A retailer’s perspective on swipe fees

For some time, the processing fees that banks charge businesses following every credit card transaction has been a challenge. Because more consumers prefer to use plastic when they reach the cash register, companies do themselves a disservice by being cash only, but if they run a high volume, the fees levied by card providers can quickly get out of hand.

It is not unusual to walk into a convenience store and be greeted with a sign declaring all purchases under $10 or $15 are cash only. This is done to make sure the business can afford the swipe fees.

The problem with all this has come to head over the last few years in the form of several lawsuits that have become a legal quagmire. The biggest suit has been going back and forth for close to nine years, and even with a settlement agreed upon in December, many retailers have pulled out of it and several retail organizations are calling for it to be overturned.

It is clear that this is a major problem for companies, but hearing the challenge from the  mouth of a business owner can be more powerful.

Recently, Jeff Miller, the president of Miller Oil Co., in Norfolk, Virginia penned an op-ed in the Virginian Pilot where he shared a retailer's perspective on how swipe fees have impacted how his business operates.

He called swipe fees a form of legalized bank robbery. Despite the Durbin Amendment to the Dodd-Frank financial reform law, which is designed to curb this kind of swipe fee, the Federal Reserve has not been enforcing the law. This has been a major problem for the small business owner, many of whom have had to increase their prices in order to cover the cost.

"Outrageously steep credit-card fees right now add about 7 cents to the price of every gallon of gasoline sold in our area," Miller wrote. "Yet I can't simply raise my prices every time I want, because I operate in a hyper-competitive business where my prices are posted on signs looming above the street."

This is essentially a hidden tax that hurts everyone except for the banks. When it comes to operational costs, swipe fees are now the second highest thing to consider behind labor. That is more than rent or utilities and this is showing no signs of slowing down.

Having the right credit card payment processor can go a long way toward getting over these fees.

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