Card Network Fees Have Risen Every Year Since 2010. Here's What That Means for Small Businesses

In April 2024, Visa and Mastercard announced a settlement with U.S. merchants that was supposed to cap interchange fees through 2030. Four months later, a federal judge rejected it, calling the relief insufficient. The fees stayed. The trajectory continued.

Card network fees have increased in some form every single year since 2010. Not dramatically, not all at once, but consistently. A fraction of a basis point here, a new assessment category there, a foreign transaction adjustment that quietly applies to more transaction types than the name implies. The cumulative effect on small business margins has been substantial.

The average small merchant in the United States now pays between 1.5 and 3.5 percent of every card transaction in processing costs, depending on card type, industry classification, and processor markup. A decade ago that range sat lower, and the ceiling was harder to reach. Today, a small retailer accepting premium rewards cards earns the airline miles and hotel points that those cards advertise. The rewards are funded somewhere, and the somewhere is merchant fees.

What makes this trend durable is the structure of the card networks themselves. Visa and Mastercard do not issue cards or lend money. They operate the rails that connect banks, and they set the interchange rates that banks collect on every swipe. Because both networks operate near-identical systems and dominate the market, handling roughly 80 percent of U.S. card volume between them, competitive pressure on fee levels is limited. Merchants cannot easily opt out without turning away the majority of their customers.

The practical options for small businesses have not changed much even as the fee environment has. Negotiating directly with card networks is not available to most merchants. Cash discount programs, which shift the processing cost to the card-paying customer, have grown in adoption as fees have climbed. Surcharge programs, legal in most states under specific disclosure rules, accomplish the same goal through a different mechanism. Dual pricing at the point of sale, once a workaround used mainly by gas stations, has become mainstream retail practice in some markets.

What has changed is merchant awareness. Five years ago, most small business owners could not have told you their effective processing rate. Today, more of them can. Payment processors who built their business models on opaque pricing and complicated statement formats are finding that informed merchants ask harder questions and switch more readily when better options appear.

The fee increases are unlikely to reverse. The 2024 settlement rejection removed the most concrete near-term mechanism for relief. But merchants who understand what they are paying and why have more tools available than the industry's marketing materials typically suggest. The first step is knowing the number.