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Anti Federalist
11-19-2012, 05:51 PM
Swipe fees.

Nothing chaps my ass worse than watching some knucklehead fork over plastic to pay for a fucking coffee or candy bar.

Morons...


Swipe Fees: The Hidden Tax the Candidates Never Discussed

By Lyle Beckwith - November 18, 2012

http://www.realclearpolitics.com/articles/2012/11/18/swipe_fees_the_hidden_tax_the_candidates_never_dis cussed_116186.html?google_editors_picks=true

We heard a lot from the presidential and congressional candidates about keeping taxes low for the middle class and helping small businesses create jobs. They said nothing, though, about an unknown and hidden “tax” on the use of credit cards that hurts every consumer and merchant. It’s called the swipe fee -- the fee that merchants (and, ultimately, consumers) pay to banks to accept a card.

Even though swipe fees are invisible to consumers, they result in higher prices, even for those who mostly pay with cash and rarely use a card. The only difference between swipe fees and taxes is that the $50 billion in revenue that the swipe fee generates every year goes directly to banks rather than to the government. Every American household on average pays about $427 a year in the swipe fee “tax.”

Banks have a right to charge for the use of their cards and make a profit if they earn it; however, they don’t have a right to price-fix, which is exactly what they are doing. Visa and MasterCard each set the fees for their banks, and none of the banks compete. With the fee hidden, competitive market forces never have a chance to break the fixed prices. That’s wrong and is what makes swipe fees more like an unavoidable, hidden tax on business rather than a legitimate private charge that goes into the cost of doing business.

The swipe fee is the second highest operating expense for merchants, an especially serious burden for small businesses. And it’s the fastest-growing expense these businesses face, rising much faster than, for example, health care costs. While health care has received a lot of presidential attention, swipe fees haven’t. But they should and here’s why:

The cost to swipe cards has tripled in the past decade. Some merchants actually lose money on small card transactions for items such as a cup of coffee or a snack. And the fee is not properly disclosed or subject to competitive market forces. It is a pure power grab by banks that have worked with the dominant credit card companies to take unfair advantage of Americans for years.

When a consumer swipes a credit card, the bank takes 2 to 3 percent of the purchase price. For every $1,000 in credit card purchases, that amounts to $20 to $30. It goes almost always to a giant “too big to fail” bank reaping the benefit. A mere 10 banks get much more than 80 percent of credit card swipe fees. In fact, they use that money to further exploit their dominance over community banks and credit unions. It shouldn’t be that way.

Consumer and merchant groups, such as the one I represent, have been advocating in Congress for reform legislation for both debit and credit cards for years. In 2011, Congress responded by reforming debit card swipe fees and limiting the amount of fees that could be centrally price-fixed for the largest 100 or so banks. This reform left the door open to (and did not regulate at all) fees that banks would be willing to compete on and even centrally set fees for more than 99 percent of banks that are smaller than the biggest of the big. Debit reform has worked -- merchants are better off, consumers are saving, and smaller banks and credit unions are thriving.

Meanwhile, credit card swipe fees remain exorbitantly high and a huge abuse of Americans’ wallets. These fees are seven to eight times higher in the U.S. than in Europe. In fact, swipe fees in the United States are the highest in the industrialized world. We pay higher fees than countries that have reined in Visa and MasterCard’s abuses, and we pay higher fees than countries that have done nothing. The credit card industry simply takes advantage of us because they can. U.S. consumers use cards without knowing the impact it causes, and merchants are trapped by the stranglehold Visa and MasterCard have. It’s time for all that to change.

Next year, we will be back asking Congress for reforms to credit swipe fees. If our nation’s leaders really want to help consumers and small businesses, they will end swipe fee price-fixing and bring market forces to the card industry so merchants have more options and consumers don’t pay the price.
Lyle Beckwith is the senior vice president for government relations for the National Association of Convenience Stores.

Danke
11-19-2012, 05:54 PM
I'd imagine there is a labor cost for handling FRNs too, no?

Anti Federalist
11-19-2012, 06:01 PM
I'd imagine there is a labor cost for handling FRNs too, no?

I'd guess so.

matt0611
11-19-2012, 06:04 PM
I pretty much refuse to use credit cards for anything in person unless its a really large purchase (rare) or things online.

misean
11-19-2012, 06:10 PM
1. I've always used a card to pay for things; I'll buy a pack of gum with a credit card if they let me.
2. I don't see what the banks or credit cards are doing wrong here???????????????????? I'm thankful I don't have to carry cash. I don't see a need to disclose fees to the consumer either.

dannno
11-19-2012, 06:17 PM
1. I've always used a card to pay for things; I'll buy a pack of gum with a credit card if they let me.
2. I don't see what the banks or credit cards are doing wrong here???????????????????? I'm thankful I don't have to carry cash. I don't see a need to disclose fees to the consumer either.

Did you not read the article??


Banks have a right to charge for the use of their cards and make a profit if they earn it; however, they don’t have a right to price-fix, which is exactly what they are doing. Visa and MasterCard each set the fees for their banks, and none of the banks compete. With the fee hidden, competitive market forces never have a chance to break the fixed prices. That’s wrong and is what makes swipe fees more like an unavoidable, hidden tax on business rather than a legitimate private charge that goes into the cost of doing business.

The swipe fee is the second highest operating expense for merchants, an especially serious burden for small businesses. And it’s the fastest-growing expense these businesses face, rising much faster than, for example, health care costs. While health care has received a lot of presidential attention, swipe fees haven’t. But they should and here’s why:

The cost to swipe cards has tripled in the past decade.

dannno
11-19-2012, 06:18 PM
I pretty much refuse to use credit cards for anything in person unless its a really large purchase (rare) or things online.

You still pay the fee through higher prices - in fact, you pay just as high of a fee as someone who uses a card all the time.

AGRP
11-19-2012, 06:19 PM
The solution is simple. Dont use credit cards.

misean
11-19-2012, 06:25 PM
Did you not read the article??

Good point. I skimmed the article and missed that.

matt0611
11-19-2012, 06:27 PM
You still pay the fee through higher prices - in fact, you pay just as high of a fee as someone who uses a card all the time.

I know.

alucard13mmfmj
11-19-2012, 06:29 PM
I use BoA cause they dont charge me a maintenance fee (yes i know, BoA are evil bankers). Better than my mom's bank, Chase. Chase charges her 6 USD if she doesnt use her debit card enough (what a load of baloney).

Probably should switch to a credit union.

Brian4Liberty
11-19-2012, 06:41 PM
Some businesses give cash discounts. There's probably a law that says that some businesses can't do that.

Zippyjuan
11-19-2012, 06:45 PM
Banks used to make their money from the difference between what they paid depositors and what they charged borrowers. Today the vast majority of their income comes from fees. When the fees they could charge were tightened in the wake of the economic collapse, they sought other things they could charge fees on and raised the fees they were still allowed to charge.

Anti Federalist
11-19-2012, 07:12 PM
1. I've always used a card to pay for things; I'll buy a pack of gum with a credit card if they let me.
2. I don't see what the banks or credit cards are doing wrong here???????????????????? I'm thankful I don't have to carry cash. I don't see a need to disclose fees to the consumer either.

You like every purchase you make logged into a database and subject to scutiny from god knows where?

See, even among "freedom folks" most people don't want freedom.

They'd rather have ease and convience instead.

ghengis86
11-19-2012, 07:15 PM
You like every purchase you make logged into a database and subject to scutiny from god knows where?

See, even among "freedom folks" most people don't want freedom.

They'd rather have ease and convience instead.

Yep.

If it saves me some trouble, time or extra effort I don't mind ceding privacy and anonymity. I've got nothing to hide.

What are you trying to hide comrade?

jonhowe
11-19-2012, 07:34 PM
You like every purchase you make logged into a database and subject to scutiny from god knows where?

See, even among "freedom folks" most people don't want freedom.

They'd rather have ease and convience instead.


Uh, he knows it's being logged and doesn't care. Is he not free to do that? Whats wrong with exercising your right to use a service that provides convenience?

I, for example, use a card ANYTIME a purchase is for myself and my girlfriend together, as we use this card as a faux-joint-card to simplify the bills. Also, for most items I get cash back (sometimes up to 5%, always at least 2%). We use the money for our christmas shopping each winter.

Oh, and I consider myself a "freedom folk", but I also enjoy living in NYC. Yes, I know they are watching me. Yes, I know I soon can't buy big sodas. Thankfully I don't have to pay $12 for a box of cigs since I don't smoke. Either way, though, I CHOOSE to live here because I LIKE it.

dannno
11-19-2012, 07:37 PM
The solution is simple. Dont use credit cards.

No, you still pay the higher prices even if you pay cash.

The solution is to end the banking monopoly.

Zippyjuan
11-19-2012, 07:46 PM
Swipe Fees Capped
(article from May 2012)- I was curious how much the swipe fee on a transaction was. I remember when I was younger that most stores would not accept a credit card for purchases of under $10 because of the fee. If you use your card as a debit card the fee is lower as I understand it (you pay any fees on debit vs the retailer paying the fee as a credit card).
http://business.time.com/2012/05/07/swipe-fee-caps-are-here-so-where-are-the-savings/

One of the most contentious parts of the Dodd-Frank financial reform legislation enacted in the wake of the credit crisis was the Durbin Amendment. You may not know it by name, but you know its primary effect: higher bank fees. It’s also the reason behind those infamous debit card fees banks were threatening to implement last year. Trade groups that pushed for the fee cap said the trade-off would be worth it, because customers would see lower prices in stores. So how’s that working out?

Not so great.

First, some background: The Durbin Amendment set a cap of roughly 24 cents on interchange or “swipe” fees — the money a store has to pay your bank when you buy something with a debit card. Before, the average swipe fee was around 43 or 44 cents (the stats differ slightly because the fee was calculated both with and without including purchases that were later returned by the customer). Now, small banks — which were exempt from the cap — still get an average of 43 cents per swipe, according to a new Federal Reserve study.

Big banks get an average of 24 cents. The cap was intended to be just that — a cap — but it wound up becoming a de facto floor as well as a ceiling, because banks are trying to maximize how much they can collect under the new law. Still, some in the industry say Durbin is costing banks big bucks. A study conducted recently by CardHub.com says big banks are losing a little more than $8 billion a year because of the fee cap.

(MORE: Retailers Want a Rematch in Swipe-Fee Battle: Will Consumers Lose?)

This is similar to the estimate the National Retail Federation gave when the amendment went into effect last fall, when the organization said, “Debit card swipe fees currently total about $20 billion annually, and analysts have estimated the cap will save merchants and their customers about $7 billion.”



More at link.

Brian4Liberty
11-19-2012, 08:38 PM
You like every purchase you make logged into a database and subject to scutiny from god knows where?

See, even among "freedom folks" most people don't want freedom.

They'd rather have ease and convience instead.

And if there are no laws against it, it seems that the merchants that do not give cash discounts also like to pay the extra "tax". One might guess that they see the situation as making extra profit from cash buyers, as opposed to paying an extra fee with plastic purchases.

RabbitMan
11-19-2012, 09:23 PM
The small business I work at raised all of the prices on our main items six months or so ago to cope with the card fees. We still get charged fees for debit, they are simple smaller if a purchase is made over $30. Our business pays more in card fees on an average day this year then we did in taxes on an average day last year. Granted we are doing a lot better, but something about this picture seems wrong.

Zippyjuan
11-19-2012, 09:30 PM
Thanks for the info from a business side.

idiom
11-19-2012, 11:46 PM
Banks here in New Zealand seem to have a system that is entirely separate from the credit card oligopoly.

A lot of merchants charge a fee or won't accept Credit Cards, but happily use 'EFTPOS' cards. Its good for the banks because the transaction is immediate,there is no middleman sitting on the funds overnight. The banks charge no fee for it.

If you use a credit card though, you get up to 2% depending on the product, although this is broken out as a surcharge on your receipt.

Growing up with EFTPOS, I have never understood why anyone would use VISA or Mastercard or their alternatives. Its such a backwards system.

I pretty much only use cash when visiting the states.

Brian4Liberty
11-20-2012, 01:20 AM
The situation with credit card fees seems to be analogous to the healthcare industry. Some customers cost more than others, and that cost is distributed equally among everyone. Cash payers subsidize the credit card users. No one questions the rising costs, they just focus on how to evenly distribute them.

For instance in California, they passed a law that said that healthcare insurance must cover maternity costs. The solution? Now a single male must pay the same as a child bearing woman of the same age. So some people must pay for coverage for a "condition" that can never possibly occur. The health care industry had no problem with that. "Raise the price on males? No problem there!"

Brian4Liberty
11-20-2012, 01:22 AM
If you use a credit card though, you get up to 2% depending on the product, although this is broken out as a surcharge on your receipt.

Growing up with EFTPOS, I have never understood why anyone would use VISA or Mastercard or their alternatives. Its such a backwards system.

I pretty much only use cash when visiting the states.

That makes too much sense. Can't do that.

puppetmaster
11-20-2012, 04:02 AM
I offer a 50 cent discount for cash at my store. I tell them I would rather they keep the money in our community then fork it over to some mega bank in some other location....my customers love it

amy31416
11-20-2012, 05:06 AM
No, you still pay the higher prices even if you pay cash.

The solution is to end the banking monopoly.

Someone needs to point out that at least it's the seller who gets those few extra pennies, rather than the bankers--who haul it in on a major scale.

Yes, end the banking monopoly, but in the meantime--use cash. You can negotiate if you're a regular customer, or if you're buying a high-price item.

Brooklyn Red Leg
11-20-2012, 05:23 AM
Part of the problem with "using cash" boils down to the fact you get fucked any way you go. I lose 1% of my paycheck every time I cash it because that is the fee I get charged to convert a check to cash. If I go to a bank, its even WORSE (either by having a bank account and paying monthly fees, or fees to cash without an account). And this is the crux of the problem: banks have enjoyed way too much protection and have way too much influence. If it were a free market, the banks would be forced to compete and would lose their advantages, resulting in better economics for regular joes.

ghengis86
11-20-2012, 05:36 AM
Part of the problem with "using cash" boils down to the fact you get fucked any way you go. I lose 1% of my paycheck every time I cash it because that is the fee I get charged to convert a check to cash. If I go to a bank, its even WORSE (either by having a bank account and paying monthly fees, or fees to cash without an account). And this is the crux of the problem: banks have enjoyed way too much protection and have way too much influence. If it were a free market, the banks would be forced to compete and would lose their advantages, resulting in better economics for regular joes.

Find a credit union with free checking, direct deposit your checks and just withdraw cash. No fees. Even no minimum balance for checking.

I love my credit union.

Brian4Liberty
11-20-2012, 10:18 AM
Find a credit union with free checking, direct deposit your checks and just withdraw cash. No fees. Even no minimum balance for checking.

I love my credit union.

Yep, Credit Union is the way to go.

angelatc
11-20-2012, 10:40 AM
Swipe fees.

Nothing chaps my ass worse than watching some knucklehead fork over plastic to pay for a fucking coffee or candy bar..

How about watching some knucklehead fork over government-funded plastic to pay for a fucking coffee or candy bar? That means the bankers are getting a cut of the welfare pie!

We had a store once. I did a 180 on CC fees at that time. I'd rather pay the swipe fee than deal with checks. But we didn't have a lot of small ticket items, so that pack-o-gum charge wasn't much of an issue.

What chapped my ass was the % that they got. It doesn't cost them any more to process a $1.00 transaction than it does a $1000.00 transaction.

angelatc
11-20-2012, 10:44 AM
Some businesses give cash discounts. There's probably a law that says that some businesses can't do that.

No. AFAIK, it's not even against the law in most places to charge a surcharge to credit card users any more. But it is a violation of the contract the vendor has with the credit card company.

Brian4Liberty
11-20-2012, 11:53 AM
No. AFAIK, it's not even against the law in most places to charge a surcharge to credit card users any more. But it is a violation of the contract the vendor has with the credit card company.

Lol. Of course.

amy31416
11-20-2012, 12:14 PM
How about watching some knucklehead fork over government-funded plastic to pay for a fucking coffee or candy bar? That means the bankers are getting a cut of the welfare pie!

We had a store once. I did a 180 on CC fees at that time. I'd rather pay the swipe fee than deal with checks. But we didn't have a lot of small ticket items, so that pack-o-gum charge wasn't much of an issue.

What chapped my ass was the % that they got. It doesn't cost them any more to process a $1.00 transaction than it does a $1000.00 transaction.

When my dad owned a transmission shop, he always gave a discount for cash because not only was there no CC fees--but he could normally keep the transaction entirely off the books--and it was usually some guy way down on his luck.

oyarde
11-20-2012, 12:23 PM
I pay no bank fees , I used to pay a monthly fee, but with that ( $5.50 a month ) , I got a free safe deposit box , free checks, free cashiers checks , then , they moved it to $8 , and did not tell me , that, I was not alright with .

idiom
11-20-2012, 03:44 PM
But EFTPOS was invented in America?

Why do you all use credit cards instead?!?

The Banks don't get the credit card fees, the Credit card companies do. Y'all are nuts.

Its even in the governments interests to have no fees for merchants or customers for plastic banking because then everything is electronic and traceable.

People *don't* use credit cards in New Zealand, but over 70% of transactions are electronic.

GunnyFreedom
11-20-2012, 04:07 PM
But EFTPOS was invented in America?

Why do you all use credit cards instead?!?

The Banks don't get the credit card fees, the Credit card companies do. Y'all are nuts.

Its even in the governments interests to have no fees for merchants or customers for plastic banking because then everything is electronic and traceable.

People *don't* use credit cards in New Zealand, but over 70% of transactions are electronic.

Yes, it's called 'debit' rather than credit. There is still a surcharge for debit, but it's significantly less. There shouldn't be a surcharge at all for debit IMHO, but at least it's not crippling like the credit surcharges. I buy with debit all the time. I never ever buy with credit.

ETA - I can't say "never ever" because some gas pumps do not have a debit option. If I have to buy gas and the pump is credit only no debit, then it gets charged as a credit surcharge rather than debit. That's on the vendor though. At this point in time, there is not a significantly increased burden to allow debit transactions at the pump, so if a pump is credit only, I have to assume that the vendor is OK with the transaction fees on gasoline purchases. But that's literally the ONLY place I use the 'credit' side of my debit card. Even online purchases I use a PayPal linked directly to my bank account rather than through my card.

idiom
11-20-2012, 04:34 PM
We have debit cards as well, but there are surcharges and merchant fees on those too because of the system they run on.