How Have U.S. Card Fees Grown Since 2006?
The Senate Judiciary Committee hearing on “Excessive Swipe Fees and Barriers to Competition in the Credit and Debit Card Systems” is May 4, 2022, with both Visa and Mastercard testifying.¹
The last hearing on this issue with both Visa and Mastercard testifying was on July 19th 2006² – nearly 16 years ago. With credit card swipe fees still rising despite the introduction of measures to increase competition in the debit card market in 2011, we address the fundamental question: how much has been paid in U.S. Visa and Mastercard interchange fees since the 2006 hearing?
Interchange fees, along with card volume, have grown significantly from 2006 to today, as can be seen in Figure 1 and Figure 2. Based on figures from the Nilson Report, CMSPI estimates that U.S. merchants have paid $794 billion in Visa and Mastercard interchange fees from July 19th 2006 to May 3rd 2022. This is comprised of $564 billion in Visa and Mastercard credit card interchange fees, and $230 billion in Visa and Mastercard debit card interchange fees.
In 2021 alone, the total U.S. Visa and Mastercard Credit Card interchange fees totaled an estimated $62.49 billion, which is a sharp contrast to many other jurisdictions where interchange fees are substantially lower. In Europe, for example, CMSPI estimates that $6.24 billion USD was paid in Credit Card interchange fees in 2021, which despite lower Credit Card volumes is only 10% of the fees paid by U.S. merchants.
Figure 1. Estimated Interchange Fees Paid (Billions)
Figure 2. Estimated Interchange Fees Paid (Billions)
Figure 3. Estimated Interchange Fees 2006-2021
Methodology
CMSPI calculated this figure using the Nilson Report, which has reported merchant fees in most years since 2009. For years prior to 2009, we used card number growth between 2006 and 2009³ to estimate 2006, 2007 and 2008 fees.
We believe Nilson Report merchant fee numbers account for both interchange and network fees. We have estimated interchange fees by removing estimated network fees from reported merchant fee data. Based on this assumption, we estimate 80.65% of Visa and Mastercard merchant fees paid were interchange fees between 2012 and 2018, and we have used this ratio as an estimate for all other years. We compared this result against publicly available information on network fees from both Visa⁴ and Mastercard’s⁵ public filings and other sources.⁶
Sources:
+1 https://www.judiciary.senate.gov/meetings/excessive-swipe-fees-and-barriers-to-competition-in-the-credit-and-debit-card-systems
2 https://www.govinfo.gov/content/pkg/CHRG-109shrg29737/html/CHRG-109shrg29737.htm
3 https://www.nytimes.com/2009/01/06/your-money/credit-and-debit-cards/primercards.html#:~:text=Credit%20cards%20have%20been%20around,in%20the%20United%20States%20alone.
4 https://investor.visa.com/SEC-Filings/default.aspx#annual-filings
5 https://investor.mastercard.com/financials-and-sec-filings/default.aspx
6 https://www.cardfellow.com/blog/credit-card-processing-fees/