Merchants: As CARD goes into effect, $48 billion in hidden swipe fees still cripples Main Street
Published: February 19, 2010
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As the credit card reforms passed last May go into effect on Monday, merchants' groups complain that Congress has still not taken action on the "biggest credit-card fee of them all." Retailers insist that without swipe fee reform, "the big banks and credit-card companies will still be raking in billions of dollars in hidden, unfair fees from Main Street businesses and their customers." According to the Food Marketing Institute, the $48 billion that Americans paid in swipe fees in 2008 is more than they paid in annual fees, cash advance fees, over-the-limit fees, and late fees combined.
“Swipe fees are crippling Main Street businesses and hurting our customers at a time when we can least afford it,” said Jennifer Hatcher, vice president of government relations at the Food Marketing Institute. “As long as the big banks and credit-card companies get to keep lining their pockets with these unfair, hidden fees, we won’t truly have reform. You can’t fix the abusive credit-card system without fixing the biggest hidden fee of all – and that’s the swipe fee.”
Despite the many reforms that the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act will enact, Congress has yet to address swipe fees, also known as “interchange,” which retailers say are set in secret by the banks and credit-card companies and charged to store owners every time they run a customer’s credit card. Since 2001 alone, swipe fees have tripled, even as the cost of processing the transactions has decreased, retailers say. For small businesses and their customers who see an average of $2 out of every $100 purchase siphoned off by the banks in swipe fees, Feb. 22 won’t bring any much-needed relief.
