Swipe Fees

Having a legal reason to charge consumers more is much better than hiding swipe fees in the ticket price.

Since its inception, merchants have known about the impact of swipe fees on their business. Initially it allowed them into the pay-over-time marketplace which was closed because they did not have their own credit card system.  The swipe fee covered the cost of running such a system and was never intended to be a free service to merchants

As a fledgling industry, the payment networks used a sliding scale of percentage. The more money charged to cards, the lower the percentage charged. Smaller merchants were forever doomed to the maximum the networks charged and the pinch into their profits felt like a gouge on low markup items. Pricing was held in check by competition from bigger businesses paying smaller fees. Restricting usage of the card was unpopular among consumers. The cost was a profit loss.

A fee per transaction is an old scheme without the annoyance of competition to the plastic society the banks have adeptly created. Checkbooks have been junked for all purpose ATM cards. Mailboxes are littered with rewards, points, rebates and discount advantages for using a credit card.

And now the hour for the class action settlement is upon us.

For fixing swipe fees, the penalty exacted on Visa, MasterCard and several of the nation's largest banks will total about $7.25 billion.

From the $7.25 billion, merchants get a fractionally reduced fee for a short term and permission to concoct a two-tiered consumer pricing system; one for cash and one for credit, though some state laws might prohibit this credit card surcharge.

What exactly changed?

Merchants no longer care what fee is imposed by the card networks. The nasty problem of 'paying the cost of doing business’ can legally be passed on to consumers.

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