Hidden Credit Card Swipe Fees Are Costing You Money
Tell Congress to Do Something About it
What Are Swipe Fees?
Every time you use a credit card to pay for goods and services, the credit card companies charge fees to the retailer. Like other overhead charges, these fees are passed on to you, the consumer, in the form of higher prices. In 2023 alone hidden Swipe Fees cost the average American family more than $1,100.
And swipe fees have been rising fast in recent years. In fact, Swipe Fees have more than doubled over the past decade. The fee amount is a percentage of the total transaction cost, which means that swipe fees go up even faster during times of higher inflation.
Who Controls Swipe Fees?
Two global credit card networks control about 83% of the credit card volume in the United States. Those two networks tell the banks that issue credit cards how much to charge retailers for accepting the cards. That means the banks do not need to compete on prices, resulting in increasing fees year after year.
Why Are Swipe Fees Important And How Am I Affected?
Swipe fees have increased more than 50% just since 2020. Swipe fees represent the second-highest operating cost for merchants, for example—more than rent and utilities. The average rate paid to the two largest credit card companies in the United States was 2.25% of the transaction amount—more than seven times what they are in Europe and five times more than in China.
If Swipe Fees continue to rise, so will prices. That will cost you and your family more and more every year.
The Solution? Competition.
The Credit Card Competition Act (CCCA) is bipartisan legislation introduced in both the U.S. House of Representatives and U.S. Senate. Both versions would require credit card networks to allow transactions to be processed over at least two unaffiliated card payment networks—the same process that has been used for debit cards for more than a decade. That means that those networks would have to have competitive prices to not lose business—the same as every other business.
The legislation would only apply to banks with more than $100 billion in assets, exempting the vast majority of banks and credit unions in the United States, including community banks and other small and mid-sized regional banks. In addition, the CCCA would block networks supported by foreign governments— such as China’s UnionPay—from operating the U.S. processing market, which closes an existing security gap.
The Bottom Line
When businesses are presented with more options, it creates a competitive market, which helps drive costs down. That helps you, the consumer.