Each time you buy something with your credit card or make a purchase online the credit card company charges the business a fee for swiping the card. This fee is the same whether you purchase a stick of gum or a full cart of groceries.
These card fees can add up quickly and have recently been affecting businesses, especially the small ones. Even the University of California, Los Angeles has decided to charge a percentage on student credit card purchases to overcome the costs of card transaction fees.
The Federal Reserve Board is scheduled to meet today to discuss the final rules and fee limits that banks can charge merchants for debit card only purchases. This 12 cent per transaction cap will go into effect on July 21, 2011.
Currently retailers are paying around 44 cents per transaction on average for each debit card transaction they process.
Although this new restriction will come as a welcome relief to most businesses, it will not help with the sometimes harsh fees charged by regular credit card companies, which are almost always higher than debit card fees.
Small business owners have begun to speak out against these fees saying they are a real pain and can add up to hundreds of dollars a month or more. The owner of Perfect Endings Cupcakes, LeTrecia Arthur, said, “For a small business like me, that is my profit each month: just a few hundred dollars.”
The problem is that most credit card purchases are just a few dollars while the fee remains the same no matter how much the purchase is. This is especially true of the Airline Miles Credit Cards which charge retailers a higher fee in order to provide the special perks to customers. “Basically, I would be paying someone to buy the cupcakes because the fees are so high on those.”
It is evident that more restrictions need to be put in place for credit cards as well, but at least the Board is on the right track when it comes to debit cards.
As always, stay tuned to Credit Cards Professor for more credit card news and important updates.
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