Unfair swipe fees hamper hiring for small retailers

How excessive credit card fees impact small businesses' ability to create jobs
Legislative Assistant
September 6, 2023

Small businesses are the backbone of the American economy and are widely acknowledged as the engine driving job creation in the United States. The 12.9 million jobs created by small businesses over the past 25 years account for two out of every three positions added to the U.S. economy, according to the Small Business Administration. But skyrocketing credit card swipe fees on top of challenging economic conditions are having a profound impact on small retailers’ ability to hire employees and create jobs.

The primary impact of high swipe fees is higher prices for consumers. But we spoke with three small retailers to see how unfair and excessive swipe fees are also contributing to hiring challenges.

Fed up with fees?

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

High, anti-competitive fees

U.S. credit card swipe fees were already the highest in the industrialized world but increased another 20% last year, making it even more difficult for retailers to afford to add staff. 

“Without the high Visa and Mastercard charges, I would be able to hire another full-time employee,” said Jennifer Ramer, president of Planet Cowboy in Nashville. 

With control of 80% of the credit card market, Visa and Mastercard centrally price fix the swipe fee rates charged by all banks that issue cards under their brands and restrict processing to their own networks even though others could do the job for less and with better security. 

The card industry refuses to negotiate swipe fees with Main Street, resulting in constantly rising fees that are now most merchants’ highest operating cost after labor. That leaves small retailers with no choice but to incorporate the high fees into their prices or reduce their already thin profits.

Largest operating cost after labor

Michelle McCosh, owner of Everything Scrapbook and Stamps in Boca Raton, Fla., also said high swipe fees make it tough to hire more employees.

“Fees are so consuming that it makes it hard,” McCosh said. “If fees are reduced or more competitive options were available, then we would be able to keep up with the demand for additional help.”

The average credit card swipe fee is 2.24% of the purchase amount while retailers’ average profit margin is less than 3%. Meanwhile, the large Wall Street banks that issue the vast majority of cards have an average profit margin of 27%.

Take action

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

To small retailers like Melissa Clark, owner and director of Honey & Abernathy in Delaware, Ohio, that’s not fair. She says swipe fees are “a paralyzing cost” preventing her from hiring more employees and growing her business.  

“High swipe fees divert operating funds from much-needed labor supply and facility funding, thus halting growth,” Clark said. 

The need for relief

Small businesses need the Credit Card Competition Act, a bill that would inject competition into the U.S. payment market and give them more choice in which routing networks they use to process credit card transaction. This reform is critical to help them choose networks that may have lower fees and better security, allowing them to have more in their budgets to invest in hiring. Join NRF in calling on Congress to act by participating in our grassroots campaign.

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