Americans will spend
Still, those numbers are nothing to sneeze at. And since banks charge as much as 4 percent in “swipe fees” to process credit-card transactions, which cost the banks only a few pennies a transaction, they’re the ones actually cleaning up on this holiday spending.
Consider: You buy Dad a
In many cases, banks are making more on a credit-card sale than the merchants. Consider convenience stores that sell gas: They paid
These unconscionable fees are now many retailers’ second-largest operating cost, after labor.
Even with the economy improving, consumers have remained tight-fisted during the holidays so far this year, the
Also disheartening: The swipe fees banks impose without competition on retailers raise prices for consumers (even when they don’t use credit or debit cards), hurt retailers – especially small ones – and by curtailing growth, hurt the economy too.
Unlike retailing, where merchants compete head-to-head and competition is so intense that profit margins are usually tiny, Visa and MasterCard fix swipe fees for their member banks so they don’t have to compete. This kind of abuse is certainly not what we expect from our free-market economic system.
Consider on the other hand how reform benefits consumers: A prominent economist found that in its first year in effect, 2012, a measure that modestly reformed debit-card swipe fees saved consumers nearly
Swipe fees are a corner of our economy where the market has gotten seriously out of kilter, and where banks continue to load outrageous fees on the backs of retailers already struggling with a sluggish economy and thin profit margins.
So this Father’s Day, as Dad unwraps his new socks and opens his card, spare a thought for the merchant who sold you these things. Her Father’s Day will be much the same as last year – the banks will still have their hands in her pockets, and her fees will continue to rise.
For more information about unfair swipe fees, go to the
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