Merchants Warn Consumers About Swipe Fees - Legal News

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Legal » Merchants Warn Consumers About Swipe Fees

Merchants Warn Consumers About Swipe Fees

Merchants Warn Consumers About Swipe Fees
August
6
The content is accurate at the time of publication and is subject to change.

Two years after a settlement was proposed in the long-ranging antitrust battle between merchants and credit card issuers, the Merchants Payments Coalition (MPC) is still fighting against swipe fees that they say are gouging retailers.

In a recent press release, they warn consumers that banks are taking “an unconscionably huge chunk” of their money, resulting in higher prices as sellers pass along the added expense to their customers.

Interchange fees – often called swipe fees – amount to between 2% and 3% of each purchase, and are charged by credit card networks to merchants that accept credit card payments.

Retailers brought an antitrust suit against Visa and MasterCard in 2005, claiming that they illegally fix fees at unreasonable levels. In the latest release from the MPC, they use the example of a family renting a cottage at the beach for a week in the summer. The MPC says that if the cost of the cottage is $2,000 at the swipe fee is 4%, the bank will get $80 of the transaction. They claim the actual cost of the transaction is only a few cents, leaving the bank with a profit margin far higher than the person or company who owns the rental property.

In reality, most interchange fees are not as high as 4%. But the transaction cost for the credit card processor is the same whether the purchase is for $10 or $10,000. Banks profit more from interchange fees on higher dollar-value transactions.

Average summer vacation costs

The MPC highlights a study from insurance company Allianz Global Assistance USA that said Americans would spend $100 billion on summer vacations in 2014. That’s 20% more than they spent last summer. Out of 1,000 people surveyed by Allianz, more than 50% said they were traveling over 100 miles from home for their summer vacation. They estimated their average spending at $1,900 for the vacation.

The MPC points out that even if interchange fees are only 2%, banks will get $38 of that $1,900 if consumers use credit cards to pay. Of course, using credit cards benefits consumers for many reasons, the main one being credit card rewards they can collect from summer spending. Credit cards also offer increased security features that cash can’t give, plus perks like car rental insurance, access to airport lounges, and hotel upgrades.

The MPC is comprised of retailers including supermarkets, drug stores, convenience store, gas stations and online merchants. They represent approximately 2.7 million stores and 50 million employees.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

CFPB Taking a Hard Look at Credit Card Issuers
CFPB Taking a Hard Look at Credit Card Issuers

Posted: September 10, 2014

Honesty is the best policy when marketing special interest rate promotions, was the message that federal regulars delivered to U.S credit card issuers, believing that some may be engaging in deceptive marketing practices. Continue reading
Visa Ups the Ante for Prepaid Cards
Visa Ups the Ante for Prepaid Cards

Posted: June 13, 2014

It's easy to unknowingly rack up fees when you’re using prepaid cards, but Visa aims to change all that by rolling out new standards for cards carrying its logo. Continue reading
Capital One Helps Credit Cardholders Avoid Extra Fees
Capital One Helps Credit Cardholders Avoid Extra Fees

Posted: June 27, 2014

If you’ve ever been hit with a duplicate charge – being billed twice for the same purchase – you know how frustrating it can be. Sometimes there’s a reason for the double-billing, but often it’s due to a mix-up like a company auto-renewing... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate.
For Excellent, Good Credit
INTRO OFFER: Discover will match ALL the Miles you've earned at the end of your first year, automatically. For example, if you earn 30,000 Miles, you get 60,000 Miles. That's $600 towards travel!
For Excellent, Good Credit
Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay
For Excellent, Good Credit
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!