Commentary: Swipe fees not a villain to small business

In an op-ed last week, “Swiping Fees Are Hurting Maine’s Businesses and Consumers”. Supporters of the Credit Card Competition Act say the costs associated with these fees have become a runaway cost for struggling small businesses. The comment doesn’t tell the whole story, but it could mislead readers into believing that credit card providers are getting cash rewards at the expense of high street spending. That is simply not true.

Because of the number of card transactions, businesses pay more interchange fees than before, also known as swipe fees. It has nearly tripled since 2009.. While the percentage of non-cash payments was growing before Covid-19, the pandemic has accelerated that trend. Today’s consumers rely on their credit cards to pay for everyday transactions and build credit.

Proponents of the Credit Card Competition Act say the proposal would increase competition and lower fees for small businesses. But there is no evidence that the bill will achieve this goal.

Credit unions offer credit cards as a valuable service to their members. They don’t provide this benefit as they make money from exchange fees. in fact, Federal Reserve Information It shows the negative impact these fees have on the profitability of a credit card program. For credit unions, credit card expenses are $0.23 higher than transaction income on average. Despite this, Maine credit unions continue to offer this safe and reliable service to help increase credit availability to all who need it.

Merchants know that there are costs associated with taking any form of payment – including cash. of Average cost Cashback can be up to 9.1% of the transaction. This is three times more than normal interchange fees. But since interchange fees are collected after a transaction is made, big credit card providers can feel like they’re squeezing local merchants for extra cash. In fact, it is part of the overall cost of making the entire payment system secure.

The proposed rule did not have a formal congressional hearing, which is an additional concern. This has not stopped proponents of the Credit Card Competition Act from supporting this legislation in the court of public opinion with op-eds and misleading images. Legislators should examine all potential pitfalls before enacting such sweeping policy changes. The legislation may be bipartisan, but so are its opponents.

Maine Credit Unions is dedicated to enhancing the opportunities and financial security of our members. We fulfill our mission of helping people by improving access to credit. We want to make it easy for consumers and merchants to thrive. Both are members of credit unions, and are vital to the communities we serve and Maine’s economy.

We understand that budgets are tight. But the credit card competition law is not the solution that small businesses need.

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