Credit Card Companies ‘Swiping’ For Profit- Fees Are Coming Out of Your Pocket

Tapping or swiping your credit card instead of digging around for dollar bills and quarters has made daily business for Texans simple. Not to mention the ease of clicking on a website button to make a purchase.

But that convenience comes with a cost. Even the largest beneficiaries of cashless systems acknowledge the flaws. The hard costs range from $1,100 to $1,700 annually for the typical Texan, based on recent studies. More importantly, it puts tremendous pressure on small businesses in rural Texas committed to ensuring access to grocery stores and restaurants.

Known as a “swipe fee,” this is the cost that all retailers must pay to provide credit card services, primarily controlled by large New York financial services firms. With businesses and consumers paying a fee every time they swipe a card to make a payment, it’s a booming business. For businesses like bars and restaurants, these fees are incorporated into the price of orders. For services with price caps, such as medical services, this cost is borne by the owner, placing additional pressure on Texas rural healthcare providers.

The larger the business (think Walmart), the smaller the fee. The smaller the business (think your local restaurant or hair salon), the higher the cost. Yes, you read that correctly. The less business you do, the more you pay. According to the National Retail Federation, credit card swiping fees have nearly quadrupled since 2009, and fees are higher in the U.S. than any other industrialized country.

What’s worse is that these same companies charge fees on taxes and tips – the very thing that President Trump said was unfair. This is literally a tax on tax that is paid to New York investors.

Several Texas lawmakers have filed a package of bills to address this obstacle to small business growth and high consumer costs. The bills and their companions are SB2056/HB4061 and SB2026/HB4124. The bills shield local businesses and consumers from paying exorbitant credit card swipe fees charged by large banks (including some that received bailouts) and credit card companies. TCA supports all of these bills.

As many Texas companies and organizations prohibit using actual cash, this has reached a critical point.

For example, Six Flags Over Texas recently decided to go cashless, and more and more businesses are deciding that’s the right path. This is doing little more than padding the Wall Street pockets of the owners of VisaMasterCard and American Express. Or the banks that issue those cards and make $14 BILLION in profits. These transaction, or swipe, fees are a major revenue source for them.

Texas has one of the fastest-growing economies in the world. When Texas speaks, the world listens. That makes the passage of these bills all the more important. TCA has joined a coalition of organizations supporting this initiative, and we’re in good company.

TCA is proud to join a coalition of organizations standing up to the Wall Street greed. Please click and join this important movement. We would not endorse it if we didn’t believe it was critical to Texans.

Join us in making sure Texas leads the nation in consumer protection.

Sandra Haverlah is President of Texas Consumer Association, a 501c(4) non-profit organization that has been representing individuals and small businesses on pocketbook issues for over 50 years. www.texasconsumer.org