WASHINGTON — Debit cards remain the world’s most widely used and best-performing payment method, but the overall cost of card payments is skyrocketing — with swipe fees hitting a record $236.4 billion in 2024, according to CMSPI’s new State of the Industry Report.
The report, released in collaboration with the firm’s Insights Advisory Council, provides an analytical framework for evaluating payment methods against five factors: security, cost, user experience, acceptance, and governance. Debit cards scored highest, supported by consumer trust and regulatory protections such as fee caps in many markets. Real-time payments also emerged as a key challenger, with India’s UPI and Brazil’s Pix demonstrating how instant, low-cost transactions can scale quickly.
At the same time, the Merchants Payments Coalition (MPC) highlighted the report’s findings as fresh evidence of systemic problems in the U.S. payments market, pointing to the ballooning cost of “swipe” fees — the interchange, network, and processing charges merchants pay to accept credit and debit cards.
Key Findings from CMSPI’s 2025 Report
- Debit cards lead globally. Fee caps and merchant routing choice have helped debit outperform credit cards, which continue to burden retailers with higher interchange and network costs.
- Real-time payments are on the rise. India’s UPI and Brazil’s Pix prove instant, low-cost payments can scale quickly, though widespread consumer-to-business adoption elsewhere remains limited.
- Digital wallets show potential. Adoption outside China has been uneven, but wallets continue to deliver speed, convenience, and enhanced fraud protection via tokenization and biometrics.
- Cash isn’t dead yet. Despite declining use, cash remains resilient due to low acceptance costs and its value as a fallback in uncertain times.
- BNPL and stablecoins lag. BNPL faces high merchant fees and regulatory headwinds, while stablecoins remain nascent in consumer payments. Even so, regulators and merchants see opportunity for stablecoin in B2B transactions.
Swipe Fees Outpace Inflation
- $236.4 billion in 2024. CMSPI’s tally was more than 25% higher than Nilson Report’s widely cited $187.2 billion estimate for the same year.
- Credit cards most costly. Visa and Mastercard credit cards carried an average swipe fee rate of 2.91%, generating $122.3 billion in fees.
- Double-digit burden. Fees have more than doubled over the past decade, adding nearly $1,800 annually to household costs — compared with $1,200 under Nilson’s numbers.
“These numbers show just how broken the payments market really is,” said Jennifer Hatcher, MPC executive committee member and FMI chief public policy officer. “Swipe fees are an even larger burden on small businesses and consumers than we knew previously. They drive up the price of almost everything consumers buy.”
Industry Implications for Retailers
For merchants, swipe fees are often the second-highest operating cost after labor, directly impacting pricing strategies and margins. Debit and real-time payments offer more cost-effective alternatives, while digital wallets remain a mixed picture: convenient for consumers but often tied to card networks’ fee structures.
The findings also arrive as Congress weighs the Credit Card Competition Act, legislation that would require the nation’s largest banks to enable processing over at least two unaffiliated networks. Advocates say the move could save merchants and consumers $17 billion annually by fostering fee competition and boosting security.
Outlook
CMSPI projects debit cards will retain their global lead in the near term, but real-time payments and stablecoins show momentum. At the same time, political and regulatory pressure on credit card fees is intensifying. For retailers, the takeaway is clear: managing payment mix and advocating for reform are now central to controlling costs and preserving consumer value.
