WASHINGTON--(BUSINESS WIRE)--While Americans are quaffing green beer Monday to celebrate St. Patrick’s Day, their credit card companies will be rolling in green.
That’s because Visa and MasterCard fix what the banks that issue their cards charge at between 2 and 4 percent for every transaction, even though it costs them a mere fraction of that to process a sale.
Consider it: You stand a round of beers at your local bar and your bank will scoop up, at 4 percent, more than a dollar for a round that comes to $30 – for a transaction that costs a few cents. And you don’t even know you’re paying it.
But the bar owner does. These “swipe” fees, which go up each year inexorably, are now among his or her biggest expenses. For many retailers, swipe fees are now their second-highest operating cost after labor, ahead of rent and utilities.
And Americans will be whipping out the plastic for the holiday, according to a study commissioned by the National Retail Federation.
Last year they dropped almost $5 billion on green derbies and neckties, corned beef and cabbage and everything else that comes with the holiday.
And that’s about what they’ll spend this year, the trade association predicts, partly because the holiday falls on a Monday. The average person celebrating the holiday will spend about $35, with as much as $1.40 going right into the banks’ pockets if that person uses a credit card.
Even if revelers spend only half that $5 billion using cards, and the bank’s charge only 2 percent, that’s still around $50 million in swipe fees, much of it pure profit for the banks – their very own pot of gold.
In all, merchants pay about $50 billion in swipe fees a year, and those fees have more than tripled in the past decade.
American merchants pay the highest card fees in the world, even more than small countries that don’t have our infrastructure or economies of scale.
So while you’re raising a glass to the Irish this weekend, remember the liquor-store owner or bar proprietor who sold you that drink. For them, it’s just another day of work so they can afford to pay their banks.
For more information about unfair credit-card swipe fees, go to the Merchants Payments Coalition website: http://www.unfaircreditcardfees.com/
The Merchants Payments Coalition - UnfairCreditCardFees.com - is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees.