Everyone knows you have to pay a municipal sales tax on your purchases, but what about a corporate Visa tax that’s levied by credit card companies? The Huffington Post just published a great investigation on the $48 billion in credit card “swipe fees” charged by banks, and passed on to consumers, every year. Is a tax not a tax if we call it a fee? —YL
The Huffington Post:
Although a hotly contested issue in Washington, swipe fees barely register as a concern to most Americans. A merchant-sponsored poll last month of the issue found that nearly half of respondents were completely unfamiliar with it. Once it was explained to them, however, 70 percent backed Fed action to cut the fees.
In December, the Fed proposed to reduce the average debit card swipe fee by nearly 75 percent—down from an average of 44 cents per swipe to just 12 cents. The rule was supposed to be finalized on April 21 and take effect July 21, but the Fed missed its deadline last week.
For every month the law is postponed, banks will make $1.35 billion on debit cards, according to Nilson Report data. That makes for a very motivated lobby. “The merchants had the advantage last year of caring only about this in the bill while the banks were worried about trying to kill the consumer bill and the other stuff,” says Rep. Barney Frank (D-Mass.), former chairman of the House Financial Services Committee. “This is now as important to the banks—in fact, it’s more important to the banks than to the average merchant, which is what shifted this.”
Indeed, the American Bankers Association, JPMorgan Chase and Regions Bank count a total of eight new lobbying shops working on swipe fees in 2011, according to lobbying disclosure forms.
Banks began issuing cash cards in the 1970s as a tactic to automate services and cut labor costs—more ATMs meant fewer bank tellers and check processing costs. When swipe machines were first introduced in stores, banks actually paid some merchants to accept debit cards. Later, swipes became free, and once debit cards had become ingrained in consumer culture, banks began charging merchants, and the costs keep going up.
The fees incense many merchants. Sheetz Corp. operates nearly 400 gas stations and convenience stores from Ohio to North Carolina, and CEO Stan Sheetz is pressing lawmakers hard to lower swipe fees. But unlike most retailers, Sheetz also serves on the board of a small bank that makes a fortune from fees. “From the bank’s standpoint ... it’s all gravy,” says Sheetz. “It’s a cash cow.”
Credit and debit swipe fees cost Sheetz $5 million a month, second only to labor costs among the company’s top executives, he says. “I am a die-hard capitalist pig,” Sheetz tells HuffPost. “That’s why Visa and MasterCard piss me off. ... They treat us like shit. The arrogance is unbelievable.”
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By Shenonymous, April 30, 2011 at 10:16 am Link to this comment
The best thing Americans can do is to get rid of their credit cards
Report thissaving one that has the best interest and policies for emergencies.
You would see how fast they do a different dance. I did that years
ago and I have never regretted it. If you can, buy for cash or wait
until you have it. I know I know, you have to pay off the cards
already used, but you can stop using them even if you have to
make monthly payments. Call them to make payment arrangements
that you can afford (which is probably not a lot) and still buy cash.
Use the one active card only when there is an emergency. You have to
control yourself to control the greedy vultures. It is blood they always
smell, yours.
By TDoff, April 29, 2011 at 12:55 pm Link to this comment
Anyone care to place a wager on when the merger between the Federal Government and the US Chamber of Commerce will be complete?
Report thisCan you imagine the Wall Street infighting that will be going on to determine who will handle the IPO? And which of Goldman’s ‘favored’ clients will get the biggest block of discounted initial stock?
Think of the boiler rooms Wall Street will set up to telemarket shares in Fort Knox gold.
And Boeing won’t have to fly to D.C. to push their latest failed airliner on the military as a troop transport. They’ll just walk across the hall and knock on the Joint Chiefs’ door.
‘Synergy’ will be the hot buzz word. As soon as they determine by how much the President of GM outranks POTUS.
By SarcastiCanuck, April 29, 2011 at 12:34 pm Link to this comment
(Unregistered commenter)
Just another corporate rip off to add to our growing pessimism.Funny to see the gas peddlar calling his cohorts crooks though.Sheetz motto must be,“Better to screw than get screwed”.
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