By Andrew Miller
A thin plastic rectangle could be the biggest operating expense your business faces.
Credit card swipe fees are up 70% since the pandemic. Last year’s fees set a new record of $198.25 billion.
After labor, these swipes are one of the top costs of doing business.
That 2-4% per transaction gets baked into your pricing, absorbed into your margins, or both.
Consumers are paying the price too. It’s estimated that the average family spends around $1,200 on credit card fees each year.
These fees aren’t going away any time soon. Those responsible, like Visa and Mastercard, corner 80% of the credit card market and centrally set fees. And they’re not interested in negotiating.
It seems like the law is on their side. The Department of the Treasury just set an interim final rule allowing card processors to set swipe fees and prevent state laws from addressing the rising costs.
At the expense of small businesses and consumers, big banks and credit card companies can now work together to raise their swipe fees… and their profits.
To advocate for small businesses, the National Federation of Independent Business (NFIB) sent a letter in opposition to the ruling. In addition, the Merchants Payments Coalition and nearly 350 national, state, and local merchant trade associations sent another letter pushing for the Credit Card Competition Act.
The bipartisan bill would introduce competition into the credit card market, and require that credit cards can be processed on at least two unaffiliated networks. That way, merchants can choose among competing options on fees, security, and service.
If passed, it could save consumers and merchants around $17 billion annually. So far, it hasn’t moved.
P.S. Swipe fees aren’t going away. But if your business needs capital to stay ahead of them, Signet can get you funded in as little as 24 hours. Let’s talk.