Mother’s Day shopping brings consumers out in abundance to retailers, and the rising “swipe” fees big banks and credit card networks charge merchants to process transactions could cost consumers nearly $800 million for the holiday, according to the Merchants Payments Coalition (MPC).
“Everything from greeting cards and flowers to dining out and jewelry will cost more this Mother’s Day because swipe fees drive up prices,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “Motherhood is a sacred institution to most Americans but for the credit card industry it’s just another opportunity take an inflated percentage of every sale. The credit card industry is literally swiping two of the roses out of Mom’s bouquet this year. That’s not fair to families trying to honor moms on this special day, especially since swipe fees multiply the impact of inflation that’s already making it more expensive to take Mom out to brunch or buy her a gift. It’s time for Congress to bring competition to the payments market by passing the Credit Card Competition Act.”
The National Retail Federation’s annual survey found that consumers celebrating the May 14 holiday plan to spend an average $274 per person for a total of $35.7 billion.
Based on those numbers and the 2.24% average swipe fee for Visa and Mastercard credit cards, MPC estimates that $6.14 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 24-stem Mother’s Day bouquet where each flower costs about $3.
If all Mother’s Day purchases were made with credit cards, swipe fees would account for $799.7 million of the 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% of purchases in 2021, 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 $174.7 million in swipe fees on $7.8 billion in jewelry, $125.4 million on $5.6 billion in “special outings” like dining out, $71.2 million on $3.18 billion in flowers and $25.8 million on $1.15 billion in greeting cards.
Credit and debit card swipe fees have more than doubled over the past decade and soared 17% last year alone to a record $160.7 billion, 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 the average family by an estimated $1,024 last year.
The impact on Mother’s Day comes as Senators Richard Durbin, D-Ill., and Roger Marshall, R-Kan., are working to pass the Credit Card Competition Act. First introduced last year, the legislation would require that banks with over $100 billion in assets 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 at least $11 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.