Credit Card Swipe Fees

Last Updated: June 12, 2023

The Issue

The shift from Americans using cash to credit and debit cards was accelerated by the COVID-19 pandemic, and it comes at a real cost to main street businesses.  Every time a payment card is used, fees are charged to the retailer and those fees have been rising at a dramatic rate for a generation. This issue is exacerbated during inflationary times. Because credit card fees are a percentage of the total transaction cost, they multiply with every cent of inflation. 

The two global card networks, Visa and Mastercard, control about 83% of the credit card volume in the United States. Retailers have no choice but to accept these cards, meaning they are stuck with whichever network is on the card. Visa and Mastercard set the prices and terms for the thousands of banks that issue their cards—even though the biggest fees, swipe fees, go to the bank that issued the card. Banks should compete on their swipe fee prices, but they don’t. This results in swipe fees increasing year after year and U.S. merchants and consumers paying more in such fees than the rest of the world. The market is clearly broken.

Retail Impact

The convenience store industry has more than 150,000 convenience stores nationwide, 60% of which are single-store operators. These businesses have seen a historic jump in their swipe fees with inflation and rising gas prices. Over the last three years, overall card fees paid by the convenience store industry were up 82% and up 44% over the last year. For many convenience retailers, the swipe fees they pay exceed their pre-tax profits. These fees represent their second-highest operating cost—less than labor but more than rent and utilities. On Visa and Mastercard credit transactions, the average rate paid in the United States was 2.25% of the transaction amount—more than 7 times what merchants pay in Europe and 5 times what merchants pay in China.

The Credit Card Competition Act

The Credit Card Competition Act is bipartisan, bicameral legislation introduced by Sens. Roger Marshall (R-KS), Dick Durbin (D-IL), Peter Welch  (D-VT) and J.D. Vance (R-OH)  in the Senate (S. 4674), and Reps. Lance Gooden (R-TX), Zoe Lofgren (D-CA), Tom Tiffany (R-WI) and Jeff Van Drew (R-NJ) in the House. Both bills would require the largest U.S. banks that issue Visa or Mastercard credit cards to allow transactions to be processed over at least two unaffiliated card payment networks—the same process that has been used for debit card transactions for more than a decade. The proposed legislation only applies to banks with more than $100 billion in assets, exempting the vast majority of banks and credit unions in the United States, including community banks and other small and mid-sized regional banks.

NACS Position

NACS supports this legislation because businesses like convenience stores thrive on competition, and the card networks should too. Congress must pass this bill and bring competition to credit cards through market-based reforms.

NACS members are encouraged to reach out to their members of Congress and ask that they support the Credit Card Competition Act. NACS makes it easy for retailers and suppliers to send a message to their legislators via the NACS Grassroots Portal.

Q&A on Credit Card Surcharging

Beginning January 27, 2013, retailers can add fees to try to recover the outrageous swipe fees they pay for credit card transactions. However, there are very difficult hurdles to overcome related to actual implementation and consumer misperceptions, making it unlikely that many retailers will be surcharging any time soon. Read more >