Whatever You Buy This Fourth of July, Banks Will Gouge the Merchant on Fees When You Use a Credit Card, Which Means Higher Prices For You

WASHINGTON--()--Merchants Payments Coalition issued the following:

It won’t be just hot dogs that will get a good grilling over hot coals this Fourth of July. The merchants who sold them will get their very own special kind of grilling by the banks.

In fact, the people who sell everything from bunting to bottled water to barbecue sauce, from small corner stores to the biggest grocery chains, get gouged by the banks every time a customer buys something with the swipe of a credit card. The Fourth of July will be no different.

Observing how the banks pervert our free-market system, though, is especially ironic on a holiday which celebrates the freedom that democracy and free enterprise have brought Americans – free enterprise except, of course, for these anti-competitive “swipe fees,” which most Americans don’t even know about. And that’s the way the banks like it.

Why should consumers care? Because what most Americans also don’t know is that these outrageously unfair fees on merchants hurt consumers when retailers have to raise prices; that the fees curtail growth in retail and kill jobs; and in the end hurt our entire economy, of which retail is a huge part.

Here’s how it works: Visa and MasterCard control the vast majority of the market for credit and debit cards. They each illegally fix rates so that the banks that use their brands can charge huge fees. Let’s say you just bought a $500 gas grill to replace your old one and you used a credit card. The bank charges the merchant as much as 4 percent – $20 – just to process a transaction that costs the bank only a few pennies.

Or this: A small survey on Instant.ly, a do-it-yourself market research website, found the majority of Americans won’t travel on the long July 4 weekend. Those people instead are likely to buy something to put on the grill over the weekend. Drop $100 at the supermarket on your credit card and the grocery store will have to pay the bank 2 percent, the typical swipe fee for grocery stores. That’s $2, yet another windfall for the bank, whose cost is typically less than a nickel.

Or consider airfares for those revelers who will travel. The online travel agency Travelocity says New York City, Los Angeles and Orlando will be the most popular destinations this holiday. The average cost of a round-trip ticket in the U.S. will be $400. Even at 2 percent, the typical swipe fee for airline tickets, that’s $8 airlines will be forking over to the banks for a service that costs only the tiniest fraction of that.

When those travelers get to New York, the average hotel rate per night will be $236, says Travelocity, which at 2 percent is almost another $5.

Those kind of anti-competitive profit margins add up to huge, multi-billion-dollar windfall profits for banks while merchants, who often count their profits in a few pennies on the dollar, have no choice but to swallow the fees if they want to keep accepting credit cards.

This is an issue that should concern both political parties on this most important of the non-religious holidays. Not only do Visa and MasterCard subvert the open markets our capitalist system was built upon, but they also hurt consumers and small businesses. For some of these, swipe fees are second only to labor in operating costs these days, more than rent or utilities. Some businesses pay more in fees than they make in profits.

It’s time for merchants to declare independence from this grossly unfair set-up forced on them by the big banks and demand a level playing field that’s fair to merchants and their customers. Hopefully merchants’ and consumers’ own Fourth of July – and liberation from unfair bank fees – will come sooner rather than later.

For more information about unfair 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.

Contacts

Merchants Payments Coalition
Michael Flagg, 202-253-4164
mike@hintoncommunications.com

Contacts

Merchants Payments Coalition
Michael Flagg, 202-253-4164
mike@hintoncommunications.com