Retailers Score Victory on Credit Card Fees
In a landslide vote in congress, retailer’s previously unheard cries against the credit card industry for charging high fees on each credit card transactions, finally won the approval of congress and passed in a victory for retailers.
What exactly were they objecting to? You may not know this, but every time you swipe your credit card, or maybe even your debit card with those Visa and Mastercard logos, the banks that back those cards are charging the retailers that you just swiped the card with a fee simply for the privilege of them being able to accept your credit card.
That’s how the banks that back these credit cards make a lot of their money, so even if you are paying that credit card off every month, the credit card companies are still making money off of your patronage to the various retailers that accept their cards, because they are charging them fees to be able to display their credit card logo and accept it at their store.
Pretty clever set up, and surely one that sets them up to make a pretty penny, regardless of how much interest they make off of you, the credit card holder. But retailers have been begging congress for years to hear them out on why these credit card transaction fees were too much to handle sometimes for them. They wanted to cap them and make them more fair and equitable, and also more conducive to good business where one party doesn’t have a blatant benefit over another.
You may be having an “aha” moment right now. I know I did. I thought, oh yeah, that’s why some of the smaller businesses I’ve gone into won’t let you charge your purchase unless it’s over a certain amount, say ten to twenty dollars. Because if you charge a measly little five dollar item or less, they may actually be losing money on their profit margin because they are paying a flat fee regardless of the amount of the transaction anyways to the credit card company!
This could be a good thing, and a bad thing for us consumers. First off, they may start really pulling back, even more so, on any rewards associated with using your credit card, like points accumulated. They’ve already pulled back on these considerably, but may do so even more now. So if you have a great airline miles credit card or gas credit card, you might be seeing your benefits diminish.
However, this also may trickle down to consumers in the form of lower prices on goods since the retailers no longer pass the high costs of credit card fees down to you. As with everything else in economics, it’s a double edged sword!
