Customers are racking up an average of $427 in hidden swipe fees (also called interchange fees) each year from purchases made on their credit cards, the Florida Business Journal reported.
”The continuing burden of interchange, or swipe fees on small business owners has become heavier and heavier to bear. It is the second largest expense behind payroll. It is something we are extremely worried about,” said Jim Smith, president of the Florida Petroleum Marketer and Convenience Store Association.
Credit card companies say the fees are a necessary cost of doing business.
These interchange fees are a percentage of each transaction card companies and their member banks collect from retailers every time a credit or debit card is used. These fees average about 2% in the U.S., according to the NACS.
In 2008, credit card fees cost U.S. convenience stores $8.4 billion, compared with $5.2 billion in store profits, according to NACS data, and almost all these fees are attributable to swipe fees, the Florida Business Journal reported.
Bruce Mitchell, a Florida c-store owner told the Florida Business Journal his operation paid more than $3 million in credit card fees last year alone.
“I am paying 25% more for credit card fees than I pay in wages,” he said.
Recently, tax offices in four Florida counties refused to continue accepting Visa because their budget could not afford the swipe fees.
C-stores and other small businesses, however, can’t afford to lose customers by saying no to credit card purchases.
This is why groups are pressing for new laws that would require credit card companies to reveal swipe fees or allow merchants to negotiate those fees.
Federal lawmakers recently reintroduced the Credit Card Fair Fee Act, which NACS said would give merchants “a seat at the negotiating table with banks to determine the fees assessed for every sale made by credit card, and ultimately reduce the costs of everyday goods for consumers.”
However, the Electronic Payments Coalition, an organization that represents payment card networks, financial services companies and financial services trade associations, said in a new release that retailers are trying “to make consumers pay for one of their business expenses-the cost of accepting credit and debit.”