Merchants and small businesses pay over $65 billion annually to banks in the U.S. for credit card “swipe” fees – the fees small business owners pay to banks to accept credit and debit cards from their customers.
Small business owners and merchants have been seeking relief from these bank fees for more than ten years, which in some cases, equal more than 50% of the profit a small business earns on an annual basis.
Unfortunately, this hidden bank cost is passed on to consumers in the form of higher prices. According to the merchant trade groups, the average household in the U.S. pays over $450 annually in hidden bank card “swipe fees” on credit and debit card fees when they use their bank card to pay for goods and services.
The Federal Reserve Board has made a proposal that reduces these bank fees dramatically. Now the board is requesting public comment from consumers, small business owners and merchants on two alternative interchange fee standards that would apply to all covered issuers: one based on each issuer's costs, with a safe harbor (initially set at 7 cents per transaction) and a cap (initially set at 12 cents per transaction); and the other a stand-alone cap (initially set at 12 cents per transaction). Under both alternatives, circumvention or evasion of the interchange fee limitations would be prohibited.
The Board also is requesting comment on possible frameworks for an adjustment to the interchange fees to reflect certain issuer costs associated with fraud prevention.
If you would like to submit comments on this proposal, click here: http://dld.bz/G98Y
To view comments on this proposal, click here: http://dld.bz/G99x
Closing date for comments: 02/22/2011