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Established Contributor
pipeguy
Posts: 571
Registered: ‎10-31-2011

Interesting article on Swipe Fees and Merchant options

Quote from the article:

 

The evolving problem, which has been widely documented, is that merchants only want to pay for the value they receive (plus maybe a little more to avoid the inconvenience of changing their practices). A 2% or 2.5% premium is reasonable. Sadly, many merchants are paying much more. Accept a Visa Signature business rewards card and the merchant will be paying a significant premium. Add to that a flurry of unintelligible fees and surcharges and the actual merchant bill can easily average 6%.

 

http://www.americanbanker.com/bankthink/forget-swipe-fees-credit-card-issuers-are-losing-the-payment...

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Frequent Contributor
compassion101
Posts: 489
Registered: ‎06-06-2012

Re: Interesting article on Swipe Fees and Merchant options

"They can proactively begin reducing the number of categories charged to merchants, starting with Signature and rewards cards. Issuers can continue to offer rewards cards with an annual fee to replace the differentiated income."

 

Will be interesting to see what happens in all of this. Most of the people on this board obviously have a dog in this fight. Someone has to pay the fees, so far it has been the merchants, and in the long run they can either raise prices of products to compensate or charge fees for card usage I would think.

 

 

 

Frequent Contributor
Dadaluma83
Posts: 364
Registered: ‎08-23-2011

Re: Interesting article on Swipe Fees and Merchant options

I don't mind paying reasonable annual fees. Right now anything under $100 is reasonable like my airline miles card since the amount of spending I push through it and the perks I get make it worthwhile. Plus the signup bonus has cancelled the annual fee for several years.

 

If the annual fee was higher I would just cancel the card. No sense in paying a bank a large fee upfront to use the card, then hope to get it back in rewards. Both the banks and merchants lose by the consumer not using credit cards so it is in their best interest to compromise.

 

Merchants don't seem to understand that rewards cards carry higher fees true, but they make up those fees by more sales. All rewards card users have that voice inside saying "The more you spend, the more miles and cashback you get" if there were higher annual fees or surcharges simple, I stop using credit cards and pay cash only, and use a debit card only for online purchases or traveling and neither the banks or merchants want that.

FICO Scores: TU: 768 (Jan 2012), EQ: 755 (Jan 2012 Lender pull)
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webhopper
Posts: 7,230
Registered: ‎09-16-2011

Re: Interesting article on Swipe Fees and Merchant options


Dadaluma83 wrote:

I don't mind paying reasonable annual fees. Right now anything under $100 is reasonable like my airline miles card since the amount of spending I push through it and the perks I get make it worthwhile. Plus the signup bonus has cancelled the annual fee for several years.

 

If the annual fee was higher I would just cancel the card. No sense in paying a bank a large fee upfront to use the card, then hope to get it back in rewards. Both the banks and merchants lose by the consumer not using credit cards so it is in their best interest to compromise.

 

Merchants don't seem to understand that rewards cards carry higher fees true, but they make up those fees by more sales. All rewards card users have that voice inside saying "The more you spend, the more miles and cashback you get" if there were higher annual fees or surcharges simple, I stop using credit cards and pay cash only, and use a debit card only for online purchases or traveling and neither the banks or merchants want that.


If a consumer wants to lessen the burden of swipe fees for a small businessman such as an independent contractor, there are ways to avoid this. Paying with a check, taking a cash advance from the CC into a bank account, taking out a personal loan.  For the most part I don't feel bad about merchants who choose to accept a credit card. They have already raised prices to accomodate the fees and you will pay the same price for the merchandise  whether you charge with a debit or credit card. In most cases it makes sense to use the payment option that is most convenient to you, the customer. As the old saying goes, the customer is always right!


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Established Contributor
pipeguy
Posts: 571
Registered: ‎10-31-2011

Re: Interesting article on Swipe Fees and Merchant options


webhopper wrote:

Dadaluma83 wrote:

I don't mind paying reasonable annual fees. Right now anything under $100 is reasonable like my airline miles card since the amount of spending I push through it and the perks I get make it worthwhile. Plus the signup bonus has cancelled the annual fee for several years.

 

If the annual fee was higher I would just cancel the card. No sense in paying a bank a large fee upfront to use the card, then hope to get it back in rewards. Both the banks and merchants lose by the consumer not using credit cards so it is in their best interest to compromise.

 

Merchants don't seem to understand that rewards cards carry higher fees true, but they make up those fees by more sales. All rewards card users have that voice inside saying "The more you spend, the more miles and cashback you get" if there were higher annual fees or surcharges simple, I stop using credit cards and pay cash only, and use a debit card only for online purchases or traveling and neither the banks or merchants want that.


If a consumer wants to lessen the burden of swipe fees for a small businessman such as an independent contractor, there are ways to avoid this. Paying with a check, taking a cash advance from the CC into a bank account, taking out a personal loan.  For the most part I don't feel bad about merchants who choose to accept a credit card. They have already raised prices to accomodate the fees and you will pay the same price for the merchandise  whether you charge with a debit or credit card. In most cases it makes sense to use the payment option that is most convenient to you, the customer. As the old saying goes, the customer is always right!


I could not disagree more, I know of no merchant that factors extra profit into their selling price to cover various types of swipe fees (Signature, Rewards, etc). I've run, managed and owned retail business for going on 40 years, you price products based on MSRP, competition (pricing), actual product cost and other factors, but not swipe fees other than a consideration of over head costs.

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