Swipe fees are growing more costly for retailers and consumers, but the Fed is attempting to lower them.
Consumers likely paid hefty fees on Valentine’s Day if they bought gifts using credit cards. Swipe fees — fees credit card issuers and issuing banks charge retailers to process debit and credit card transactions — cost consumers an estimated $578 million in higher prices this Valentine’s Day, a Merchant Payments Coalition study found.
The study based this estimate on the average 2.24% rate on Visa and Mastercards. Since the average amount spent on Valentine’s Day is $185.81, consumers paid about $4.16 per person in swipe fees.
The Merchant Payments Coalition couldn’t give exact figures since not all Valentine’s Day purchases were made with credit cards.
"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," Brennan Duckett, a Merchant Payments Coalition Executive Committee member, said.
"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."
Shoppers who buy online also aren’t immune from debit or credit card processing fees, the report found. Swipe fees tend to be even higher on online purchases versus in-store purchases.
For larger purchases, it’s often more economical to use a personal loan with a low interest rate and set repayment terms. Head to Credible to compare rates and lenders and find a timeline that works for you.
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In October, the U.S. Federal Reserve proposed lowering swipe fees. The proposal, if passed, would cut the current fee cap from 21 cents per transaction to 14.4 cents per transaction.
This would be the first time the Fed adjusted rates since the initial cap was set in 2011. The proposal is now open to feedback from the public.
"Retail is the most competitive industry in the US economy today. The Fed’s proposed revisions lowering the interchange rate for debit transactions will not only benefit every retailer but also customers and employees," Austen Jensen, the executive vice president of government affairs at the Retail Industry Leaders Association, said in an interview.
"The entire retail community operates off the slimmest of margins and when there is an opportunity to lower prices or provide additional benefits, merchants seize those moment."
If you’re dealing with high debt, personal loans can help you get out of it. You can consolidate your debt into one low-interest loan and pay it off over a few years. Use an online marketplace like Credible to make sure you’re getting the best rate and lender for your needs.
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Consumers can’t always avoid swipe fees unless cash is used instead of plastic. There are other credit and debit card fees that can easily be avoided with a few simple steps.
To avoid costly fees associated with credit cards, consider using a personal loan for your next big purchase. When it comes to personal loan shopping, Credible can do the heavy lifting for you. With the click of a button, you can view multiple lenders, rates, and terms in one spot.
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