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Credit card swipe fees could cost consumers over $683 million in higher prices this Valentine’s Day, according to The Merchants Payment Coalition.
“For restaurants, swipe fees are anything but a love story,” says MPC executive committee member and National Restaurant Association director of technology and innovation policy Brennan Duckett. “On one of the year’s biggest dining holidays, these excessive fees raise costs for restaurant operators and for every couple trying to enjoy a special night out. It’s time for Congress to show some love to small businesses and their guests by passing the Credit Card Competition Act.”
Consumers are expected to spend an average of $199.78 on Valentine’s Day items like candy, flowers, jewelry, greeting cards and meals and entertainment this year, according to the National Retail Federation. This would include an average $4.69 in swipe fees, based on the average 2.35% rate for Visa and Mastercard, totaling as much as a typical Valentine’s greeting card or three pieces of chocolate from a mid-range box. If all purchases were made with credit cards, this would add up to $683.9 million.
Valentine’s Day spending will give banks and card networks lucrative profits as they take a percentage of each purchase made with a card. By category, swipe fees could account for $164.5 million of the $7 billion consumers are expected to spend on jewelry, $148 million of $6.3 billion spent on evenings out, $82.3 million of $3.5 billion spent on clothing and $72.9 million of $3.1 billion spent on flowers.
Credit and debit card swipe fees are most merchants’ highest operating cost after labor. The fees are too high to absorb, especially for small merchants, and drive up consumer prices by nearly $1,200 a year for the average family.
President Donald Trump last month endorsed the Credit Card Competition Act, gaining support of many lawmakers and companies. Under the bill, banks with at least $100 billion in assets would be required to enable credit cards to be processed over at least one unaffiliated network like Star, NYCE or Shazam in addition to Mastercard or Visa. The measure is expected to result in competition over fees and could save merchants and their customers over $17 billion a year.
Visa and Mastercard currently control over 80% of the credit card market and each sets the swipe fee rates charged by all banks issuing cards under their brands. Each also restricts transaction processing to its own network.
