The fight over credit card swipe fees enters a new year with no end in sight

With new fee increases and more shoppers ditching cash, some small businesses are urging their customers to consider sticking with bills and coins.

Many small businesses are breathing a bit easier as inflation has cooled and the race for workers slows. But consumers’ steady embrace of credit cards is taking a growing bite out of their margins.

Gene-Christian Baca, the owner of Walter’s Hot Dogs in Mamaroneck and White Plains, New York, estimated that he now pays $50,000 a year in costs associated with processing credit card transactions, a sum he says has ballooned with rising card processing rates and more customers paying with cards over cash.

“Every year, 3% of all of our sales is washed away just to credit card processing,” he said.

A Visa credit card inserted into a card reader in Tiskilwa, Ill., on Sept. 18, 2018.Daniel Acker / Bloomberg via Getty Images fileMerchants have long shouldered these “swipe fees,” the catchall term for businesses’ payments to banks and card companies each time customers swipe. While a federal rule caps debit card swipe fees at 21 cents per transaction, those for credit cards can be much higher.

And as many shoppers ditched cash for plastic cards or mobile payment apps, businesses have seen credit card transactions swell. They made up 32% of all U.S. consumer payments in 2023, up from 24% in 2019, according to a Federal Reserve study. Cash shrunk its share to 16% over the same period, down from 26%.

https://www.nbcnews.com/business/business-news/fight-credit-card-swipe-fees-enters-new-year-no-end-sight-rcna184729


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Updated: 8 hours ago
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