Swipe Fees Could Cost Consumers Almost $800 Million This Mother’s Day

Convenience store swipe fees were $19.5 billion in 2022.

May 02, 2023

WASHINGTON—Rising swipe fees could cost consumers nearly $800 million this Mother’s Day, according to the Merchants Payments Coalition (MPC).

“Everything from greeting cards and flowers to dining out and jewelry will cost more this Mother’s Day because swipe fees drive up prices,” said Doug Kantor, NACS general counsel and MPC executive committee member. “Motherhood is a sacred institution to most Americans, but for the credit card industry, it’s just another opportunity take an inflated percentage of every sale. The credit card industry is literally swiping two of the roses out of Mom’s bouquet this year. That’s not fair to families trying to honor moms on this special day, especially since swipe fees multiply the impact of inflation that’s already making it more expensive to take Mom out to brunch or buy her a gift. It’s time for Congress to bring competition to the payments market by passing the Credit Card Competition Act.”

The National Retail Federation’s annual survey found that consumers celebrating the May 14 holiday plan to spend an average $274 per person for a total of $35.7 billion.

Based on those numbers and the 2.24% average swipe fee for Visa and Mastercard credit cards, MPC estimates that $6.14 per shopper will go to banks and card networks rather than the merchant when customers pay by credit card. That’s the equivalent of two roses out of a typical 24-stem Mother’s Day bouquet where each flower costs about $3.

If all Mother’s Day purchases were made with credit cards, swipe fees would account for $799.7 million of the total. The actual amount is difficult to calculate because some 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% of purchases in 2021, 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 $174.7 million in swipe fees on $7.8 billion in jewelry, $125.4 million on $5.6 billion in “special outings” like dining out, $71.2 million on $3.18 billion in flowers and $25.8 million on $1.15 billion in greeting cards.

Credit and debit card swipe fees have more than doubled over the past decade and soared 17% last year alone to a record $160.7 billion, according to a Nilson report. They are most merchants’ highest operating cost after labor and are too much to absorb, driving up prices paid by the average family by an estimated $1,024 last year.

The impact on Mother’s Day comes as Senators Richard Durbin, D-Ill., and Roger Marshall, R-Kan., are working to pass the Credit Card Competition Act. First introduced last year, 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, forcing 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.

Visa and Mastercard—which control 80% of the market—currently price fix the swipe fees charged by banks that issue cards under their brands rather than the banks competing to offer merchants the best deal. They also block competition by restricting processing to their own networks even though most competing networks charge lower fees and, according to the Federal Reserve, have less fraud.

Convenience store swipe fees were $19.5 billion in 2022, up from $14 billion in 2021.

In May 2022, Kantor testified before the U.S. Senate Committee on the Judiciary, underscoring the exorbitant swipe fees levied on retailers and how those fees are the direct result of price fixing by Visa and Mastercard.