WASHINGTON--(BUSINESS WIRE)--The following press release was issued by Merchants Payments Coalition:
Sales are expected to jump 4 percent this holiday season, which means tidings of joy for retailers and the entire economy during a crucial time of the year.
But, as always, the banks will be there to deflate the holiday cheer. That’s because banks help themselves to as much as 4 percent of the purchase price when customers swipe a credit card to buy a turkey or a television or a tie for Dad. That money comes right out of the pockets of merchants and their customers.
Let’s say you pay $60 for the latest Assassin’s Creed video game for the kids. A “swipe fee” of 4 percent would be $2.40 going straight to the bank that issued your card. Yet it costs that bank only a few pennies to process the purchase. That’s a profit margin in five figures!
Consider the total impact: The National Retail Federation estimates sales will reach $617 billion from November through December. If consumers used credit cards to spend all that, bank swipe fees would add up to $15 billion based on their average cut of around 2.5 percent of sales – a nice stocking-stuffer for the banks.
Many merchants, on the other hand, scrape by on skimpy profit margins of only a percentage or two. So they have no choice but to pass along at least some of the cost of these outrageous swipe fees to you, the customer. Everything you buy, whether you use a card or not, from gas and groceries to clothes and shoes, is more expensive because the banks abuse their power over retailers.
How do the banks get away with it? Simple: Just two companies, Visa and MasterCard, control the credit-card market. They each use this power to fix the fees that banks charge. So the banks make out like bandits (or Grinches) for continuing to put the Visa or MasterCard logos on their cards while merchants and consumers get a lump of coal.
As you can imagine, higher prices stifle economic growth; and that hurts everyone, including retailers. Retail is a huge chunk of our economy and consists of many small businesses, which are our biggest job generators.
Yet swipe fees continue to rise. With nearly unchecked growth, the fees are now many merchants’ second-highest operating cost after labor. Whole industry sectors, such as convenience stores, pay more in swipe fees than they earn in profits. This is a huge, unfair burden on our retailers.
Yet it doesn’t have to be this way. In Europe, the card networks and banks charge one seventh or one eighth what they charge merchants and consumers in the United States.
So if you’re wondering who stole Christmas this year, look no further than your bank to find the Grinch.
Whether the Grinch takes his ill-gotten gains away in a big sack or in the form of illegally fixed fees, he will get his usual unfairly deep cut this holiday and, indeed, throughout the rest of year, too.
Meanwhile you and your favorite merchants – that homey diner down on Main Street, the little wine store on the corner or the candle shop at the mall – will pay for it.
For more information about unfair swipe fees, go to the Merchants Payments Coalition website: http://www.unfaircreditcardfees.com/
The Merchants Payments Coalition is a diverse group of retailers, supermarkets, drug stores, convenience stores, restaurants, fuel stations, on-line merchants and other businesses that fights unfair credit-card fees and advocates for a more competitive and transparent card system that works better for consumers and merchants. The coalition's member trade associations together represent almost 3 million stores with 50 million employees.