13 Aug, 2015
WASHINGTON–(BUSINESS WIRE)–August 12, 2015 – As Americans go on vacation, they might complain about noisy hotel neighbors or delayed flights. But many don’t realize the banks put the damper on their fun too by making it more expensive.
According to a survey by Choice Hotels International, eight of ten Americans will travel this summer. Whether they are driving or flying, staying in a hotel or renting a beach house, hidden “swipe fees” that banks charge merchants on every credit and debit card transaction will push the prices up.
These swipe fees are out of all proportion to the banks’ actual cost of processing card payment transactions. Merchants pay a quarter for a debit transaction that costs 4.4 pennies to process and up to four percent of each credit card payment.
At those rates, financial institutions run a 500-percent profit on debit cards and as much as 10,000 percent on credit cards. Swipe fees have swollen into a $50 billion business, most of it profit for the banks.
How did this happen? Visa and MasterCard, the two credit-card giants that control the U.S. card market without competition, fix swipe fees for all their member banks. Since banks don’t have to compete for merchants’ business, swipe fees continue to rise and have more than tripled in the past decade.
Because swipe fees are hidden, many people don’t realize the fees raise the price of everything, even if you use cash, and especially hurt the poor.
Consider just travel: Choice Hotels found major cities and east coast beach towns are among the most popular destinations this summer. A three-day trip to New York City costs around $1,909, according to TripAdvisor. If charged to a credit card at an average swipe fee of 2 percent, almost $40 of that will go directly to banks for transactions that cost them a few pennies.
Don’t get taken for a ride. Learn more about swipe fees at: http://www.unfaircreditcardfees.com/.
The Merchants Payments Coalition includes retailers, restaurants, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses fighting unfair credit card fees and advocating a more competitive and transparent system that works for consumers and merchants. The coalition’s member associations represent 2.7 million stores with 50 million employees.