Businesses hope bill will reduce credit card ‘reading fees’

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WICHITA, Kan. (KWCH) – Kansas businesses are hoping a federal bill will make changes to what they have to pay each time a customer pays with a credit card.

Last year, merchant processing fees, or “swipe fees,” cost U.S. businesses more than $137 billion. This expense is often passed on to consumers in the cost of items, and since the COVID-19 pandemic began more than two years ago, people are using credit cards much more often at store checkouts.

The average merchant processing fee is around 2% for each credit card transaction. On Friday morning, a group of Kansas business owners spoke with Sen. Roger Marshall about the issue. Marshall is sponsoring legislation that he says would bring more competition and help ease the burden of sweeping fees.

Businesses big and small say these fees are a problem.

“People like me who struggle with one location, to be able to keep our doors open and not pass them on to customers, it’s really a blow to our bottom line,” said The Monarch founder and CEO, Jennifer Ray.

For a grocery chain like Dillons, sweeping fees are one of their biggest expenses.

“These costs are higher than what we would typically see for utilities to power all of our stores,” Dillons spokeswoman Sheila Regehr said.

The National Association of Convenience Stores said for Kansas’ 1,200 convenience stores, sweeping fees cost $110 million last year, an expense second only to labor costs.

“The American household paid $900 more in sweeping fees last year,” said Anna Blom, director of government relations for the National Association of Convenience Stores. inflation.”

Senator Marshall said the bill he introduced last month with Illinois Sen. Dick Durban would reduce those fees by introducing competition.

“(This would require) the bank-issued credit card to have two routers, only one of which can be Mastercard or Visa. The bank can choose the other, thereby preserving security,” Marshall explained.

Retailers would then have the choice to select the routing system for card transactions. Marshall said Visa and Mastercard control more than 80% of this market.

“If it’s a high-yield credit card, it comes with even higher fees,” Blom explained. “For a retailer, when they get their monthly statements, it’s not clear what those charges look like.”

Card companies use swipe fees for their rewards programs and banking services, as well as to fight fraud.

The National Association of Convenience Stores said retailers in Kansas face some of the highest swipe fee rates. According to their estimates, the bill introduced by Senators Marshall and Durban could reduce sweeping fees by $11 billion.

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