Every time a retailer accepts a credit card payment for a sale, they pay a percentage of the transaction amount to the credit card networks and card-issuing bank. This fee is known as a “swipe fee,” and retailers and other businesses that accept credit cards have seen their swipe fees nearly quadruple since 2009. As a result, the United States now has the highest swipe fees in the industrialized world.
Rising swipe fees are driven by the Visa and Mastercard duopoly. The two networks control over 80% of the credit card market and accounted for 74% of all credit card swipe fees paid in 2023, recording over $100 billion in annual swipe fee collections for the first time in history.
In 2023, U.S. businesses shelled out $172 billion to cover the cost of swipe fees. Applied to millions of transactions each day, swipe fees have become most retailers’ highest operating cost, second only to labor, driving up consumer prices by more than $1,100 a year for the average household.
These fees are non-negotiable, “take it or leave it” agreements. With more consumers using cards over cash, “leaving it” isn’t an option for retailers. As prices rise, swipe fees increase as a percentage of the transaction, amplifying inflation’s impact.
A healthy and thriving retail industry is vital to the nation’s economy. Retail is the nation’s largest private-sector employer, contributing $5.3 trillion to the GDP and supporting 55 million working Americans. Main Street retailers and consumers need relief from the high swipe fees that hinder their ability to invest in their businesses, hire more staff, contribute to their communities and be more competitive on price.
NRF helps lead the Merchants Payments Coalition and has fought for fair swipe fees for over two decades, saying the current system lacks transparency and competition and that banks’ cost of processing transactions has gone down as technology has improved. The card industry, however, refuses to negotiate over the fees, and NRF has argued in court and before Congress that the way Visa and Mastercard set swipe fee schedules followed by virtually all banks that issue their cards violates federal antitrust law.
Congress has an opportunity to bring relief to American businesses and consumers through the Credit Card Competition Act. By requiring only the largest card-issuing financial institutions to enable a second network to route transactions on their cards, this bill could save retailers and consumers $16 billion annually in swipe fees — without ending credit card rewards.