Credit card swipe fees could cost consumers $20 billion this holiday season

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Talk about staggering numbers.

Key Point

• Merchants are charged a fee to accept credit cards.
• These charges are not always passed directly to the consumer, but often indirectly in the form of higher charges.

The holiday season is a time when consumers tend to flock to retail stores in droves to check out items from their gift lists. Online sales also tend to recover during the holiday season.

On the other hand, many consumers routinely make credit card purchases during and after the holidays. Credit cards offer the convenience of not having to carry around cash and earning points on your purchases. Some credit cards offer bonus points or cash back in certain categories such as gas, restaurants, and groceries.

But while using a credit card can save you money whether you’re shopping for the holidays or on a daily basis, your reliance on your credit card can also mean you’re spending more than you expected. This is because merchants pay a lot to accept credit cards. And those charges can be passed on to you whether you know it or not.

Swipe fees can really add up

Credit card processing fees can be a significant burden for merchants. Especially recently, these fees have risen. In fact, the Merchant Payments Coalition estimates that rising processing fees could cost consumers more than $20 billion in losses this holiday season.

Breaking this figure down, consumers are expected to spend an average of $833 during the holiday season this year, according to the National Retail Federation’s annual forecast. Based on Visa and Mastercard’s average processing fee rate of 2.22%, the average consumer’s swipe fee is worth $18.50, totaling $20.9 billion across the country if all holiday purchases are made with credit cards. may become.

Of course, it’s difficult to pinpoint an exact amount in terms of seasonal credit card processing fees, as some consumers emphasize paying for their holiday purchases in cash. But with 81% of consumers planning to pay for their holiday shopping with a credit card this year, it’s safe to assume that seasonal swipe fees will be substantial.

also, average Credit card processing fees may be 2.22% and some premium cards may have a swipe fee of 3% or higher. This equates to an extra $25 during the holiday season.

you’re probably paying for it one way or the other

Some merchants have adopted the practice of passing credit card processing fees directly to the consumer. In fact, restaurants and small retailers often see signs explaining that non-cash purchases incur additional charges.

But even if you’re not facing direct charges for using your credit card, you’re likely paying more thanks to more expensive items. Rather than pass processing fees on to consumers, some merchants compensate by increasing the price of the items they sell. So even if you don’t see his 2.22% surcharge on the specific item you purchased, he may be paying the 2.22% surcharge via the higher price tag.

Know when cash is paid

If you’re still in the middle of your holiday shopping and come across a merchant that explicitly passes the credit card processing fee on to the consumer, you can get these extras by visiting an ATM and paying for your purchase in cash. You have a great opportunity to avoid costs. But sometimes, when it comes to paying credit card fees, you have no choice. As such, you should carefully budget for times when you are likely to make many purchases and prices are higher than average.