The current congressional debate over the banking regulations that determine the fees that banks can charge merchants for debit card transactions will have an impact on everything you buy, whether you use a debit card or not.
Many consumers are not aware that when a merchant lets you use a debit or credit card to make a payment that the merchant is charged both a “per transaction” fee and another fee that is based on a percentage of the overall cost of the purchase. One way or the other, those fees have to be reflected in the price of the items you are purchasing.
Banks are currently allowed to charge merchants as much as $.44 per debit card transaction. This fee, called a “swipe” fee because of the physical act of “swiping” the card through a card reader, is higher in the United States than it is anywhere else in the world. It means that on a purchase of about $5.00, the merchant might have to pay almost 10% of the total value of the purchase in fees to the bank.
We accept both credit and debit cards through our internet sales and don’t have any way of differentiating what kind of card is used until we get our monthly statement from the bank which shows the fees that we have been charged in order to accept debit and credit card payments. Those fees have to be reflected in the amount we charge for our products and it is part of the final amount you pay.
In yesterday’s congressional debate, the Senate stood up to powerful banking lobbyists and empowered the Federal Reserve to limit the fees banks can charge on the use of debit cards.
Unfortunately, there is too much money at stake to hope that a single vote in the Senate is going to settle this matter. The next round of “big banks vs. big merchants” is scheduled for next week in the House.
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