Last summer I explained how credit and debit card interchange fees are soaking American consumers:
Most people don’t realize that in addition to charging interest and penalty fees on individuals who carry a balance, credit card companies charge the merchant an additional “interchange fee” (transaction fee) between 2 to 3%.
Although they are not as high, debit card transactions are subject to a similar interchange fee.
Interchange Fees Affect Cash Buyers Too:
Even if you prefer to use cash, merchants are generally unwilling to offer a discount due to restrictive user agreements with the credit card companies.
Merchants have little choice but to honor credit card companies’ requests for a “one price for all” pricing structure in fear that their ability to process credit card transactions will be revoked by VISA, MasterCard,
Discover, or AMEX networks.
As a result, Americans spend over $40 Billion Dollars a year for the privilege of using their credit cards (whether they carry a balance or not). Billions more are paid by cash buyers who are forced to pay the same price as those who pay with credit or debit cards.
How to Fight Interchange Fees:
There is hope for consumers. A sweeping credit card reform bill has been introduced in Congress with the hope that Americans might see some relief from these ridiculous fees.
Unfortunately, law makers in both the Senate and the House are hesitant to take issue with “interchange fees” directing their “precious time” on the issues of universal default, high interest rates, and excessive late fees.
The first thing you can do is contact your State Representative and Congressperson and tell them you want to restore your right to purchase goods not have to subsidize the credit card industries profit margins.
Secondly, you can always ask your local merchant for a discount. This is exactly what I did when I took my car in for repairs at the local Volvo Dealership, and it paid off!
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I am afraid that the bill that has passed unfortunately will result in an increase of these fees. Certainly I expect annual fees to go up and rewards to get eliminated. But by raising the interchange fees, card issuers can make up a lot of the lost revenue fast.
I love the idea of asking for the discount for cash.