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Sorry, Point-Lovers—Buying With a Credit Card Can Be Costly For Small Businesses "Swipe fees" — charges imposed on merchants for processing card payments — can add up for small businesses, with some saying it's their third largest expense.

By Madeline Garfinkle

Key Takeaways

  • Many small businesses are facing increased financial strain due to swipe fees, which can average around 2%.
  • It's an added financial challenge for entrepreneurs.

Opinions expressed by Entrepreneur contributors are their own.

It's one thing that customers love, but small businesses generally hate.

Although credit cards come with a lot of benefits for customers — points, cash back, exclusive discounts — small businesses don't quite benefit as much from swiping plastic.

According to the Merchants Payments Coalition, an organization aimed at payment reform in the U.S., retailers across the county now bear an annual burden of roughly $160 billion in "swipe fees" — charges imposed on merchants for processing card payments. Doug Kantor, a member of the coalition's executive committee, told NPR that the figure has surged by more than 50% since 2020.

"It is unfortunately a very unjust system and one that's hidden from most of us so that we really don't even know what's happening," Kantor told the outlet.

Related: Bank of America Slammed With $250 Million Fine for Opening Fake Accounts, Double-Dipping Charges — Here's How to Find Out If You Qualify for Payment

Swipe fees are typically around 2% and go to the bank that issued the card. These fees generally encompass a percentage of the customer's purchase, plus a flat fee per transaction.

For many small businesses, the fees can really add up. Victor Garcia, owner of SolDias ice cream shops around Texas, told NPR he paid $25,000 in swipe fees last year. Jennifer Luna, who owns a local gift shop in Seattle, wrote in a Seattle Times Op-Ed last month that, in 2022, she paid $75,000 in swipe fees — while paying herself $40,000. Aside from rent and employee compensation, Luna says swipe fees are her third-largest expense.

Related: Best Credit Card Processors of 2024

While some big-name companies can negotiate deals to minimize swipe fees, such as Costco, (which gets a break for only accepting Visa cards), small businesses generally don't have a choice but to pay the set fee determined by banks.

"Swipe fees are a cost I can't control and have a real impact on my business and customers," Luna wrote.

A group of lawmakers in Washington D.C., working with the Merchants Payments Coalition, are advocating for a bill, the Credit Card Competition Act, that would mandate major credit card issuers to permit networks other than Visa and Mastercard (which currently dominate the credit card network market) to process transactions, arguing that increased competition would lead to reduced fees.

Related: The Ultimate Guide to Choosing a Credit Card Processor

Madeline Garfinkle

News Writer

Madeline Garfinkle is a News Writer at She is a graduate from Syracuse University, and received an MFA from Columbia University. 

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