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WASHINGTON – The “swipe” fees banks charge merchants to process credit card transactions will drive up the price of school and college supplies by almost $3 billion this year and cost the average family between $20 and $30, the Merchants Payments Coalition said today.
“The impact of swipe fees on the cost of school supplies reinforces the lesson taught in every high school and college economics class: lack of competition leads to higher prices,” MPC Executive Committee member and National Grocers Association Chief Government Relations Officer and Counsel Christopher Jones said. “Swipe fees make it more expensive for families to send their children to school whether it’s crayons in elementary school or dorm supplies in college. It doesn’t take a degree in economics to see that it’s time for Congress to fix this broken market by passing the Credit Card Competition Act.”
Swipe fees, which average 2.26% of the transaction but range as high as 4%, are most merchants’ highest operating cost after labor and have to be built into pricing. Few consumers use cash, and credit card rules make discounts difficult, so all shoppers pay more because of swipe fees regardless of how they pay.
According to the National Retail Federation, families are expected to spend an average of $875 on K-12 school supplies, clothing, and related items, for a total of $38.8 billion this year. While a precise amount is difficult to calculate, MPC estimates that swipe fees account for almost $20 of the per-family cost and $876.9 million of the total.
Back-to-college spending is expected to average $1,365 with a total of $86.6 billion, resulting in swipe fees of just over $30 on average and $1.96 billion overall. Together, back-to-school and back-to-college swipe fees could amount to $2.83 billion.
K-12 families are expected to spend an average $142 on school supplies like pencils and notebooks, including over $3 in swipe fees; $310 on electronics like calculators, or about $7 in swipe fees, and almost $425 for clothing and shoes, including almost $10 in swipe fees. For college, spending should average $82 for college-branded gear (including $1.85 in swipe fees), $91 for school supplies ($2), $192 for dorm furnishings (about $4.35), $284 for clothing and shoes (over $6) and $360 for electronics ($8).
The $20 in swipe fees for a K-12 family is equal to the cost of a school lunchbox while the $30 college average would buy a backpack.
Swipe fees account for almost $2 of the $85 price of a typical school-recommended list of pencils, crayons, paper and similar supplies for a first-grader. In high school, the fees can total almost $3 on the $125 graphing calculator required for an algebra class and over $3 for the basic $135 supply list. And they amount to $10 on a $450 laptop.
Swipe fees for Visa and Mastercard credit cards have nearly quadrupled since 2010 to more than $100 billion last year. Total credit and debit card swipe fees hit a record $172 billion in 2023, driving up prices by over $1,100 a year for the average family.
The impact on school spending comes as Congress is considering the Credit Card Competition Act. Visa and Mastercard – which control 80 percent 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. The legislation would require banks with at least $100 billion in assets to enable cards they issue to be processed over at least two unaffiliated networks – Visa or Mastercard plus a competitor like NYCE, Star or Shazam. That would make networks compete over fees, security and service and is expected to save merchants and their customers $16 billion a year.
