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U.S. merchant fees higher than those in other nations
By Meg C.
Recent credit card legislation sought to make credit card companies more transparent. The end result was that credit card companies can't arbitrarily raise interest rates or charge consumers hidden fees.
What about merchants? Many small business owners depend on credit card sales in order to keep their businesses thriving. Merchants are charged merchant fees in the form of "swipe charges" charged each and every time someone performs a transaction.
History of swipe charges
Technology has since evolved and processing credit card transactions has dramatically decreased in cost. However, swipe fees have actually increased since the 1960s. In some companies, swipe fees represent the largest non-labor operating cost.
Recent credit card reforms keep a credit card company from taking advantage of the American consumer. Reforms don't regulate swipe fees and merchant account fees. Now that credit card companies are prohibited from gouging consumers, they may be more likely to come after small businesses and those with merchant accounts.
Aren't merchant fees high everywhere?
Does that sound fair? While many small businesses in the U.S. are struggling, credit card companies are taking advantage of the small business owner's dependence on credit cards as a method of payment for goods and services.
How are swipe fees so low in other countries?
In Australia, credit card swipe fees dropped .45 percent since reforms went into effect in November 2003. MasterCard, under the pressure of the European Union, reduced its cross-border interchange rate to .3 percent in April of 2009. This is a far cry from the two percent that U.S. consumers pay.
The bottom line is that other countries ensure that their business owners are not taken advantage of by credit card companies. Never once has a credit card company voluntarily reduced their fees without pressure from a regulatory body.
How would swipe fee reform help the U.S.?
Reforming swipe fees would help small businesses keep more of their profits instead of sending them to the pockets of credit card companies. The only way for legislation to make way through our government is for concerned citizens to contact their representatives.
What should small business owners do?
In addition, send a copy of the UnfairCreditCardFees.com report to your senator or congressman. Grabbing the attention of lawmakers is the only way that necessary changes will be made.
Article by Meg C.
Published: October 5, 2009