Credit and debit card ‘swipe’ fees totaled $224 billion in 2023

WASHINGTON – The Merchants Payments Coalition welcomed new data released today by payments consulting firm CMSPI showing that “swipe fees” big banks and card networks charge merchants to process credit and debit card transactions totaled $224 billion last year, nearly a third more than previously believed.

“This report shows that the cost of swipe fees is much higher than previously known and that the impact on small businesses and consumers is far more severe,” MPC Executive Committee member and FMI – The Food Industry Association Chief Public Policy Officer Jennifer Hatcher said. “This underscores the need for Congress to bring competition to the broken payments market as soon as possible. These fees are rising more rapidly than anyone knew before and have to be brought under control. They dramatically drive up prices for almost everything anyone buys, and American families cannot afford for these fees to go any higher.”

The new State of the Industry Report released by CMSPI shows that credit and debit card swipe fees totaled $224 billion in 2023. That compares with $172 billion reported this spring by the Nilson Report, a trade publication that follows the card industry and is the most widely quoted source of data on swipe fees. In addition, CMSPI said Visa and Mastercard credit card swipe fees averaged 2.94% of the transaction amount last year, compared with a 2.26% reported by Nilson.

While Nilson does not specify what swipe fee components are included in its numbers, CMSPI said its figures include interchange fees, which go to card-issuing banks; network fees, which go to card networks like Visa or Mastercard; and processing fees, which go either to a merchant’s “acquirer” bank or a third-party processor. Interchange, the largest of the fees, accounts for $143 billion of CMSPI’s 2023 total.

CMSPI’s report was prepared in collaboration with its Insights Advisory Council, a panel made up of representatives of major merchants that was formed in 2023.

Typically ranging from 2% to 4%, swipe fees are most merchants’ highest operating cost after labor and have to be built into pricing. The total amount collected has more than doubled over the past decade and the fees drive up prices by about $1,700 a year for the average family based on the CMSPI numbers. That compares with over $1,100 based on the Nilson numbers.

The new data comes as Congress is considering the Credit Card Competition Act, which is aimed at reducing swipe fees. Visa and Mastercard currently price-fix swipe fees charged by banks that issue cards under their brands, and also block transactions from being processed over other networks that could do the job with lower fees and better security. 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 or Shazam. That would make networks compete over fees, security and service and is expected to save merchants and their customers $16 billion a year.