Small Business Owners Want A Reduction In Fees

Many consumers are not aware of this but every time you use your card to purchase goods and services the business owners accepting payment are charged a fee by the credit card issuers whether it be an American Express, Discover, MasterCard or Visa. Business owners have never been happy with this practice. No big surprise there, no one likes to pay fees.

But now in the midst of these tough economic times there is a renewed effort on the part of small business owners to reduce those fees. They are looking to create legislation that would mandate that the credit card companies negotiate the fees that they charge. This so called “credit card bill of rights” for proprietors will tamp down the leverage that the credit card issuers have historically enjoyed.

There is even talk of a class action law suit against the banks and credit card companies. The basis of the argument is that they violate anti-trust laws. The legal action has its roots in the fact that with the economy weakening, merchants are seeing less dollars coming in. And for the money that is being spent, paying fees to the credit card issuers is placing an undo hardship on their businesses.

It’s really not very realistic to expect the merchants to say ‘hey, the hell with you’ to Visa and MasterCard either. Be it good, bad or indifferent we Americans have been conditioned to use our plastic. To have a store owner suddenly refuse to accept them would surely doom their business to failure.

The fee payment structure works in this manner: Sue goes into the Bill’s Electronics and buys a TV for $500. She uses her Chase Platinum Visa to pay for the purchase. From that $500 Chase will get about $8.50 in fees while the bank of the electronics store will get around $2. These fees come straight out of the $500 so Bill’s Electronics ends up with $489.50. The fees are charged to process the transaction.

Now just imagine all of the credit card transactions that take place across the United States on a daily basis and you can see that these fees add up to a huge amount of money. It is estimated that in 2007 there were over 61.5 billion dollars in fees paid out to the credit card companies. Keep that in mind the next time you see one of those slick Capital One commercials.

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