Merchants say credit card ‘swipe’ fees will add to inflation for those celebrating Fourth of July
Credit Card Industry Swipes Almost a Full Pack of Hot Dogs from Patriotic American Families
“Swipe” fees banks charge merchants to process credit card transactions will add hundreds of millions of dollars to the cost of everything from food to fireworks as Americans struggling amid rampant inflation celebrate Independence Day this year, the Merchants Payments Coalition said today.
“Consumers are eager to celebrate this Fourth of July, but credit card fees are adding to the cost of the holiday,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “Swipe fees are a percentage of the transaction, so they go up whenever prices go up and are a multiplier effect for inflation. The fees can be the equivalent of another box of sparklers or package of hot dogs and are money that disappears up in smoke more than anything Americans shoot into the sky or put on the grill. That’s a windfall for the card industry but less sparkle for consumers watching their wallets.”
Unknown to most consumers, banks and card companies take an average of just over 2 percent of the transaction every time a credit card is used to make a purchase. Swipe fees soared 25 percent last year to a record $137.8 billion for credit and debit cards combined and have more than doubled over the past decade. The fees are most merchants’ highest operating cost after labor and drive up prices they charge consumers, working out to about $900 a year for the average family. Since credit card rules make cash discounts difficult, consumers pay more even if they pay with cash.
While an overall total is difficult to calculate, swipe fees touch every aspect of Fourth of July celebrations. Swipe fees on food, fireworks and flights approach $350 million.
Americans plan to spend a record $84.12 on food for the Fourth on average, or $7.7 billion, according to the National Retail Federation. Based on the average 2.22 percent charged for Visa and Mastercard credit cards, that includes $1.87 in swipe fees for the average family and adds up to more than $170 million nationwide. Beer and wine will add another $1.4 billion to the tab, according to WalletHub – bringing about $22 million more in swipe fees.
Spending on fireworks totaled $2.4 billion last year, according to WalletHub, for another $53 million in swipe fees. Swipe fees account for about $2.55 of the $115 price of a “Fireworks Fiesta” package advertised by one dealer, or about half that on a more modest $55 “Big Shot Bag.”
For families making road trips, gasoline cost an average $4.88 a gallon this week, according to AAA. NACS says fuel merchants pay about 10 cents a gallon in swipe fees, adding a dollar to every 10-gallon fill-up. Rental cars can cost $500 a week or more, according to NerdWallet, with swipe fees representing about $11 of the cost.
An estimated 12.9 million people are expected to fly over the July 4 weekend and will face the highest airfare in five years at an average $437 per domestic round trip ticket, according to travel app provider Hopper. That amounts to almost $10 per ticket in swipe fees, or $124 million on $5.6 billion in total airfare. International travelers will pay an average $1,200 per ticket, including about $26 in swipe fees. Hopper says hotel rooms will average $206 per night, which would mean a swipe fee of close to $5.
About Merchants Payments Coalition
The Merchants Payments Coalition represents retailers, supermarkets, convenience stores, gasoline stations, online merchants and others fighting for a more competitive and transparent card system that is fair to consumers and merchants.