According to the Merchants Payments Coalition, rising swipe fees charged by banks to merchants could cost consumers nearly $578 million this Valentine’s Day.
Swipe fees are the fees banks charge merchants to process their credit and debit transactions. Currently, those fees average 2.24 percent for Visa and Mastercard. According to the National Retail Federation, consumers are expected to spend on average about $186 on Valentine’s Day gifts like candy, flowers, jewelry, greeting cards and evenings out. The coalition said that would mean about $4.16 per person in swipe fees, for a total of $577.9 million if all purchases were made with credit cards.
“Valentine’s Day is one of the busiest days of the year for restaurants, but that special meal out is going to cost a little more for the restaurant and the customer this year, thanks to higher swipe fees,” MPC Executive Committee member and National Restaurant Association Director of Technology and Innovation Policy Brennan Duckett said. “Whether it’s eating out, buying flowers, or choosing an engagement ring, soaring swipe fees drive up the price of everything U.S. consumers buy and impact what couples can afford.”
The coalition said Valentine’s Day spending gives banks and card networks lucrative bonuses as they take a percentage of each purchase. A $120 bouquet of roses would include $2.70 in swipe fees, while a $60 box of chocolates would include about $1.30 in swipe fees, the coalition said.
The coalition said that exact figures are hard to calculate because consumers don’t use credit cards for all of their purchases. However, the Federal Reserve said about 75 percent of in-person purchases are made using a card, and card industry rules make using cash discounts difficult. Online, almost all purchases are paid for by debit or credit card, and swipe fees are even higher online than they are in stores.
The coalition said credit and debit swipe fees have risen 50 percent since the pandemic and are most merchants’ biggest operating cost after labor. Because fees are too high to absorb, they drive up the cost of consumer purchases, the coalition said. The coalition urged law makers to take action by voting on the Credit Card Competition Act that would end Visa and Mastercard’s monopoly over how transactions on cards issued under their brands are routed for processing. The legislation would require cards from the largest banks in the country be able to be routed over at least one competing network, like NYCE, Star or Shazam. The legislation would result in more competition over fees, security and service that is expected to save merchants and consumers more than $15 billion a year.