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Small Biz Owners Lobby To Cut Credit Card Fees

By on January 29, 2010 in Ideas

Small merchants have long chafed at the fees they must pay banks every time a customer swipes a debit or credit card. But now, with business slowing and every dollar important to their bottom line, some merchants are pushing for changes, reports The New York Times.

The merchants are lobbying for legislation that would compel banks to negotiate fees with them and are supporting a second measure that one of its sponsors calls a “credit card bill of rights for merchants.” At the same time, some merchants are seeking class-action status for litigation claiming antitrust violations by banks and the MasterCard and Visa card networks.

A typical merchant card payment has two parts: an “interchange fee,” which includes an average 1.7 percent of the sale price and a flat per-transaction fee, and a separate fee that goes to the merchant’s bank.

Take, for example, a driver who pays for a $1,000 car repair with a credit card. The bank that issued the consumer’s card receives an interchange fee of $17.10 (including a 10-cent flat fee), while the repair shop’s bank gets $4, or four-tenths of 1 percent of the total sale. The repair shop pockets $978.90.

Photo by photobucket.

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Rich Whittle has added 6,226 posts to Business Opportunities Weblog.

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  • http://redhotfranchises.com RedHotFranchises

    Thanks for the heads up on the valuable insights. Cutting down unnecessary costs and increasing profit margins is the key to long-term success.

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