This holiday season, the National Retail Federation estimates that holiday spending may top $989 billion, growing approximately 2.5% to 3.5% over 2023.¹ CMSPI estimates U.S. retailers will pay card acceptance fees² of over $20.06 billion this holiday period, up from $18.6 billion in 2023 (Figure 1). To put that cost into perspective, the $20.06 billion represents enough money to pay the estimated 400,000-500,000 seasonal workers hired this year an annual wage of $41,000-$52,000.³

Want to see what share of holiday card costs is forecasted to come from your state? (Figure 2).⁵ State impact figures were calculated by splitting out total fees paid nationally by each state’s share of US GDP for the most recently available year.

More Digital Spend – and Fees – A Hallmark of This Season

U.S. credit card acceptance fees for merchants are some of the highest around the globe.⁷ In fact, data suggests credit cards account for over 73% of total card fees paid by the country’s retailers,⁸ and spending on these cards spikes during the holiday season.⁹ Of the $20.06 billion in merchant card fees forecasted for the period between November and December, credit card fees account for over half.¹⁰

Part of the increase in card costs can be attributed to the rising share of ecommerce in holiday purchases. Based on the NRF estimates, the share of expenditure in ecommerce channels has risen nearly 7% in 2023 to represent more than 30% this holiday season. With nearly one in three dollars estimated to be spent online, retailers will be exposed to disproportionately high costs: the transaction fees for accepting a card payment can be 21 basis points higher for credit and can be 58 basis points higher for debit when the same payment is made online versus in-store based on 2023 data (Figure 3).¹¹

The other part of the cost trend can be explained by increases to card fees. Beginning in January 2025, retailers will be subject to fees surrounding authorizations, digital transactions and fees applicable to all transactions. These fee increases only add to the staggering $224 billion cost U.S. retailers faced in 2023.¹³

Furthermore, to demonstrate the extent to which credit card costs are impacting U.S. retailers, if all holiday expenditures this year were performed on credit cards, retailers would be spending nearly $28 billion in card fees, over $7 billion more than the estimate based on the current payments mix.

Keeping Costs Down

Given it’s the busiest shopping season for most, the holiday period represents one of the biggest challenges and opportunities for retailers. With the anticipated influx of customers, the results of suboptimal arrangements will be amplified and could even worsen.  

Despite the Fed’s Card Not Present debit routing clarification in 2023¹⁴ and the pending potential change of the debit interchange caps, the payments landscape is as costly as ever for merchants. With the shift to online shopping during the holidays and the significant card fee cost differential between in-store and online shopping, cost-saving measures are more important than ever. Alongside the shift to online spending, the holiday season also tends to see a spike in Buy Now, Pay Later spending which has come to represent one of the highest cost payment methods in the U.S.¹⁵ and typically cannibalizes debit spending,¹⁶ further inflating retailer costs during the holidays. 

As more card fees are introduced, as more spending occurs online, and as more payment methods are used at checkout, the holiday season brings with it an increased level of complexity that can prevent some of the largest merchants from optimally utilizing cost-saving measures, such as CNP least-cost routing and fee audits. For these retailers, the holidays could result in millions in potential savings left unrealized.