Explain more to me about "swipe fees". Confused....

[pizza1]

Tried googling and on these boards for info, and the info I've found has been confusing! What I've read is that swipe fees are bad, but here in the forums "heavy usage" = lots of swipes= CC issuing banks are happy?? Lol... I'm just trying to understand this whole swipe thing better. So lets say I used my Barclays card last month, and had 30 "swipes", or transactions. Is that a good thing from Barclays eyes? Thanks for helping me understanding better!

[MarineVietVet]

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@pizza1 wrote:

Tried googling and on these boards for info, and the info I've found has been confusing! What I've read is that swipe fees are bad, but here in the forums "heavy usage" = lots of swipes= CC issuing banks are happy?? Lol... I'm just trying to understand this whole swipe thing better. So lets say I used my Barclays card last month, and had 30 "swipes", or transactions. Is that a good thing from Barclays eyes? Thanks for helping me understanding better!

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I can only speak for myself but I don't find this to be true.

Out of six cards I only use one for most of my purchases. The other five are used one time a month to autopay recurring monthly expenses and all the CCC's seem very happy with me.

YMMV.

[Anonymous]

The swipe fee's are very bad for the retailers, not so much for the CC companies.

[pizza1]

Ahhh, ok... So lets say I have a MasterCard thru Barclays...I swipe my card 20 times in a month. Barclays would love that because they are getting paid a fee for each swipe?

[Anonymous]

Barclays and Mastercard would love that. In most cases.

[pizza1]

Thank you and to Marine for replying

[pipeguy]

Swipe fees are a percentage of the sale that the "credit card" keeps, say 3% (it varies from about 2% to 5%, determinded by a lot of factors). Swipe fees are paid by the retailer and split (not 50/50) by the network (MC/V/ASE/D) and the issuer (Cap-1, Chase, Barclays, etc).

There are many different ways to figure the percentage kept, minimum per sale, x-amount per sale+ percentage, reward program, network, average sale, percentage of charge backs, again, etc etc. Bottom line this amount (percentage) comes off the top of every sale as a cost for retailers and goes into the pocket of the network/issuer. 

Having been in business for 30+ years, 18 of them as self employeed, I can tell you that swipe fees for a small business runs more than rent and less than employment as far as a monthly cost - a major expense. I know most people don't care, but I never "charge" anything under $10 if I can help it, and if its under $3, I'll go without rather than stick it on a credit card because I understand the small business cost.

[Anonymous]

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@pizza1 wrote:
Ahhh, ok... So lets say I have a MasterCard thru Barclays...I swipe my card 20 times in a month. Barclays would love that because they are getting paid a fee for each swipe?

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Yes!

Swipe fees for example... I have a side business besides my salary job.

I use a Square to take CC payments. Square charges me 2.75% to take CC's -- That's a swipe fee.

[Anonymous]

they're great for companies like Visa/MC because that's how they make money, the issuing bank may collect some of the swipe fee too but interest is primarily their game. the fees are bad for the retailers you shop at because it cuts into their profits... the reason some consumers consider the swipe fees bad is because most retailers will usually pass the swipe fees on to us in the form of higher prices for the products they sell. 

[14Fiesta]

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@Anonymous wrote:

they're great for companies like Visa/MC because that's how they make money, the issuing bank may collect some of the swipe fee too but interest is primarily their game. the fees are bad for the retailers you shop at because it cuts into their profits... the reason some consumers consider the swipe fees bad is because most retailers will usually pass the swipe fees on to us in the form of higher prices for the products they sell. 

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+1 Which is where the rewards game comes in. We use rewards cards to get a discount on merchant products via cash back percentage or points. But rewards cards usually have a higher fee they charge the merchant to compensate for the rewards. In return, the merchant raises the cost a little bit more to deal with the higher fees. So really, the rewards are just covering the built in extra price we pay at the register. But if we didn't use rewards cards, we still pay the built in cost of others swipe fees, while we leave empty handed, so to speak. It's a vicious circle.