Swipe fees that banks and card networks charge to process credit card transactions could drive up consumers’ cost of celebrating the Fourth of July by more than $500 million this year, the Merchants Payments Coalition (MPC) said. NACS is a founding member of the MPC.
“Fourth of July is the most American of our national holidays, but there is nothing American about fees that are set without competition,” said Doug Kantor, NACS general counsel and MPC executive committee member. “Americans celebrating Independence Day will pay more for everything from sparklers to hot dogs because of swipe fees that have skyrocketed higher than the biggest fireworks display. Lack of competition is why these fees continue to rise and why consumers are paying more. It’s time for Congress to bring swipe fees under control and make the card industry compete the same as small businesses do every day. Competition is the American way and there’s no better time to remember that than the Fourth of July.”
While a precise total is difficult to calculate, MPC estimates that higher costs from swipe fees on food, alcohol, fireworks and flights could total $513 million, or about $4 per U.S. household which is the equivalent of a package of hot dogs or a box of sparklers.
Americans plan to spend an average of $93.34 per household—a record $9.5 billion—on food for the Fourth this year, according to the National Retail Federation. Based on the average 2.24% swipe fee for Visa and Mastercard credit cards, that includes $2.09 in swipe fees for the average family and adds up to $212.8 million in swipe fees nationwide. Alcohol purchases for the Fourth of July last year, totaled $3.9 billion according to NIQ, adding another $87.4 million in swipe fees if the number is similar this year.
Spending on fireworks totaled $2.3 billion last year, according to the American Pyrotechnics Association, adding another $51.5 million in swipe fees. Swipe fees account for about $4.50 of the $200 price of an “All American” assortment advertised by one dealer, or about $2.50 on a $110 “Red, White and Boom!” package from another dealer.
For families who will drive, gasoline is averaging $3.58 a gallon for regular unleaded, according to AAA. Fuel merchants can pay 7-10 cents a gallon in swipe fees, making every fill-up more expensive, according to NACS data. Rental cars can cost between $500 and $600, or more, a week, according to NerdWallet, with swipe fees representing up to $13 of the cost.
An estimated 24 million people are expected to fly over the July 4 weekend and will pay an average $300 per domestic round trip ticket, according to travel app provider Hopper. That amounts to $6.72 per ticket in swipe fees, or $161.3 million in swipe fees on $7.2 billion in total airfare.
The estimates come as Congress is considering the Credit Card Competition Act, which was reintroduced on June 7 by Senators Richard Durbin, D-Ill., Roger Marshall, R-Kan., Peter Welch, D-Vt. and J.D. Vance, R-Ohio and by 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 80% of the market—currently price-fix swipe fees charged by banks that issue cards under their brands and also block transactions from being processed over other networks that could do the job with lower fees and better security. The legislation would require banks with at least $100 billion in assets to enable cards they issue to be processed over at least two unaffiliated networks—Visa or Mastercard plus a competitor like NYCE, Star or Shazam. That would make networks compete over fees, security and service and is expected to save merchants and their customers $15 billion a year.
Credit and debit card swipe fees have more than doubled over the past decade and soared $22 billion last year to a record $160.7 billion. The fees are most merchants’ highest operating cost after labor and drive up prices by more than $1,000 a year for the average family.
NACS announced its support for the bipartisan legislation earlier this month.
“Our stores compete every day for consumers’ business—as does every other business in the country. In the broken credit card market, no competition means an open invitation for these large multinational corporations to continually increase rates and to only focus on what benefits them, as opposed to the customer,” said NACS President and CEO Henry Armour.
Armour added that credit card swipe fees for the convenience retailing industry have increased a staggering 82% between 2020 and 2022 and now stand at $19.5 billion.
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.