Swipe fees are a huge burden for small business owners across the country. Ted Burke, a restaurant owner from California, talks about how powerless he feels when faced with credit card companies’ unrestrained ability to set non-negotiable and unreasonably high rates.
“Business owners like me can negotiate virtually all of our costs, but we are powerless to negotiate swipe fees. This is because the major credit-card companies set rates on behalf of the banks that offer their cards, not on the cost of processing. That is the opposite of the free enterprise system, it is not right and it costs consumers as well as merchants.”
As the prices go up, banks raise their fees even though it doesn’t cost them a penny more to process transactions. Mr Burke says:
“Typically, this kind of technological improvement drives down costs. The swipe fees, however, just keep going up.
Moreover, banks are double-dipping - they are already protected from inflation because credit swipe fees are assessed as a percentage of each sale. Thus, when menu prices go up, so does bank revenue. Yet the banks keep raising the percentage rate to take a bigger bite, making transactions more expensive.
I view the banks and credit-card companies as unwanted business partners. They do not work anywhere near as hard as I do, yet they collect nearly as much in fees as the average restaurant earns in profit.”
Read the rest of Ted Burke’s article
here.
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