A smart solution on credit card fees | Midwest Voices #SwipeFees

By Henry Armour, President and CEO of the National Association of Convenience Stores, special to The Star

Sometimes Washington has the opportunity to make things right. Congress is currently considering legislation that would break the stranglehold credit card companies have had on a rising cost to small businesses and consumers alike: Debit card fees.

A provision in the Financial Reform bill passed by the Senate would give the Federal Reserve the similar regulatory authority on debit cards (which are just electronic checks) as they already have on paper checks.

These debit card fees are rapidly rising toward 2 percent of the transaction amount – far higher than can possibly be justified. If passed, the bill would also prevent credit card companies from penalizing merchants for simply offering their customers discounts.

The fact that we need a law to stop Visa and MasterCard from threatening merchants who give discounts is a remarkable statement in and of itself!

The relief this bill could bring wouldn’t come a moment too soon. Like consumers we have had to make tough choices recently. Keeping our stores out of the red has meant tightening our belts in many areas but there is one expense we pay every month that is skyrocketing.

It’s not health care costs like you might guess and, unlike every other cost of doing business, it’s completely non-negotiable.

It’s the ever-rising hidden fees on every debit card transaction. Even consumers who use cash and checks end up paying swipe fees in the form of higher prices in stores.

It’s not right and it’s not fair that every time someone swipes a debit card, the card industry hits them with a huge charge that isn’t determined by a competitive market.

Hidden swipe fees are essentially a secret tax — the proceeds of which go directly to the credit card industry.

Passing this reform means not only consumers get to keep more of their hard-earned money through discounting but it also means that the banks and credit cards will be afraid to keep raising swipe fees because they could no longer be hidden from consumers due to discounting.

In other words, a free market would begin to operate and both consumers and merchants would benefit.

Charging ever-rising hidden swipe fees for declining card rewards and services is a great business model for the card industry but it’s not good for our hard-pressed customers and stores. Americans pay the highest swipe fees in the world — and that gap is growing.

One week after it announced a 30 percent increase in U.S. fees, Visa announced a 60 percent decrease in European debit card swipe fees.

But it’s worse than you think: European swipe fees were only a third as high as American swipe fees to begin with.

Why are Americans uniquely abused by the credit card industry? Two reasons: swipe fees are hidden from consumers and no one at the Federal Reserve or in Congress has forced the big banks and the card giants to play fair.

But that may be changing. Last month, after five and one half million Americans signed petitions and thousands of small business people like me spoke up, a bi-partisan, two thirds majority of 64 Democratic and Republican Senators voted yes to give the Federal Reserve the similar regulatory authority on debit cards they already have on paper checks.

The credit card giants and big bank CEOs are doing everything they can in Washington to make sure this legislation is defeated. Congressional leaders like Rep. Dennis Moore need to take action: Stand up to the big banks and the credit card giants, make swipe fees reasonable and let consumers get discounts.

Read more: http://voices.kansascity.com/node/9289#ixzz0qTHDOnwo

A smart solution on credit card fees | Midwest Voices.


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