Opinion: Swipe Fee Fatigue Is Fueling a Retail Cash Revival — and Undercutting Issuers’ Profit Engine

Every Sunday I meet a friend at a local patisserie. Before I go, however, I know to hit the ATM because the patisserie doesn’t accept any other form of payment.

The same is true with my monthly eyebrow threading. The young woman who owns the shop has placed a sign on the door and at the register that reads “Cash only, please.” The new bar down the street? It only reluctantly takes cards.

Suddenly, cold-hard currency is hot again. And not just in the U.S. When I went to Czechia, more widely known as the Czech Republic, this past summer, very few of the charming restaurants and beer gardens accepted credit cards. 

Cash-only policies offer benefits and drawbacks for both retailers and customers, but one thing is for sure: Lenders are losing out when consumers stop using their credit cards. 

A major problem for small businesses concerns swipe fees, which typically range from 2% to more than 3% of each transaction depending on the processor. Because merchants are responsible for paying those fees, they feel the pinch. And when profits are slim, they value every incoming penny and may want to opt out of accepting cards altogether. 

In April 2025, Brian Clarke, a Boston Fed payments analyst and deputy director, explained just how hard these fees are for small businesses across the country. Providing customers with the span of payment choices is perceived as positive, he noted, but the cost of accepting cards is not always worth adding them to the array of options.

Clarke points out that when a customer uses a 10-dollar bill for a $10 transaction, the entire sum goes into the till. If the customer uses a card, though, the business will only get between $9.70 and $9.80 cents. 

Merchants are required to pay a 2% to 3% swipe fee for each card transaction, showing why some businesses only accept cash for purchases.

Mere change, so what’s the big deal? In aggregate, that difference adds up. Resentment has been building, too. Swipeflation.com reports that these fees totaled a record $180 billion last year, a 70% rise since before the Covid 19 pandemic. 

Many businesses accept the cost of processing credit card transactions as an overhead expense. Other businesses pass on the cost of credit card transactions to their customers through convenience fees, or, in states where they’re legal, surcharges of their own, according to a Bankrate.com report. But doing so can create negative customer sentiment.

Hence the “please pay in cash” request, which means financial institutions are removed from the process. 

Some relief for merchants is coming. After years of litigation and negotiating, in November 2025 Visa and Mastercard agreed to lower the transaction fees. Per the agreement, swipe fees will be reduced by about one-tenth of a percent, so merchants will pay 0.1% less per transaction than they currently are. 

This may sound like an insignificant reduction, but it’s a step in the right direction. When it becomes more appealing for small businesses to welcome card purchases, their customers may spend more freely as well.

Not everyone wants to run to the ATM and take out $20 just to buy a croissant. When they can pay with their card, they just may buy a whole box for the upcoming office party. 

Customers who pay in cash take a toll on a credit card issuer’s bottom line. The lender receives the highest portion of the fee that the merchant pays to process the transaction. 

Therefore, when merchants decide against cards because the swipe fees are too expensive, lenders are also negatively impacted. 

Not only does eschewing card transactions affect a card issuer’s underwriting capability, they also miss valuable insight into their customers’ purchasing behavior. That information is important for effective marketing purposes.

In addition to the slightly lower Visa and Mastercard fees, credit card issuers can also make card payments more appealing to small businesses so they choose to offer cards as payment options. 

To help merchants offset the swipe fees, credit card issuers can go the extra mile. They may partner with small businesses to voluntarily lower interchange fees even further.

Because cash transactions are invisible to all but the consumer, the financial institution can share data it gathers from digital payment records so the business can focus its marketing and advertising budget more effectively. 

When small businesses know they still come out ahead by accepting cards, they may take down the “cash only” sign.

Swipe fees aren’t going away, but when small businesses know they still come out ahead by accepting cards, they may take down the “cash only” sign from their doors. 

In general, customers want to have the option to pay with their cards, too. Merchants won’t have to turn away people who only use their mobile wallet or who can’t run to the cash machine.

Other customers prefer to use their cards to earn rewards, maintain their own accounting records, delay payments, or for the consumer protection embedded in credit accounts. 

Right now, swipe fees have turned off too many small businesses. When those fees are more reasonable and the benefits outweigh the cost, all parties win.