Consumers should expect to spend more on Valentine’s Day this year, according to the Merchants Payments Coalition (MPC), which estimates that rising swipe fees charged by banks could cause $578 million in higher prices. That total is several million higher than last year’s.
“Valentine’s Day is one of the busiest days of the year for restaurants, but that special meal out is going to cost a little more for the restaurant and the customer this year, thanks to higher swipe fees,” said Brennan Duckett, MPC Executive Committee member and National Restaurant Association director of technology and innovation policy. “Whether it’s eating out, buying flowers or choosing an engagement ring, soaring swipe fees drive up the price of everything U.S. consumers buy and impact what couples can afford.”
Consumers are expected to spend an average of $185.81 on Valentine’s Day items such as candy, flowers, jewelry, greeting cards, clothing and evenings out this year for a total of $25.8 billion in spending, according to the National Retail Federation’s annual holiday survey. Based on the average 2.24 percent rate for Visa and Mastercard, that total would include $4.16 per person in swipe fees – as much as a typical Valentine’s greeting card or two or three pieces of chocolate from a mid-range gift box – and would add up to $577.9 million if all purchases were made with credit cards.
According to more specific calculations from the MPC, the $120 cost of “Classic Love” red rose bouquet can include $2.70 in swipe fees. The swipe fees on a $60 box of chocolates amount to about $1.30. A $200 dinner for two can run over $5 for swipe fees on the meal and tip, and a $50 bottle of wine or champagne adds another $1 in swipe fees.
By category, swipe fees could account for $143.4 million of the $6.4 billion consumers are expected to spend on jewelry, $109.8 million of $4.9 billion spent on evenings out, $67.2 million of $3 billion spent on clothing and $58.2 million of $2.6 billion spent on flowers.
The MPC did note that exact figures on swipe fees are difficult to calculate because not all purchases are paid for with credit cards. But, about 75 percent of in-person purchases are made with plastic, according to the Federal Reserve, and card industry rules make cash discounts difficult. Online, virtually all purchases are paid for by debit or credit card, and swipe fees are even higher than in-store.
Credit and debit card swipe fees – which have risen 50 percent since the pandemic and reached a record $160.7 billion in 2022 – are most merchants’ highest operating cost after labor, according to the MPC. The fees are often too high for retailers to absorb, and thus drive-up consumer prices by over $1,000 a year for the average family.
The impact of swipe fees comes as sponsors of the Credit Card Competition Act are awaiting a vote in the U.S. Senate.
The legislation would end Visa and Mastercard’s longstanding monopoly over how transactions on cards issued under their brands are routed for processing, according to the MPC. Instead, cards from the nation’s largest banks would be required to be able to be routed over at least one competing network like NYCE, Star or Shazam in addition to Visa or Mastercard’s networks. Banks would choose which networks to enable, but merchants would then choose which to use, resulting in competition over the fees, security and service. In total, the legislation is expected to save merchants and consumers over $15 billion a year, per the MPC.
This article first appeared in Gifts & Decorative Accessories.
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