November 16, 2023
WASHINGTON – Rising credit card “swipe” fees will contribute significantly to the cost of celebrating Thanksgiving this year regardless of whether families stay home, eat out or travel, the Merchants Payments Coalition said today.
“The credit card industry must have a lot to be thankful for this year. The hidden fees they charge American families and local grocery stores take a bite out of every turkey and a slice out of every pumpkin pie,” MPC Executive Committee member and FMI – The Food Industry Association Vice President of Government Relations Christine Pollack said. “Card companies are fattening their profits off the food that hard-working families purchase for their Thanksgiving meals. It’s time for Congress to make the card industry compete over swipe fees just as grocers and Main Street merchants compete every day for their customers’ business.”
Unknown to most consumers, merchants are charged an average of 2.24 percent of the purchase amount, and many times as high as 4 percent, by Wall Street banks and card networks like Visa and Mastercard to process customer credit card transactions. Credit and debit card swipe fees have more than doubled over the past decade and have risen 50 percent since the pandemic alone, hitting a record $160.7 billion last year. The fees are grocers’ highest operating cost after labor and rent. The fees cost the average family more than $1,000 a year regardless of whether they pay by cash or card for the purchase of everyday goods and services.
Swipe fees touch all aspects of an American family’s Thanksgiving celebration, making everything from the turkey to travel cost more.
Groceries for a home-cooked Thanksgiving dinner for 10 will average $61.17 this year, including $27.35 for a 16-pound frozen turkey, according to the American Farm Bureau Federation. Based on the average rate, swipe fees will account for $1.37 of the total – including about 60 cents for each turkey. Americans will spend $1.28 billion on turkeys, according to research website Finder, citing data from the National Turkey Federation and the U.S. Department of Agriculture. Based on that number, swipe fees contribute $28.7 million to the amount.
Lending Tree sets the estimate for dinner much higher, saying those throwing an at-home Thanksgiving party for 11 plan to spend an average $361 on food, drink and decorations, which means swipe fees account for $8 of the total. For parents with children under 18, the amount “catapults” to $469, including over $10 in swipe fees.
For those going out to eat, some mid-range family restaurants can feed 6-8 people for about $400 (including $9 in swipe fees), according to Town & Country magazine. But big city, high-end restaurants can charge $100 or more per person, costing a party of 10 over $1,000 (including over $22 in swipe fees). Those prices don’t include tips, which are also subject to swipe fees if charged, and don’t necessarily include alcohol.
Dinner isn’t the only cost of celebrating Thanksgiving. An estimated 49.1 million people are expected to drive to their destinations, and the cost of regular gas currently averages $3.35 per gallon, according to AAA. That means swipe fees cost 7.5 cents per gallon, adding 75 cents to a 10-gallon fill-up.
Travel app Hopper says the average daily car rental rate this Thanksgiving will be $42, which would make the swipe fee close to $1 per day. Airfare for a domestic round-trip flight will average $268, with swipe fees accounting for $6 of the ticket price. With AAA expecting 4.7 million people to travel by air, that’s $1.26 billion in airfare, including about $28.2 million in swipe fees.
The impact of swipe fees comes as Congress is considering the Credit Card Competition Act. First proposed last year, the CCCA was reintroduced in June by Senators Richard Durbin, D-Ill.; Roger Marshall, R-Kan.; Peter Welch, D-Vt., and J.D. Vance, R-Ohio, along with Representatives Lance Gooden, R-Texas; Zoe Lofgren, D-Calif.; Thomas Tiffany, R-Wis., and Jefferson Van Drew, R-N.J.
Visa and Mastercard – which control over 80 percent of the market – each centrally set swipe fees charged by banks that issue cards under their brands, and also restrict processing to their own networks. The legislation would require banks with at least $100 billion in assets to enable cards to be routed over another competing network such as NYCE, Star or Shazam for processing in addition to Visa or Mastercard. Merchants would then be allowed to choose which network to use, creating competition over fees, security and service that is expected to save them and their customers $15 billion a year while improving security.
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.