Swipe Fees Are a Drain on Consumers’ Wallets, a Merchant Group Says

Fees paid by merchants to accept credit card and debit cards will dampen consumer spending power this holiday shopping season as sellers look for ways to offset the cost, says the Merchants Payment Coalition.

Swipe fees are projected to cost merchants at least $19.9 billion this holiday shopping season, up from $19 billion a year ago, payments consultancy CMSPI projects. Overall, debit and credit cards transactions are projected to account for 89% of holiday spending, CMSPI adds.

For most merchants, swipe fees are their second-highest operating expense after labor costs and have risen 70% since the pandemic, the MPC says. In 2024, merchants paid a record $187.2 billion in swipe fees, adds the MPC. The group defines card swipe fees as interchange and network fees, both of which it says have been rising in recent years.

The MPC argues that the cost of swipe fees aggravates inflation for consumers, as merchants hike prices or levy surcharges on credit and debit card transactions to cover the cost.

With the National Retail Federation projecting holiday spending to average $890 per consumer this holiday shopping season, the MPC estimates that, based on the average 2.35% acceptance fee for Visa and Mastercard branded cards, swipe fees will cost consumers about $21, or enough to “buy a Barbie doll or Lego set.”

“Swipe fees are rising, and merchants have to try and build those costs into their pricing or levy a surcharge,” says Doug Kantor, an MPC executive committee member and general counsel for the National Association of Convenience Stores.

While the practice of surcharging is becoming more common, “it’s not that common,” Kantor adds. “The card companies are pulling a lot of money out of the economy through swipe fees.”

In response, the Electronic Payments Coalition counters that credit cards help facilitate consumer spending, especially for online purchases, and provide fraud protection, rewards such as cash-back that can be used to purchase gifts, and convenience for small businesses and consumers.

“Millions of Americans got a jump on the holidays during Cyber Monday, pumping more than $14 billion into the economy – something that simply wouldn’t be possible without card payments. Even the Salvation Army kettles are now equipped with card payment options,” Nick Simpson, managing director, communications and public affairs for the EPC, says by email. “To paraphrase Christmas Vacation, credit cards really are the gift that keeps on giving the whole year through.”

To support its position, the EPC cites data from research firm IHL Group (formerly IHL Retail Advisory Group) that grocery stores pay about 4.7% to process cash transactions. Handling cash is labor-intensive and requires substantial security investments to safeguard and deposit funds, the EPC adds.

During the recent Thanksgiving holiday, American families were projected to spend more than $1.8 billion on Thanksgiving meals, according to the EPC. If all those purchases were made with credit cards, retailers would save an estimated $43 million to $57 million in processing costs compared to handling the same volume in cash, according to IHL. If that $1.8 billion were spent as cash, it would cost merchants more than $85 to process those transactions, based on IHL data, the EPC says.

In response to the EPC’s position that credit cards are an integral part of the economy, the MPC’s Kantor argues that spending on credit cards would occur even if consumers did not use them. “The card companies are wrong on their assumption,” Kantor says. “Swipe fees reduce consumer spending at a time when affordability is being stressed.”