Using your credit card to pay for purchases is quick and easy. But that simple swipe can come with a lot of hidden fees, like “swipe fees” that keep going up.
Doug Kantor, general counsel for the National Association of Convenience Stores, explained that credit card companies charge merchants these processing fees, which can range anywhere from 1.5% to as much as 4%.
And they’re costing businesses and consumers more money every year.
“These ‘swipe fees’ are set by the major credit card companies. What they do is tell the banks that issue your cards how much to charge the store where you shop,” Kantor said. “Those fees have grown out of control.”
Credit card companies make billions of dollars a year charging these fees.
Last year, U.S. businesses paid $198.25 billion in credit and debit card fees, and merchants are often forced to pass that cost onto consumers, according to the Merchants Payments Coalition.
The average U.S. household paid roughly $1,200 more because of such fees last year.
“Consumers are completely in the dark and don’t have any way to say, ‘Gee, that fee seems like too much.’ Or, ‘I’d rather make a different choice,’” Kantor said.
Some states have tried to pass legislation to cap these processing fees, and there is congressional support for a bipartisan bill to help lower these fees.
One important note: The swipe fees for a debit card are less than a credit card but retailers and restaurants are still forced to pay a processing fee, so some merchants will offer discounts to consumers who pay with cash.