Credit card fees, particularly those associated with high-end cards offering luxury perks and rewards, are increasingly burdening both merchants and cash-paying consumers in the United States [1]. At Tiger Fuel gas station and convenience store, managers expect to pay more in credit card fees this year than on rent, with fees for some premium cards reaching as high as 5% [1]. Maurice Lamarche, vice president of retail operations for Tiger Fuel Co., stated that these rising fees make it harder for the business to stay afloat and keep prices low, as more revenue is diverted to card processors instead of wages or other expenses [1].
According to the Nilson Report, total credit and debit card fees paid by merchants to processors such as Visa and Mastercard surged 70% since 2019, reaching $198 billion in 2025 [1]. This increase is attributed to higher consumer spending, a decline in cash usage, and elevated fees that fund rewards programs [1]. The National Retail Federation estimates that these fees add over $1,200 annually in higher prices for the average household [1].
The impact of these fees is not evenly distributed. Customers using rewards credit cards often recoup much of the higher prices through perks like cash back, points, or lounge access, while those paying with cash, debit, or non-rewards credit cards receive no such benefits and bear the full brunt of price increases [1]. A Harvard Business School study estimated this dynamic results in a $30 billion annual wealth transfer from cash and debit users to credit card users, equating to an effective 16% sales tax hike for cash payers [1]. Mark Egan, a Harvard Business School professor and study author, explained that lower- and middle-income Americans—who are more likely to use cash—are disproportionately affected by these rising costs [1].
Industry organizations like the National Retail Federation are advocating for legislation to reduce swipe fees, highlighting the growing financial strain on both merchants and non-rewards consumers [1].
CONCLUSION
The sharp rise in credit card processing fees is driving up consumer prices and disproportionately impacting lower- and middle-income Americans who pay with cash or debit. While rewards card users benefit from perks that offset these costs, non-rewards users face higher prices without compensation. The issue has prompted calls for legislative action to address the growing financial burden on merchants and cash-paying shoppers.