Credit Card Fees to Cost Consumers $500 Million+ This Easter

Swipe fees could cost the average consumer the equivalent of a dozen eggs.

April 05, 2023

The swipe fees that big banks and credit card networks charge retailers to process transactions could cost the average consumer the equivalent of a dozen eggs this Easter, reports the Merchants Payments Coalition. Overall, swipe fees could total more than half a billion dollars nationwide this Easter.

“The card industry will be putting its hand in the Easter basket again this year as rising swipe fees contribute to the cost of everything from Peeps to chocolate bunnies,” said Doug Kantor, MPC Executive Committee member and general counsel for NACS. “These fees make inflation even worse at a time when parents and the Easter Bunny can least afford it. And the problem won’t end when Easter is over because swipe fees drive up prices for consumers all year long. The card industry refuses to stop price-fixing these fees and compete, so it’s time for Congress to act. If children can compete at an Easter egg hunt, why can’t card networks compete when it comes to setting swipe fees?”

The National Retail Federation’s annual survey predicts that U.S. consumers will spend an average $192.01 on Easter-related items this year, for a total of $24 billion in sales. Based on the 2.24% average swipe fee for Visa and Mastercard credit cards, $4.30 per shopper will go to banks and card networks rather than the merchant when customers pay by credit card. That’s just above the $4.21 average price for a dozen eggs.

If all U.S. Easter purchases were made with credit cards, swipe fees would total approximately $537.6 million. However, the actual amount is difficult to determine since purchases are split between credit cards and debit cards, which have a lower swipe fee, and cash. But cash accounted for only 19% of purchases in 2021, according to the Federal Reserve, and its use is declining as more shopping occurs online and more consumers use cards for in-store purchases.

Credit and debit card swipe fees have more than doubled over the past decade. They soared 17% last year alone to hit a record $160.7 billion, Nielson reports. They are most merchants’ highest operating cost, following labor, and are impossible for retailers to absorb. As a result, they drove up expenses for the average family by an estimated $1,024 last year.

The impact on Easter comes as Senators Richard Durbin, D-Ill., and Roger Marshall, R-Kan., are preparing to reintroduce the Credit Card Competition Act. The legislation would require that banks with over $100 billion in assets 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. This move would force networks to compete over fees, security and service. Payments consulting firm CMSPI estimates that competition would save businesses and their customers at least $11 billion a year.