Aiden Irish

January 15, 2026

If you’ve visited my booth at a market, you’ve definitely heard my ubiquitous refrain when asked about payment methods: “I accept card, but cash is very much preferred.”

Let me start by recognizing that many businesses do prefer card, many going so far as to not accept cash payments. Two prominent reasons include the greater ease in tracking revenue and reduced risk of theft. Additionally, many businesses switched to card transactions during the pandemic in order to reduce risk of cash becoming a disease vector. Thus, while this farmer prefers cash, there are valid business reasons that other farmers (and other businesses broadly) prefer card transactions.

Regardless of preference, however, one immutable fact about accepting cards is that they are expensive. These expenses have implications for the financial success of businesses and the development of a vibrant economy more broadly.

So, let’s talk about it.

The Basics: Onerous “Swipe Fees”

Just to get us started, let’s talk about how much I, and all small businesses pay in order for our customers to be able to use plastic or any other payment method.

The average that I pay for all digital transactions (credit card, debit card, Apple Pay, etc.) is 4% of all such transactions. I pay these fees to Square, which is the transaction service company that I use, but they are directly in line with what businesses like mine pay to other companies such as Toast (See this NYT article for details). The exact percentage varies slightly depending on factors such as the purchase size and number of total transactions, but only by a few tenths of a percentage point.

One thing that surprises many people is that these fees do not change if you use a debit card. As far as my business is concerned, the cost of you using a debit card is exactly the same as the cost of you using a credit card. Furthermore, I have no ability to negotiate nor even get clarity on the breakdown of these fees. The fees that I pay combine the charges from large credit companies such as Visa and Mastercard with bank fees and the transaction service prices of Square. All of these separate costs are rolled into one with no variance depending on the exact method of transaction.

The end result is that credit card fees are one of the three largest expenses that I pay for in a given year. Card fees rival the $1,200 to $2,000 I pay for compost each year (my largest nutrient input) or how much I pay for physical booth space at a farmers market for a season (about $1,000 per market per season). In total, U.S. businesses of all sizes in 2023 paid $172 billion in credit card transaction fees.

Profits to the Already Dominant

If there is a single theme that will come to dominate the pages of these policy essays, it will undoubtedly be economic consolidation. Within any given sector (and increasingly across different sectors) a handful companies control the vast majority of sales. These will be topics of their own in coming months, but just for a general sense of the issue, up to 85% of the market for meat (pork, chicken, lamb, beef) is controlled by four companies. This trend holds true for seeds, tractors, grocery retail, food processing/manufacturing, etc.

The scale of consolidation within the credit card market is even more extreme. The two largest credit card companies – Visa and Mastercard – account for 80% of all credit card transactions. In response to this control, these companies were sued in a class action antitrust lawsuit (which was later dismissed) and are still being sued by the U.S. Department of Justice for antitrust violation.

The scale of market consolidation is, arguably, a large part of why these companies also enjoy exorbitantly high profit margins. Visa and Mastercard reported margins of 53% and 49% respectively in 2023. This contrasts with the average of 2.4% across businesses in the retail sector overall or between 5% and 11% for all businesses in the S&P 500. So my credit card transaction fees end up as part of this consolidated high profit margin as well as part of the $30 million compensation packages that each of the CEOs of Visa and Mastercard received in 2025.

Economic Multipliers and Local Food

Market consolidation and ludicrous profit margins are maddening, but they do not tell the larger story about how consolidated economic power undermines local communities. For a better picture, let’s talk about the economic multiplier effect.

An economic multiplier analysis explores how a dollar of spending ripples out across the economy. There are a few variations on types of multipliers – job multipliers, income multipliers, sales multipliers, etc. – but for our purposes, we’re going to just focus on economic multipliers, which analyze the impact of a dollar of input on total economic activity.

We typically present an economic multiplier as a ratio of $1 invested or spent to the number of dollars of economic activity that, on average, that dollar generates (We tend to use Gross Domestic Product, GDP, as the measure of economic activity. GDP is rife with problems, but I’ll save that for a later discussion). If the ratio is greater than $1, then the spending or investment is generally considered a good one because we got more dollars of economic activity than we initially put in to the economy. For example, investments in public education are extremely strong, with multiplier effects ranging from $2 to $10 for every $1 invested.

The economic multiplier for investments and/or spending in local food economies (e.g., funding for farmers markets, consumer spending on local food, etc.) are generally in excess of $1.4. For example, one analysis from the University of Washington found local food investments in King County to be between $1.4 and $1.8 and national analysis finds multipliers as high as $2.5. This means that, whether it’s your tax dollars being invested in local food economies or your shopping choice to go to a farmers market, those dollars are generating a lot of economic activity.

So, why are investments in local food economies such good ones? The short answer is, they’re good investments because they primarily benefit small businesses that keep money moving. In economic development thinking, a healthy economy is one where money moves, a lot! When you or your government spend money with a small business, that business is going to turn around and spend a large percentage of each dollar received. Additionally, local food businesses are more likely to spend money on other small local businesses that keep the dollars moving around the economy, such as my local farm supply store or hardware store.

This is not the case with extremely large companies like Visa and Mastercard. Large companies are more able, and thus more likely to use their profits to hoard money through actions such as stock buybacks that generate little to no economic activity. Mastercard, for example, announced a $12 billion buyback plan at the end of 2025. Actions like buybacks only augment the wealth a small pool of shareholders who, in turn, spend a far lesser share of their total wealth than lower income people (As a side note, investments in lower income populations are more beneficial for the economy than investments in high income people for exactly the same reasons as I’ve described above). The end result of buybacks and other forms of financial hoarding is that the money stops moving. And every time I have to pay fees to these companies, that money essentially stops moving, or at least less than it would in a small business economy.

What should we do?

Policy analysis is incomplete without an action plan. So here are a few things to consider. First, and unsurprisingly, use cash when and where you can when buying from small businesses (Again, recognize and respect that there are valid reasons some small businesses prefer not to use cash). The primary reason that I charge a $1 surcharge for all card transactions is not because I want the $1. In the discipline of behavioral economics, that $1 is what we would call a “nudge,” a small tweak to a decision-making scenario that encourages a different decision, such as using cash instead of card.

More broadly, the detrimental effects of companies like Visa and Mastercard cannot be understood without paying attention to the larger issue of economic consolidation. It is not an accident that two companies control 80% of credit card transactions and it can change. Lina Khan, former chair of the Federal Trade Commission, was charting a transformative approach to federal antitrust action that had not been seen since the famous “trust busting” era of the early 20th Century. While some of this work has continued under the current administration, it has been sporadic at best. I will talk more about antitrust policy and its role in your food choices in the coming months. In the meantime, pester your representatives about their plans to combat economic consolidation.

More specifically, there is a dire need for more extensive regulations on credit card companies by capping interest rates, late fees, swipe fees, and requiring greater transparency on where and how fees apply. The European Union provides an important model where fees are capped at different levels for debit versus credit and at levels that are less than one-tenth of those charged in the U.S. (0.3% for credit cards). These rules also provide strong limitations on how much credit card users (i.e., you) can be charged. Credit companies will say that such actions will make their continued business impossible. As a business owner, I would say that if you’re bringing home half of your revenue as profit, then you can afford some regulations that make the general population better off.

Credit cards and other forms of electronic payment are a great resource and I will always accept them when needed. But next time you are on your way to the farmers market, try to remember to stop at the ATM, you’ll be helping your local economy!