WASHINGTON – The “swipe” fees credit card networks and banks charge merchants to process transactions could cost consumers more than $750 million this Mother’s Day, according to the Merchants Payments Coalition.
“Credit card companies are swiping two flowers out of Mom’s bouquet this Mother’s Day,” MPC Executive Committee member and National Association of Convenience Stores Senior Vice President of Government Relations Lyle Beckwith said. “Families are trying to give mothers a special day, but the credit card industry sees Mother’s Day as just another chance to dig into consumers’ pockets with hidden fees. It’s time for Congress to stand up for moms by passing the Credit Card Competition Act.”
The National Retail Federation’s annual survey found that consumers celebrating the May 12 holiday plan to spend an average of $254 per person, for a total of $33.5 billion.
Based on those numbers and the 2.26 percent average swipe fee for Visa and Mastercard credit cards, MPC estimates that $5.74 per shopper will go to banks and card networks rather than the merchant when customers pay by credit card. That’s the equivalent of two roses out of a typical $60 Mother’s Day bouquet with vase where each flower costs about $2.50.
For the year as a whole, the average family paid an additional $1,102 to cover swipe fees last year.
If all purchases were made with credit cards, swipe fees would account for $757.1 million of the Mother’s Day total. The actual amount is difficult to calculate because purchases are split between credit cards and debit cards, which have a lower swipe fee, and some are made with cash. But cash accounted for only 19 percent of purchases in 2022, according to the Federal Reserve, and its use is rapidly declining as more spending moves online and more consumers use plastic for in-store purchases.
MPC estimates that the total would include $158.2 million in swipe fees on $7 billion in jewelry, $133.3 million on $5.9 billion in “special outings” like dining out, $79.1 million on $3.5 billion in electronics, $72.3 million on $3.2 billion in flowers and $24.9 million on $1.1 billion in greeting cards.
Swipe fees can vary widely, starting at 18 cents on the average $8.15 expected to be spent on greeting cards or 54 cents for the average $23.91 for flowers but amounting to $1.80 on an $80 bouquet of carnations widely considered the “official” Mother’s Day flower. Special outings are expected to average $44.97, which would mean swipe fees of $1.02, but Mother’s Day brunch with drinks and tip can easily run $200 for a family of four, including swipe fees of about $5 – and can be far more at high-end restaurants in major cities. Consumers plan to spend an average $53.12 on jewelry, which would mean swipe fees of $1.20, but swipe fees would amount to $9 on a $400 “Mom” diamond and gold necklace and could be hundreds of dollars on high-end fine jewelry.
Credit and debit card swipe fees have more than doubled over the past decade and reached a record $172.05 billion last year, according to the Nilson report. They are most merchants’ highest operating cost after labor and are too much to absorb, driving up prices paid by shoppers.
The impact on Mother’s Day comes as sponsors are working to pass the Credit Card Competition Act, which is intended to fix the nation’s broken payments market.
Currently, Visa and Mastercard – which control 80 percent of the credit card market – each centrally set the swipe fees charged by all banks that issue cards under their brands rather than letting the banks compete to offer merchants the best deal. They also restrict processing to their own networks even though other networks have lower fees and better security.
Under the legislation, banks with over $100 billion in assets would enable credit cards to be processed over at least two unaffiliated networks. One could still be Visa or Mastercard but the other would be a competing network such as NYCE, Star or Shazam. Banks would choose which two to enable but merchants would choose which to use, forcing networks to compete over fees, security and service. Payments consulting firm CMSPI estimates that competition would save businesses and their customers over $16 billion a year.
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.
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