Merchant Group Warns Swipe Fees Could Top $20 Billion Amid Holiday Spending Surge

Consumers may pay more than $20 billion in fees while using their credit cards while shopping for the holidays this year, according to the Merchants Payments Coalition. 

The coalition is criticizing the costs that merchants pay to accept credit cards payments, known as swipe fees, in a recent press release that largely overlooks the benefits that credit card payments bring to businesses.

The National Retail Federation anticipates that holiday spending will top $1 trillion in 2025. This year would be the first time November and December retail sales have crossed the trillion-dollar mark, according to the federation.

The Merchants Payments Coalition estimates that the average family will pay approximately $21 in swipe fees during the holiday shopping season this year. The coalition suggests that if families could avoid paying those fees, they could use the money they saved to purchase more gifts or food for the holidays.

“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,” Doug Kantor, Executive Committee Member at the Merchants Payments Coalition and General Counsel for the National Association of Convenience Stores, said in the press release from the coalition.

“Swipe fees increase inflation and make life less affordable for everyone,” Kantor added.

The Merchants Payments Coalition said in its release that it would like Congress to intervene in the matter to reduce swipe fees.

From a consumer who is on a tight budget to a small business owner who meticulously tracks every penny their company spends, people generally appreciate paying fewer fees. But the costs the Merchants Payments Coalition has concerns with serve several purposes the group doesn’t mention in its press release.

Interchange fees cover the costs issuers pay to offer credit cards to consumers and manage card accounts. The fees can also help cover card network costs and safeguards that protect against fraud.

Merchants that want to avoid swipe fees could refuse to accept credit cards payments, forcing their customers to pay in cash or via another method of payment such as a debit card. But that practice could cause businesses to miss sales targets.

Many shoppers may abandon a sale altogether once they learn that a business doesn’t accept credit card payments. 

And credit card payments present merchants with opportunities to save resources. Recent research indicates that convenience store employees can devote between 15 and 20 hours per week to counting cash.

Accepting payments in cash can require a business’s employees to spend a significant amount of time each week counting and reconciling funds.

We spoke to Matthew Goldman, Founder and Managing Member of consulting firm Totavi, about the challenges businesses face in accepting other forms of payments, including cash.

“No payment is free,” Goldman told us. “Cash is not free. Big corporations know this. Of course they’re going to complain about interchange because they want to pay less — it’s a negotiating tactic.”

While interchange fees may amount to slightly more than 2% of the amount of a transaction, managing cash payments can be costlier to merchants.

“The general estimate is that managing cash is actually like a 4% fee,” Goldman told us. “You have theft. You need to have storage. And you can have many other issues with it.”