in assets – including all 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.