In the News
The Poughkeepsie Journal: Hall: Card fees taking bite out of profits
January 26, 2010
By RASHEED OLUWA
The menu price for the Rockin' Robin chicken sandwich at the All Shook Up! Café and Juice Bar in the Town of Poughkeepsie is $8.95.
But the amount the store takes in from each transaction can range from 93 percent to 98 percent of that total if a credit or debit card is used for the transaction.
These interchange fees are usually 1.6 percent to 2 percent per transaction, but can run higher if there are bonuses or rewards associated with the card, said Frank Fasano, a co-owner of the juice bar.
"I realize that you have to pay, that's not the problem," said Fasano, who opened the shop on Raymond Avenue in August with his partner, Michelle Morrill. "But there is just no consistency to the rates."
On Monday, Rep. John Hall, D-Dover, showed up at the cafe to announce a bill he is co-sponsoring that would standardize the interchange fees that credit card companies set for transactions.
Although new federal rules will go into effect Feb. 22 that will monitor the way credit card companies can institute rate increases on consumers, the new rules offer no protection for small businesses, the congressman said.
The bill, which is sponsored by Rep. Peter Welch, D-Vt., and has 18 co-sponsors, is being reviewed by the House Financial Services Committee.
"The grasp on the industry on small businesses remains strong," Hall said. "Credit card companies impose largely unregulated and overly burdensome — some would say luxurious fees — on a business every time a business uses a credit card for a business transaction. These interchange fees affect business, regardless of size," he said.
While larger companies can absorb the fees, Hall said, the fees hurt small businesses that have a lower inventory and a smaller customer base.
Charles North, president and CEO of the Dutchess County Regional Chamber of Commerce, said he supports the bill.
"Small business cannot afford to be continually whittled away at, and that's exactly what these fees are doing," North said.
Betsy Haglage, a spokeswoman for the Electronic Payments Coalition, said the fees were essential to provide consumers an easier way to make transactions.
Merchants also benefit because they aren't hampered by the data processing and other services needed to manage credit card payments.
The Electronic Payments Coalition is made up of credit unions, banks and payment card networks that handle electronic payments.
Haglage said small businesses also have the option of shopping around for credit card processing companies that offer the best rates on interchange fees.
Even if the fees were lowered, Haglage said, the savings wouldn't necessarily be passed back to the consumers.
She referred to a report by the U.S. Government Accountability Office last year that said consumers might actually face higher card-use fees if the interchanges fees were lowered.
"I think the main takeaway here is that merchants don't want to pay their fair share for a system that gives them lots of benefits, and they want consumers to foot the bill," Haglage said.
The Poughkeepsie Journal: Hall: Card fees taking bite out of profits
January 26, 2010
By RASHEED OLUWA
The menu price for the Rockin' Robin chicken sandwich at the All Shook Up! Café and Juice Bar in the Town of Poughkeepsie is $8.95.
But the amount the store takes in from each transaction can range from 93 percent to 98 percent of that total if a credit or debit card is used for the transaction.
These interchange fees are usually 1.6 percent to 2 percent per transaction, but can run higher if there are bonuses or rewards associated with the card, said Frank Fasano, a co-owner of the juice bar.
"I realize that you have to pay, that's not the problem," said Fasano, who opened the shop on Raymond Avenue in August with his partner, Michelle Morrill. "But there is just no consistency to the rates."
On Monday, Rep. John Hall, D-Dover, showed up at the cafe to announce a bill he is co-sponsoring that would standardize the interchange fees that credit card companies set for transactions.
Although new federal rules will go into effect Feb. 22 that will monitor the way credit card companies can institute rate increases on consumers, the new rules offer no protection for small businesses, the congressman said.
The bill, which is sponsored by Rep. Peter Welch, D-Vt., and has 18 co-sponsors, is being reviewed by the House Financial Services Committee.
"The grasp on the industry on small businesses remains strong," Hall said. "Credit card companies impose largely unregulated and overly burdensome — some would say luxurious fees — on a business every time a business uses a credit card for a business transaction. These interchange fees affect business, regardless of size," he said.
While larger companies can absorb the fees, Hall said, the fees hurt small businesses that have a lower inventory and a smaller customer base.
Charles North, president and CEO of the Dutchess County Regional Chamber of Commerce, said he supports the bill.
"Small business cannot afford to be continually whittled away at, and that's exactly what these fees are doing," North said.
Betsy Haglage, a spokeswoman for the Electronic Payments Coalition, said the fees were essential to provide consumers an easier way to make transactions.
Merchants also benefit because they aren't hampered by the data processing and other services needed to manage credit card payments.
The Electronic Payments Coalition is made up of credit unions, banks and payment card networks that handle electronic payments.
Haglage said small businesses also have the option of shopping around for credit card processing companies that offer the best rates on interchange fees.
Even if the fees were lowered, Haglage said, the savings wouldn't necessarily be passed back to the consumers.
She referred to a report by the U.S. Government Accountability Office last year that said consumers might actually face higher card-use fees if the interchanges fees were lowered.
"I think the main takeaway here is that merchants don't want to pay their fair share for a system that gives them lots of benefits, and they want consumers to foot the bill," Haglage said.
