WASHINGTON–One reason for the higher prices and inflation Americans will be seeing this Thanksgiving is due to card swipe fees, according to the Merchant Payments Coalition, which said the fees are adding “millions of dollars” to prices paid by consumers.
“Consumers are spending more than ever this Thanksgiving, and credit card fees are a big part of the reason,” said MPC executive committee member and National Association of Convenience Stores General Counsel Doug Kantor. “Whether it’s the turkey on the table or the gas and airfare it takes to get home, credit card fees are driving prices even higher, and the card industry sees an unearned windfall every time prices go up.”
In a statement, the MPC said the fees remain “unknown” to most Americans, but the result is that merchants receive less than 98 cents on the dollar on average on purchases as a result.
“As prices go up, the dollar amount the card industry collects goes up with them, becoming a multiplier effect that drives inflation even further,” the MPC said. “The fees come to tens of millions of dollars for Thanksgiving alone and more than $100 billion a year. With the fees representing many merchants’ highest cost after labor and most consumers paying by plastic rather than cash, the fees have to be built into prices and cost the average family hundreds of dollars a year even if they pay with debit cards, which have lower fees, or cash.”
Fees Per Thanksgiving Item
While the organization said the overall total is difficult to calculate, swipe fees touch every aspect of the Thanksgiving celebration, including:
- Groceries for a home-cooked Thanksgiving dinner for 10 will average a record $53.31 this year, up 14% from last year, driven by a 24% increase in the price of the average 16-pound turkey (now $23.99), according to the American Farm Bureau. “With swipe fees for Visa and Mastercard credit cards averaging 2.22%, card fees account for $1.18 of the total – including about 50 cents for each turkey. Based on per-pound prices and average weights, fees equal the cost of the wings on the turkey.”
- Lending Tree sets the estimate for dinner far higher. It said a Thanksgiving party for 10 spent an average $343.26 on food and drink last year, which would result in $7.62 in swipe fees. “For the gourmet-minded, high-end restaurants can charge $80 or more per person, costing a party of 10 $800 – including $17.76 in swipe fees. That doesn’t include tips, which are also subject to swipe fees if charged.”
Dinner Isn’t the Only Cost
“An estimated 48.3 million people are expected to drive to their destinations, and the average cost of a gallon of regular gas is currently $3.41 per gallon, according to AAA,” the MPC said. “That means swipe fees amount to 7.6 cents per gallon, adding more than 75 cents to a 10-gallon fill-up. The number is up from 4.7 cents a year ago when gasoline averaged $2.12 and means the card industry will make more than the local gas station owner – fuel industry pretax profits average less than six cents per gallon.”