WASHINGTON--(BUSINESS WIRE)--Two prime seats at midcourt six rows up for the NCAA championship game on Monday – the culmination of college basketball’s March Madness – were going for $7,650 earlier this week. If the fan bought tickets with a Visa or MasterCard, his bank probably charged the seller more than $150 (perhaps far more) – all for a transaction that cost mere pennies.
This kind of madness doesn’t happen only in March. Banks gouge merchants this way every single day on every single card transaction. Why? Because retailers have no recourse: Visa and MasterCard each price-fix the fees their banks charge merchants. The credit-card business is not competitive, and merchants are stuck with these exorbitant fees if they want to accept cards.
The basketball-ticket buyer – and in fact almost everyone who buys gas, groceries, clothing or anything else with a card – doesn’t even know about this big bite.
But every customer feels it nonetheless in higher prices. And so do merchants who – in contrast to the banks – operate in a highly competitive business.
Because retailing is so competitive, some merchants subsist on paper-thin profit margins of a few pennies on the dollar. “Swipe fees” for many have become their second-highest operating cost after labor – more than rent and utilities.
American merchants now pay the highest swipe fees in the world – as much as eight times what merchants in Europe pay.
That means unfairly high costs for merchants (and retailing is a huge industry whose health is critical to the economy) and, ultimately, higher prices for consumers. American families pay an estimated average of more than $400 a year in swipe fees.
If banking were like retailing, banks would set their own prices and compete in a fair, transparent system that would look more like the rest of our market-oriented economy.
Meanwhile, the NCAA expects a record crowd this weekend in Arlington, Texas, partly because the games are in AT&T Stadium, where football’s Dallas Cowboys play. That’s 80,000 seats.
And if the fans paid by credit card, as seems likely, it’s a huge windfall for their banks. And that’s the real madness.
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.
