In 2008, merchant-paid swipe fees amounted to $62.7 billion, up 3% over the previous year, according to the Nilson Report, a payment industry web newsletter.
Some of these fees are on the rise. The domestic credit-card interchange rate -- a transfer fee set by issuers such as Visa and MasterCard, but paid to the cardholder's financial institution every time a Visa or MasterCard payment product is used -- rose from between 1.25% and 1.91% in 1991 to between 0.95% and 2.95% in 2009. MasterCard's rate also jumped from between 1.30% and 2.08% to between 0.90% and 3.25% last year, according to a recent Government Accountability Office report about credit cards. Processing fees have also been added to debit-card purchases, which in the past, were free for merchants to process.
Why the widening gap in the interchange rate? The GAO's interchange rate fee analysis concludes that several of the networks' higher interchange fee rates increased during this period. At the same time, rates on other cards, which had lower-cost incentive rates for sectors that previously did not take cards, also increased. (Note that debit-card purchases, which account for roughly 70% of Visa transactions in the U.S., were not included in the GAO study.)
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