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Business groups across the country are stepping up the fight over credit card swipe fees with another attempt to convince Congress to reform the system.
Proposed legislation would require banks with more than $100 billion in assets that issue credit cards to allow their cards to be processed on at least two unaffiliated networks — Visa or Mastercard plus at least one competitor, writes Andy Medici for the BBJ
“While this legislation would benefit all merchants, it is small retailers who are calling for swipe fee reform more than any segment of our industry,” a coalition of business groups wrote in a letter.
Credit and debit card fees have more than doubled in the last decade, costing merchants upwards of 3.5% for each transaction.
In other words, free rewards are not free.
And while businesses often have no choice but to accept credit cards, they are unable to negotiate which platforms they use to process those payments.
It’s even worse in Massachusetts
We're one of two states that doesn't allow a business to add a convenience fee to consumer purchases to cover the cost of credit or debit card payment processing
Instead, our businesses absorb the fees not just on the products they sell but -- particularly unfairly -- on the sales and meals taxes they collect and then turn over to the state.
About 80% of the more than $1 billion in meals taxes collected annually is paid with a credit card. That equates to hundreds of millions of dollars that the state's restaurants pay to collect meals taxes without compensation.
“The same state that does not give the option to pass on credit card fees does, in fact, add on a 2.35% fee to make payments to the state,” restaurateur Doug Bacon and Stephen Clark of the of the Mass Restaurant Association write in a BBJ oped
“And while many states have vendor tax credits for businesses collecting money, Massachusetts does not. Every time a credit card is swiped, the processor charges a fee,” they add.
What Lt. Gov. Driscoll told us about credit card fees
The issue of restaurants being forced to absorb credit card fees on meal taxes came up in discussion with Lt. Gov. Kim Driscoll at our Spring Business Breakfast earlier this month.
Here’s the video segment where Kay Masterson, proprietor of Johnny’s and Cabots, asked Driscoll about that and other small business concerns.
And one final credit card related item….
Oh, this too...
This isn't related to credit card fees but the Globe's Aaron Pressman has an interesting story today on a new hidden fee when ordering meals via Toast.
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