Understanding the true economic impact of payment processing fees in Hawaiʻi requires moving beyond population-based national models. Hawaiʻi’s visitor-driven economy and unique transaction patterns mean that widely cited estimates—often based on resident credit card usage—substantially understate the actual costs borne by local merchants.

This research article explains why, quantifies the discrepancy, and provides a defensible estimate of Hawaiʻi’s merchant swipe-fee burden using official tourism data.

1. The Problem with Population-Based Swipe-Fee Models

Many national analyses of swipe fees use resident credit card behavior and census population figures to estimate state-level costs. For example, Forbes Advisor’s methodology states:

“…to determine how much an average resident in each state could expect to pay in monthly credit card fees… this metric—credit card swipe fees per capita—was the most heavily weighted in our rankings.” — Forbes Advisor swipe-fee methodology¹

This means their state rankings and totals are driven by:

• Average credit card transactions per resident

• Cost-of-living adjusted spending

• State population data

Importantly, tourist transactions are not included because those transactions are not tied to resident spending patterns. This leads to an artificially low total dollar estimate for Hawaiʻi despite relatively high per-capita figures.

2. Hawaiʻi’s Visitor Economy Is Not Captured by Resident Models

Hawaiʻi’s economy is driven by out-of-state visitors. According to the Hawaiʻi Department of Business, Economic Development & Tourism (DBEDT), revised preliminary data for Calendar Year 2024 shows:

• Total Visitor Spending (Air & Cruise only): $20.77 billion²

• Visitor Arrivals: 9,730,289 visitors²

• Average Daily Visitor Census: 231,390 visitors²

• Jobs Supported (direct, indirect, induced): 211,800 jobs²

These numbers do not include supplemental business categories, meaning actual transaction volume across all payment types is higher.

Because resident-based models do not account for these tens of millions of card-present visitor transactions, they fail to reflect real merchant exposure to processing fees.

3. Estimating Hawaiʻi’s Real Merchant Swipe-Fee Burden

To approximate the true cost of swipe fees borne by Hawaiʻi merchants, we can start with official visitor spend and apply conservative assumptions about card usage and fee rates.

Step 1: Visitor Card Transaction Volume

Assume 70–90 % of visitor spending occurs via card (credit/debit), typical in modern tourism-heavy markets.

• Visitor card volume range (2024):
  $14.5 billion – $18.7 billion

Step 2: Typical Merchant Fee Rates

Merchant fee rates include interchange, network fees, and processor markup. A reasonable blended range for card-present commerce is:

• 2.5 % – 4.0 %

Step 3: Annual Swipe-Fee Estimate (Tourism Only)

Conclusion: Even without resident commerce or non-tourism spending, Hawaiʻi merchants likely incur hundreds of millions of dollars annually in payment processing costs tied to tourism alone.

This range is two orders of magnitude larger than population-only totals produced by models like Forbes Advisor’s.

4. Why This Matters for Policy and Local Commerce

A. National Models Understate Merchant Costs

When state totals are derived from resident spending, they omit the bulk of Hawaiʻi’s economic activity. As a result:

• Legislators may underestimate local fee burdens

• Policymakers may misinterpret comparative metrics

• Merchants may not receive data reflective of real costs

B. A Tourism-Adjusted Estimate Is More Accurate

Including visitor-driven spending creates a more defensible picture of payment costs. Tourism correlates with:

• Card-present transactions (higher fees than online)

• Restaurant, retail, hospitality spending (thin margins)

• High transaction count per visitor

These factors multiply fee impact far beyond resident-only models.

5. Suggested Stat for Public Presentation

Estimated annual tourism-related card processing fees in Hawaiʻi:

$360 million – $700 million (based on visitor spending and blended merchant fee assumptions)

This estimate is based on Hawaiʻi DBEDT 2024 tourism data and conservative assumptions about card usage and effective fee rates.

6. Summary

National estimates that rely solely on resident spending misrepresent Hawaiʻi’s merchant payment cost burden. By incorporating official tourism spending and realistic fee assumptions, we find that Hawaiʻi merchants are likely paying hundreds of millions annually in swipe fees—far more than population-based models would suggest.

This tourism-adjusted view should be the baseline for any policy discussion about payment infrastructure, fee reform, or competitive payment alternatives in Hawaiʻi.

Footnotes & Citations

1. Credit Card Swipe-Fee Methodology

Forbes Advisor. “States Where Businesses Are Impacted Most by Swipe Fees – Methodology.”

Forbes Advisor, 2023.

https://www.forbes.com/advisor/business/swipe-fees-report/

Used for national swipe-fee estimation methodology, including reliance on resident per-capita credit card usage, population data, and cost-of-living adjustments. Does not account for non-resident (tourism-driven) transaction volume.

2. Hawaiʻi Tourism Economic Data (Calendar Year 2024)

Hawaiʻi Department of Business, Economic Development & Tourism (DBEDT).

“Benefits of Hawaiʻi’s Tourism Economy – Revised Preliminary Data (CY 2024).”

May 2025.

Key figures:

• Total Visitor Spending (air & cruise only): $20.77 billion

• Visitor Arrivals: 9,730,289

• Average Daily Visitor Census: 231,390

• Jobs Supported (direct, indirect, induced): 211,800

https://www.hawaiitourismauthority.org/media/14597/tourism-econ-impact-fact-sheet-may-2025.pdf