Credit Card Fees Could Add $20B-Plus to Holiday Spending Tab
WASHINGTON, D.C. — As holiday shopping kicks into high gear, consumers may be faced with higher prices due to rising costs of processing credit card transactions.
According to the Merchants Payments Coalition (MPC), those increasing swipe fees banks charge retailers could cost consumers more than $20 billion in higher prices this season.
"Inflation is coming down but swipe fees keep going up, taking a bigger slice out of what it takes to put presents under the tree," said Stephanie Martz, MPC executive committee member and National Retail Federation (NRF) chief administrative officer and general counsel. "With swipe fees higher here than in other countries, our children get fewer presents for the money than kids in Great Britain, France or even China. The best present Congress can give children this year is passage of the Credit Card Competition Act."
The legislation would require banks with at least $100 billion in assets to enable cards they issue to be processed over at least two unaffiliated networks — Visa or Mastercard, plus a competitor like NYCE, Star, Shazam or Discover. Meanwhile, merchants would be free to decide which enabled network they would prefer to use.
NRF reports that consumers are expected to spend an average $902 during the November-December holiday season for a total as high as $989 billion. Based on the average 2.26% rate for Visa and Mastercard, that would include just more than $20 in swipe fees for the average family, MPC added.
According to MPC, total figures are difficult to calculate because not all purchases are paid for with credit cards; however, independent payments consulting firm CMSPI estimates that 85% of holiday purchases will be made with credit or debit cards or digital wallets and that swipe fees will total at least $20 billion this year even after allowing for cash purchases — up from $18.6 billion last year.
If all purchases were made with cards, swipe fees would total $27.7 billion, up from $26 billion, according to CMSPI.