Posted on 06/17/2021 4:33:17 AM PDT by Kaslin
From the way we work to the way we shop, the COVID-19 pandemic has brought about a multitude of changes across all aspects of our lives. One of these changes revolves around the way we pay for the goods we purchase. Cash is no longer king. Contactless payments are at an all-time high and more Americans than ever are relying on their credit and debit cards to purchase goods and services. While this transition to a more convenient and sanitary form of payment has been a long time coming, the stranglehold that credit card companies currently have on this sector should cause serious concern for anyone who values small businesses and a competitive market.
Credit card companies like VISA and Mastercard charge small businesses exorbitant sums of money in the form of swipe fees. These fees are set by Visa and Mastercard but collected by the banks without competition on price. The fees far exceed any operational costs. And, small business owners have been hit hard by the ever-increasing cost of these fees. Business owners point out that these fees have more than doubled from 2012 to 2019. Why do these costs continue to rise as processing and handling technology improves and gets cheaper?
The steep cost of the fees, which average more than 2 percent but can be as high as 4 percent of the purchase, is only part of the problem. The lack of competition that allows for these arbitrary rates to go unchallenged is the more important issue. According to the Nilson Report, in 2019 swipe fees amounted to a shocking $93 billion, and an estimated $67 billion of that was from Visa and MasterCard credit cards.
Unfortunately, small merchants lack the leverage to fight for lower rates. With cash quickly becoming a thing of the past, businesses have no choice but to pay the fees if they want to accept any form of electronic payments from credit or debit cards. And accepting these types of payments is non-negotiable if businesses want to stay afloat, as 38 percent of point of sale payments made in 2020 were made with credit cards and 29 percent were made with debit cards. For small business owners these fees are becoming a significant cost that is second only to the cost of staff wages, a fact that has caused many merchants to fear for their businesses and livelihoods.
As contactless payments continue to become more prevalent and cash continues to phase out, ensuring that large credit card corporations like Visa and Mastercard aren’t monopolizing the sector at the expense of small businesses and consumers is paramount.
It’s up to our elected representatives, especially those who are members of the Senate Banking Committee, to promote swipe fee reform and urge federal regulators to investigate the way these corporations are abusing their market power. Fortunately, the committee has leaders like Ranking Member Pat Toomey (R-PA), who knows small businesses and free markets are the backbone of this country’s economy, and should support policies that will help them thrive. I am hopeful that members of the committee will continue to fight for competitive markets that benefit both small businesses and American consumers.
“It’s up to our elected representatives”
Are you delusional?
They do what the highest bidder commands.
They are not there to help you.
They shut down everything, with no authority.
They kept you locked in your hovel.
They pushed poison into the arms of your kids.
And you bitch about a 3% fee?
The White Pill is coming.
This will all be over soon enough
I still use cash for all small purchases - and most everything else.
Only use my debit card to get cash from my bank teller machine.
I use a points credit card for every purchase I make, then pay the bill in full at the end of the month. I collect 100’s of thousands of points a year doing this.
I am a credit card companies worst nightmare :)
But I have unusually high spending (both personal and business) and have the ability to pay for everything with cash if I wanted, so I never have an issue paying the bill off in full at the end of the month.
Most people would get themselves in debt quickly and then get eaten alive by interest and fees.
#me2
Swipers. What’s in your wallet? What’s your social credit score?
: )
In my small town every vendor charges you 4% extra up front to cover these fees if you use a card. So if you use cash everything costs 4% less. Which I guess defeats the purpose of the “sanitary” transaction but on the other hand none of us here live our life in fear of COVID.
I do too. I also use checks. Part of the problem is businesses that don’t give a discount for cash or check. I definately frequent the ones that do.
I used to process orders with customers credit cards. The fee was normally 3% of the total purchase.
Visa and MC have long been il/legal cartels.
Never should have been allowed to develop as they did, let alone continue and expand their coercive power for decades.
Following the point of the original post - paying cash allows the small business to avoid paying swipe fees.
I don’t even HAVE a debit card
Pseudo-Crypto company Ripe (XRP), my local Grocer says his store would pay about $100 per month in card fees if XRP was in operation in his store.
Presently, his store racks up about $14,000 per month in card fees.
Ripple XRP trades at about $0.80 per share, a penny stock but is said to be headed to $200 per share. But I don’t think so. Wall Street stock exchanges are a rigged casino.
The cost eventually gets passed on to the customer in the form of higher prices.
But I agree that the fees are too high for small businesses on credit card transactions.
No you are a small businesses worst nightmare. Your points are not even a Rounding error in their money transactions
“Why do these costs continue to rise as processing and handling technology improves and gets cheaper?”
Uhh…the love of money?
Also remember all those “Cash cards” the government sent out. It was a government payoff to the banks.
me spending money at a business is their worst nightmare? what?
they don’t have to accept credit card fees and have the ability to pass those fees on if they wish by offering a discount for cash or a fee for credit card transactions.
1. As others have pointed out on this thread, small retailers can offer a discount on cash purchases.
2. If these credit card fees are a problem, there's a huge business opportunity out there for retailers to band together and form a new company that competes with Visa and Mastercard. They can establish a "SmallBiz Card" that has a whole bunch of creative features that gives these small businesses an advantage over their larger counterparts.
3. Anyone who concludes an article like this with a statement that says "It’s up to our elected representatives ..." is a feckless loser. I haven't even seen a single serious concerted attempt by the small business community in the U.S. to deal with this "problem" themselves, so why would any elected representative waste his time with them?
Between 2-4% has been the standard merchant fees for quite a long time. It’s nothing new. In times of Covid, cards are the payment of choice. Hopefully, small businesses pass the cost on to the consumer before this all came down
exactly.
I’m betting that Amazon has negotiated those fees and pays far less than the small businesses. This goes along with bezos’ intention to close down the competition and be the only game in town.
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