The In’s and Out’s of Swipe Fee Debate

Gas prices are high, that we can all agree. When going to fill up my tank I’ve recently noticed around my neighborhood that certain gas stations are putting up two different prices, a price for those who pay in cash, and one for those who pay with a debit or credit card. It’s usually about a 6-cent difference. I think to myself, how can you charge more for a debit card which gets taken directly from my account, like a check. I get mad at the station as I usually use my debit card, but who is really causing this price increase for card usage?

Credit and debit card swipe fees cost merchants and consumers an estimated $50 billion a year. Think about it, credit card companies and banks are making a killing off of consumers taking out a card to make a purchase instead of using plain old cash. The Swipe Fee Debate has been going on for a while and the National Retail Federation has started a campaign to get results faster as the banks are trying to delay a change that would reduce fees for another two years.

Swipe fees refer to a percentage of a transaction which banks take when consumers use a credit or debit card to make a purchase. Swipe fees are continually rising, tripling over the last decade and the costs get placed on the merchants who then have no choice to place the burden of paying fees onto the consumer. Basically they are making merchants increase prices on everything they sell to cover these costs.

Right now, the Federal Reserve is proposing a reduction in debit card swipe fees that will cut them by 70%. That reduction will save the average household a total of $427 a year that they spend on fees. The banks and credit card companies are of course fighting and want a two year extension. (Funny considering that some estimates are reporting they are spending hundreds of billions to stop this. These banks could have saved that money to make up for the reform which would help the economy!)

To help push reform through, the National Retail Federation began a 60-day campaign to carry out the introduced Swipe Fee Reform. It is scheduled to go into effect on July 21 as of now, but the fight continues. Even though the reform only affects debit card fees, not credit cards, it will still save billions for merchants and consumers alike. Through the use of federal lobbying, grassroots mobilization and a national media blitz, the NRF hopes to make the public aware, so they too will put their foot down and help the reform pass.

If you’d like to make your voice heard to help Swipe Fee Reform pass in Congress, visit the NRF’s 60-Day Campaign website.

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