Credit Card ‘Swipe’ Fees Could Cost Consumers Over $500 Million for Father’s Day

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

WASHINGTON, June 10, 2024 – High “swipe” fees that credit card networks and banks charge merchants to process transactions could cost consumers more than $500 million this Father’s Day, the Merchants Payments Coalition said today.

“Credit card companies are snipping the end off the Father’s Day necktie with high swipe fees that drive up prices,” MPC Executive Committee member and National Grocers Association Senior Vice President of Government Relations and Counsel Christopher Jones said. “For families taking Dad out to the ballgame, swipe fees can equal the cost of a hot dog or a bag of Cracker Jacks. The credit card industry sees this special day as just another opportunity to make money. It’s time for Congress to stand up for dads by passing the Credit Card Competition Act.”

The National Retail Federation’s
annual survey found consumers celebrating the June 16 holiday plan to spend an average $190 per person for a total of $22.4 billion.

Based on those numbers and the 2.26 percent average swipe fee for Visa and Mastercard credit cards, MPC estimates that $4.29 per shopper will go to banks and card networks rather than the merchant when customers pay by credit card. That’s more than the price of a hot dog, peanuts or Cracker Jacks
at some baseball parks.

For the year as a whole, the average family paid $1,102 to cover swipe fees last year.

If all purchases were made with credit cards, swipe fees would account for $506.2 million of the Father’s Day 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.

MPC estimates that the total would include $101.7 million in swipe fees on $4.5 billion in “special outings” like a dinner out or a day at the ballpark, $79.1 million on $3.5 billion in clothing, $54.2 million on $2.4 billion in electronics, $33.9 million on $1.5 billion in tools and appliances, and $31.6 million on $1.4 billion in home improvement or gardening gifts.

Swipe fees on typical Father’s Day gifts can vary widely depending on the category of gift and the generosity of the giver. The fees can be as little as 38 cents on a $17
“Super Dad” necktie but close to $6 on a $260 100 percent silk Hermes tie. They can range from 84 cents on a $37 upper-deck ticket to a baseball game but over $6 on a $271 ticket just behind the plate on Father’s Day or $3 on a $135 team jersey. Swipe fees can be just over $5 on a $229 putter or $18 on an $800 propane barbecue grill.

Credit and debit card swipe fees have more than doubled over the past decade and reached a record $172.05 billion last year, 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 shoppers.

The impact on Father’s Day comes as sponsors are working to pass the Credit Card Competition Act, which is intended to fix the nation’s broken payments market.

Currently, Visa and Mastercard – which control 80 percent of the credit card market – each centrally set the swipe fees charged by all banks that issue cards under their brands rather than letting the banks compete to offer merchants the best deal. They also restrict processing to their own networks even though other networks have lower fees and better security.

Under the legislation, banks with over $100 billion in assets would 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 over
$16 billion a year.

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. Follow MPC on Twitter, Facebook or LinkedIn for the latest on swipe fees.