Credit card ‘swipe’ fees could account for $3 billion of back-to-school costs
Credit card fees could drive up the price of school and college supplies this year.
Credit card “swipe fees, the amount banks charge merchants to process credit card transactions, will drive up the price of school and college supplies by more than $3 billion this year and cost the average family between $20 and $30, according to a new report from the Merchants Payments Coalition.
Families are expected to spend an average $890 on K-12 school supplies, clothing and related items for a record $41.5 billion this year, reported the National Retail Federation.
While a precise amount is difficult to calculate, MPC estimates that swipe fees account for just under $20 of the per-family cost and $929.6 million of the total. The $20 in swipe fees for a K-12 family is equal to the cost of a school lunchbox, according to the MPC.
Back-to-college spending is expected to average $1,367 with a total of $94 billion, resulting in swipe fees of just over $30 on average and $2.1 billion overall. The $30 college average would buy a backpack. Together, back-to-school and back-to-college swipe fees could amount to just over $3 billion.
“Swipe fees add to the cost of school whether it’s a lunchbox in first grade or a laptop in college,” said Doug Kantor, general counsel of the National Association of Convenience Stores and executive committee member of the MPC. “Congress needs to bring competition to the broken swipe fee market.”
Visa and Mastercard – which control 80% of the market – currently price-fix swipe fees charged by banks that issue cards under their brands, and also block transactions from being processed over other networks that could do the job with lower fees and better security, according to the MPC.
Swipe fees have more than doubled during the past decade and rose $22 billion last year to a record $160.7 billion when debit cards are included, driving up prices by more than $1,000 a year for the average family.
Averaging 2.24% of the transaction but ranging as high as 4%, swipe fees are most merchants’ highest operating cost after labor and have to be built into pricing. With few consumers using cash and credit card rules making discounts difficult, all shoppers pay more because of swipe fees regardless of how they pay.
The impact on school spending comes as Congress is considering the Credit Card Competition Act, which was reintroduced in June by Senators Richard Durbin, D-Ill.; Roger Marshall, R-Kan.; Peter Welch, D-Vt., and J.D. Vance, R-Ohio, and by Representatives Lance Gooden, R-Texas; Zoe Lofgren, D-Calif.; Thomas Tiffany, R-Wis., and Jefferson Van Drew, R-N.J.
The MPC 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.