Credit card ‘Swipe’ Fees could cost consumers over $20 billion during 2025 holiday season

WASHINGTON — Rising “swipe” fees banks charge merchants to process credit card transactions could cost consumers nearly $20 billion or more in higher prices this holiday season, the Merchants Payments Coalition said today.

"If Scrooge and the Grinch conspired on how to ruin the holidays, credit card swipe fees would be their plan,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “These credit card fees are so high they’re swiping a Lego set or Barbie doll from under the tree of the average American family. Swipe fees increase inflation and make life less affordable for everyone. It's time for Congress to stop the card companies' humbug and give Americans some relief from fees."

Consumers are expected to spend an average $890 during the November-December holiday season for a total as high as $1.02 trillion, according to the National Retail Federation. Based on the average 2.35% rate for Visa and Mastercard, that would include about $21 in swipe fees for the average family — enough to buy a Barbie doll or Lego set, the two most-popular holiday toys, or a ham or turkey for a holiday dinner.

Exact figures are difficult to calculate because not all purchases are made with credit cards. But independent payments consulting firm CMSPI estimates that 89% of holiday spending will be done with credit or debit cards or digital wallets this year and that swipe fees will total at least $19.9 billion even after allowing for cash purchases. That’s up from $19 billion last year. If all holiday spending were done with credit cards, swipe fees would total $29.1 billion, up from $28.8 billion last year.

Swipe fees are most merchants’ highest operating cost after labor throughout the year and too much to absorb, driving up prices for consumers even when they use cash. Swipe fees have risen 70% since the pandemic and reached a record $187.2 billion last year, costing the average family nearly $1,200.

The holiday impact of swipe fees would not be affected by a recent proposed settlement of merchants’ longstanding class-action antitrust litigation over Visa and Mastercard swipe fees, which has been rejected by all major merchant groups as inadequate. MPC and other merchant associations have said Congress still needs to pass the Credit Card Competition Act to bring swipe fees under control.

Swipe fees have risen because of lack of competition. Visa and Mastercard, which control 80% of the market, centrally price-fix the swipe fees charged by all banks that issue cards under their brands rather than banks competing to offer merchants the lowest rates. They also restrict processing of transactions to their own two networks. Under the CCCA, cards from the nation’s largest banks would be enabled to be processed over at least one unaffiliated network like NYCE, Star or Shazam in addition to Visa or Mastercard. Doing so would result in competition over fees, security and service expected to save merchants and their customers $17 billion a year.

Under the legislation, rewards would not be affected, consumers would still use the same cards, and security would be improved because the Federal Reserve says the competing networks have one-eighth the fraud rate of Visa and Mastercard. Financial institutions with less than $100 billion in assets — including all community banks and all but one credit union — would be exempt.