Consumers don’t want to pay the price for swipe fees

Visa and Mastercard set the exorbitant fees that cost the average American family $1,000 each year
Sr. Director, Grassroots
August 3, 2023

Excessive credit card “swipe” fees are not only a tremendous added cost for merchants. They’re also a significant burden on consumers. As consumers increasingly embrace credit cards for payment, they’re seeing higher prices because of these fees.

Visa and Mastercard, which control 80% of the credit card market, have the sole authority to set the swipe fees merchants are forced to pay every time one of their credit cards is used. They also restrict processing to their own networks, even though other processing networks could do the job for less and with better security.

This lack of competition means swipe fees, which represent anywhere from 2%-4% of transactions depending on the type of card used, quickly add up. Merchants do all they can to keep prices low, but swipe fees are the one cost they cannot control because card-issuing banks refuse to negotiate and follow the fees set by Visa and Mastercard.

Fed up with fees?

Excessive swipe fees hurt small businesses. Visit NRF's Fed Up With Fees headquarters to learn more.

American businesses and families pay the price

Swipe fees are most merchants’ highest cost after labor and are far too much to absorb, resulting in higher prices. The system is particularly burdensome for small businesses, which pay higher rates than larger merchants and have the least ability to negotiate.

In fact, swipe fees cost the average American family over $1,000 annually, whether it’s in the form of higher prices or credit card surcharges. Consumers are increasingly aware of swipe fees and their impact on higher prices. They recognize the flawed payments market that has allowed these fees to more than double over the past decade.

According to a recent poll by NRF, 81% of consumers support federal legislation that would allow for greater competition to lower credit card fees for small businesses. We’ve heard from consumers from across the country about how high credit card swipe fees are affecting them.

Cash discounts versus surcharges

Lois Bales of Hanna City, Ill., sees the impact of swipe fees every time she goes to her local gas station. The station offers a discount of 11 cents a gallon for cash customers, but credit card customers pay full price because of swipe fees.

Other area businesses have completely eliminated cash as a payment option. “Our local entertainment venue is card-only at all events,” she says. “The cost of a night at the theater or concert is rising due to high swipe fees.”

Surcharges to cover the cost of high swipe fees are a source of frustration for Cheryl Milejczak of Cumming, Ga. While no national retailers add a surcharge — the practice is limited mostly to small merchants and restaurants — Milejczak has seen surcharges more frequently when she uses a credit card.

“This is highly unfair, but I understand they are doing it because the credit card companies are changing them exorbitantly to use their services,” she says.

Communities feel the impact

Jamie Kiffel-Alcheh, a Burbank, Calif., mother and author, says she loves supporting small businesses in her community and is concerned by the impact high swipe fees are having on local businesses.

“Like many consumers, I try to support small and local businesses whenever possible. But it is sad when those businesses close in spite of having interested customers,” she says.

“I now realize that many of them can't afford swipe fees. And these days consumers won't generally tolerate adding a fee on their end for a credit card transaction.”

Making ends meet on a fixed income

For budget-conscious consumers like George Dete, a retiree from Carlisle, Pa., swipe fees are an added concern.

Take action

Contact Congress today and tell lawmakers to co-sponsor the Credit Card Competition Act now.

“These fees added to card purchases make it harder to buy essentials,” he says. He’s on a fixed income and has paid surcharges as high as 3.6%.

A solution to bring relief

NRF continues to advocate for passage of the Credit Card Competition Act, a bill that would bring much-needed relief to retailers and consumers by requiring at least two competing processing networks to be enabled on each card.

Doing so would create competition over fees, service and security that is estimated to save merchants and their customers $15 billion annually. Join NRF in calling on Congress to act by participating in our grassroots campaign.

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