Retailers and economists are highlighting a growing economic imbalance: merchants are raising prices to cover escalating credit card processing fees, a cost burden that disproportionately falls on cash-paying customers who receive no rewards in return. At the Tiger Fuel gas station and convenience store in Ruckersville, Virginia, managers report that they now pay more in credit card processing fees than they do in rent.
Maurice Lamarche, vice president of retail operations for Tiger Fuel Co., noted that these fees, which can reach 2% or higher for premium cards offering luxury rewards, limit the company’s ability to allocate funds toward wages or lower prices. "It’s tougher for us to stay afloat, tougher for us to make money at our stores," Lamarche said. "It makes it harder for us to keep our prices low."
Data indicates that the financial pressure on merchants has intensified significantly over the last several years. Total credit and debit card fees paid by merchants to processors, led by firms like Visa and Mastercard, have increased 70% since 2019, reaching $198 billion in 2025. The National Retail Federation estimates that these swipe fees add more than $1,200 in annual costs to the average American household.
The financial impact of this system is not distributed evenly across the population. While credit card users often recoup the cost of transaction fees through luxury perks—such as airline lounge access, flight points, and cash back—those who pay with cash or standard debit cards have no mechanism to offset the higher prices embedded in retail goods.
A Harvard Business School study published this year characterized this phenomenon as a $30 billion annual wealth transfer from cash and debit users to credit card holders. Mark Egan, a professor at Harvard and co-author of the study, explained that the rewards structure creates a net loss for non-credit users. "If I pay with cash, I pay a higher price, but I don’t get any rewards, so I’m going to be hurt by that," Egan told NBC News.
This dynamic particularly affects lower- and middle-income Americans, who are statistically more likely to rely on cash for daily purchases, according to Federal Reserve data. Meanwhile, the luxury cards that generate the highest processing fees are primarily held by wealthier consumers, effectively creating a system where low-income shoppers subsidize the travel and rewards programs of the affluent.
