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Washington Retail Insight

Report Says Swipe Fees on Rising Gas Prices are ‘Additional Burden’ on Consumer Spending

By J. Craig Shearman
Washington Retail Insight
April 11, 2012

A new report out this week shows credit and debit card swipe fees are adding as much as 10 cents a gallon to rising gasoline prices that are diverting billions of dollars from consumer spending.

“Higher gas prices create an additional burden for consumers already wrestling with a weak economy,” the National Association of Convenience Stores said in the report. “Higher gas prices … hurt almost everyone.”

With gasoline at an average $3.94 a gallon in early April, swipe fees averaged about 7 cents a gallon and ran to 9 to 10 cents per gallon in some cases, the report said. Debit swipe was capped at about 22 cents per transaction under reform that took effect last year but merchants and their customers still pay a variable fee of 2-3 percent of the transaction price when credit cards are used.

NACS members and their customers paid $11.1 billion in swipe fees in 2011, most of it on gasoline sold at the pumps that have made convenience stores de facto gas stations across most of the country.

While gasoline prices have risen 80 percent since 2004, swipe fees paid on gas have gone up 180 percent during the same period, NACS said. As a percentage of the transaction, the fees automatically rise as gas prices increase, but are also driven by wider use of plastic, especially premium cards that carry higher rates than ordinary cards.

The report comes less than a month after NRF President and CEO Matthew Shay warned that high gasoline prices “are forcing millions of our customers to spend a significant portion of disposable income filling their gas tanks.” In addition to impacting consumer spending, higher gas prices also increase retailers’ transportation costs for getting merchandise to their stores.

NACS is a leading member of the Merchants Payments Coalition, which was formed in 2005 by NRF and other merchant trade associations to address soaring swipe fees. The fees have more than tripled since 2001, costing merchants and their customers an estimated $50 billion a year and increasing consumer prices by more than $400 a year for the average household.

© 2012 National Retail Federation

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