States Where Businesses Are Impacted Most By Swipe Fees

• According to the most recent data, swipe fees in 2022 totaled over $637 million nationally.
• On average, consumers pay an extra 19 cents on every credit card transaction they make due to swipe fees.
• California is the state most affected by swipe fees across the nation, while Mississippi is the least affected state.
• Consumers in Hawaii pay the most per year on swipe fees, for a total of $39.45 on average.
• Consumers in Mississippi pay the least per year on swipe fees, for a total of $18.80 on average.

The impact of swipe fees is felt across the nation, with businesses that choose to accept credit card payments in certain states bearing a larger burden. Analyzing the data it’s clear that the effects vary, with some areas experiencing significantly higher fees per capita and in total fees paid across the state.

California leads the pack with an enormous total in fees paid, amounting to over $97 million. With a per-capita fee of $2.47, it’s a substantial figure, yet not the highest. Hawaii gets that honor with a whopping $3.29 fee per capita—though this is likely inflated due to substantial amounts of tourists who don’t live on the islands. Massachusetts and New York follow closely behind, each with its unique combination of total fees and fees per capita.

Below are the top 10 states impacted most by swipe fees:

These numbers reveal a telling story about the burden of swipe fees on different communities. Businesses located in high-traffic areas are likely bearing the brunt of the impact, seeing a significant effect on the cost of doing business. Whether it's the economic size of the state, such as California, or the higher fees per individual, as seen in Hawaii, the influence of swipe fees on business practices is a complex and multilayered issue.

While the top 10 states hit hardest by swipe fees have been identified, it’s equally important to recognize the states that pay the least in credit card fees. In these areas, the burden of swipe fees is less pronounced, reflecting different economic dynamics and consumer behaviors.

Mississippi finds itself at the bottom of the list, paying the lowest per-capita fee of $1.57 and a total state fee of $4.6 million. Neighboring states such as Tennessee and Arkansas are not far behind, each with a per-capita fee of $1.66. A cluster of Midwestern states, including Nebraska, Iowa and Kansas, also feature prominently in the bottom 10, all with per-capita fees under $1.65.

Here’s the detailed listing of the bottom 10 states:

Though these states are experiencing less impact from swipe fees, it does not mean the issue is any less important here. The lower figures could be a result of varying factors, such as lower overall credit card usage or different economic conditions. Many businesses in states with smaller economies also prefer to operate on a cash-only or cash-preferred basis in order to avoid the credit card processing fees.

The data on swipe fees across the United States paints a detailed picture, highlighting distinct trends, variations and underlying factors. There’s no one-size-fits-all explanation. Different states exhibit diverse trends based on multiple variables, from population to local economic conditions.

Leaders in the Field

• Hawaii: Not only holding the highest per-capita fee at $3.29, Hawaii also exhibits the steepest swipe fee per transaction at 33 cents. This reflects a unique economic behavior within the state.
• California: Though leading in total fees at $97,474,291.77, California’s per-capita fee of $2.47 is overshadowed by Hawaii’s significant figure.
• Massachusetts: Ranking second overall, Massachusetts maintains a high per-capita fee at $2.73, yet still falls short of Hawaii’s remarkable rate.

Middle Ground

• North and South Carolina: These neighboring states present similar trends, with matching per-capita fees of $1.77 but differing in their overall rank and total fees.
• Ohio, Minnesota and New Mexico: Though differing in total fees, these states share an identical per capita fee of $1.73, signifying varied factors affecting their overall rankings.

The Lower End

• Oklahoma and Mississippi: Ranking lowest overall at 49th and 50th, these states exhibit the lowest per-capita fees of $1.58 and $1.57, a reflection of distinct economic behaviors.
• Tennessee, Arkansas and West Virginia: With the same per-capita fee of $1.66, Tennessee ranks higher in total fees due to larger population dynamics.

Insights

• Economic Behavior Connection: States with higher average incomes such as Massachusetts and New York are prone to higher per-capita fees, indicating a possible correlation with income levels.
• Population Dynamics: Populous states such as California generate higher total fees but not necessarily higher per-capita fees, revealing that population size alone doesn’t dictate these metrics.
• Local Factors: The varying fees across states such as Mississippi and Oklahoma suggest that local factors, possibly including regulations and spending habits, are at play.

Top 10 States Where Businesses Pay the Most in Swipe Fees Per Year

Whether it's the cosmopolitan energy of New York, Alaska's distant frontiers, Washington's innovation hubs or Hawaii's tropical allure, these differing attributes shape the way people handle money and use financial services. The differences in swipe fees per capita reveal a connection to the underlying state economies, social dynamics and regional preferences, casting a fresh perspective on what might seem like a mundane aspect of daily life.

Here's a closer look at the details:

• Hawaii ($3.29 per month; $39.45 per year): A significant leader in per-capita swipe fees, Hawaii's position might be influenced by its unique economic factors, including tourism and the cost of imported goods.
• Massachusetts ($2.73 per month; $32.71 per year): A hub for education and technology, Massachusetts' elevated swipe fees may reflect the concentration of affluent consumers and a dynamic spending culture.
• California ($2.47 per month; $29.65 per year): With diverse industries and a sprawling population, California's position signifies the intricate relationship between its varied economic segments and consumer behavior.
• New York ($2.30 per month; $27.57 per year): The fusion of finance, entertainment and commerce in New York offers a window into why this state ranks high in per-capita swipe fees.
• Alaska ($2.28 per month; $27.42 per year): Alaska's distinctive remote location and reliance on shipped goods may contribute to the elevated per-capita swipe fees.
• Maryland ($2.19 per month; $26.34 per year): A blend of urban and suburban communities, Maryland's rank possibly reflects a multifaceted economic structure that supports varied spending habits.
• Oregon ($2.11 per month; $25.37 per year): Known for its progressive policies, Oregon's position could be tied to specific industry strengths and consumer preferences within the state.
• Washington ($2.11 per month; $25.37 per year): Home to tech giants, Washington's swipe fees may mirror the tech-savvy population's propensity for electronic transactions.
• New Hampshire ($2.11 per month; $25.35 per year): With a smaller demographic, New Hampshire's ranking emphasizes the efficiency and convenience that drives its consumers' spending.
• Vermont ($2.11 per month; $25.33 per year): As a small, yet vibrant state, Vermont's rank reflects the close-knit community's engagement with local businesses and the state's economic environment.

Top 10 States Where Businesses Pay the Least in Swipe Fees Per Year

The data highlighting the 10 states with the lowest amount of swipe fees per year reveals a pattern that suggests regional economic factors or perhaps unique banking environments. While Mississippi leads with the lowest fee, the closeness of the figures among the states, such as Arkansas, West Virginia and Tennessee, points to underlying similarities.

What’s intriguing about these numbers is not just the contrast with the states where the swipe fees are highest but the potential insights they offer into the local economic structures, financial behaviors and regulations. Exploring why these particular states have lower fees could provide valuable context and guidance for policymakers, financial institutions and consumers alike.

• Mississippi: At the lowest end of the spectrum, Mississippi's consumers face an annual swipe fee of just $18.80. This might be an indication of a different consumer behavior or banking environment within the state.
• Oklahoma: Close behind Mississippi, Oklahoma's consumers pay around $18.96 per year, possibly reflective of the state's economic factors or consumer spending habits.
• Kansas: With an average annual swipe fee of $19.33 per capita, Kansas may have specific regional influences or regulatory conditions that contribute to this figure.
• Missouri: Missouri sees a modest swipe fee per capita of $19.48 per year. This figure could stem from various local economic and financial factors.
• Alabama: The swipe fee in Alabama averages $19.57 per capita annually, perhaps influenced by its demographic composition and local banking practices.
• Iowa and Nebraska: These neighboring states exhibit similar numbers, with Iowa at $19.77 and Nebraska at $19.86 annually. This resemblance might be a result of similar economic landscapes or banking regulations in the region.
• Arkansas, West Virginia and Tennessee: These states round out the bottom 10, all having swipe fees hovering around the $19.90 mark. The closeness in these figures could point to shared regional characteristics or economic conditions.

The variations in swipe fees across states offer an enlightening glimpse into the multifaceted financial system that shapes commerce across the nation. With transaction fees ever on the rise, businesses have to make tough decisions about whether to absorb these fees as a cost of doing business (likely raising prices overall to compensate), or to pass along them directly to the consumer with a convenience fee if they choose to pay with a card instead of cash.

Whether it’s the individual spending habits, banking regulations or broader economic factors that govern these disparities, understanding them is essential for both businesses and consumers.

To determine the states most impacted by credit card swipe fees, Forbes Advisor pulled the initial data from the Atlanta Federal Reserve Bank’s 2022 Survey and Diary of Consumer Payment Choice. The report provided national averages of the monthly value of credit card transactions, the total monthly volume of credit card transactions and the average number of credit card transactions per American, per month.

To convert the monthly value from October 2021 dollars to July 2023 dollars, we used the Bureau of Labor Statistics’ Inflation Calculator. Then, to adjust the national average to account for each state’s cost of living differences, we used the Missouri Economic Research and Information Center’s Cost of Living Index to adjust each state’s monthly value of credit card transactions for the cost of living in the first quarter of 2023. The same process was used to calculate each state’s total credit card fee payments, this time based on the Atlanta Fed’s national average value of monthly swipe fees.

Finally, we used each state’s population, as given in the 2021 U.S. Census’ 1-Year American Communities Survey, to determine how much an average resident in each state could expect to pay in monthly credit card fees and how much an average resident could expect to spend on their credit card in each state. This metric—credit card swipe fees per capita—was the most heavily weighted in our rankings, followed by each state’s average fee per swipe, the total value of credit card transactions in each state, and then the total volume of credit card transactions in each state.