Florida Retailers Decry Credit Card Fees
BRADENTON, Fla. -- Representatives from several retail organizations delivered a scathing report to the Bradenton Herald about the state of credit card fees and their impact on Florida businesses.
Mallory Duncan, senior vice president and general counsel for the National Retail Federation (NRF), told the newspaper interchange or "swipe" fees that the credit-card companies, such as Visa and MasterCard, charge on each transaction are making it harder and harder for small businesses to remain profitable.
In 2001, Visa and MasterCard collected about $16 billion in fees. Last year, the two companies combined collected roughly $48 billion, Duncan said.
Doug Kantor, counsel to NACS, said the fees have become so burdensome that Marion, Walton, Osceola and Brevard counties in Florida have stopped accepting Visa for tax payments.
"Obviously, we’re in a day and age where these local businesses don’t have the option to say, ‘I won’t take Visa,’ or ‘I won’t take MasterCard.’ So many people now have those cards," he said. "They simply can’t stay in business and do that in any realistic way. County tax collectors can because people have to pay their taxes."
Ken Burton, Manatee County tax collector, said the fees can add up, but Manatee County has no plans to discontinue taking credit cards for tax payments. Credit card payments are taking over the Internet and the fee is added to the customer’s bill, Burton noted.
Dave Edleman, manager of Westway Shell in Bradenton, Fla., agreed, telling the Bradenton Herald the fees, which are based on the percentage of sales, are among the highest portion of the station’s operating cost.
"They’re based on a percentage of sales. The higher the sales, the higher the fees," he said. "When the gas prices continue to climb, our fees continue to climb." The fees also make planning difficult from a business standpoint, according to Edleman.
"You have no way of projecting it," he continued in the newspaper report. "You can project rent, you can project utilities, you can even project payroll. But you can’t project your credit card fees because of the craziness of the gas prices."
Business operators typically end up passing on the increased fees to consumers, said Duncan of NRF. "The net effect of all of this is to drive up prices for everybody," he said. "The average household in Florida will pay about $427 in hidden swipe fees every year and that number is rising."
Sharon Gamsin, spokeswoman for MasterCard, told the newspaper retailers are free to stop using a particular card if the fees are too high. She also said the fees are not hidden and any retailer can post them for his or her customers. "We have no rules that would stop any merchant anywhere from posting what they pay for card acceptance," she said, citing increasing credit card defaults as a reason the fees are charged.
If a customer doesn’t pay his or her credit card bill, the merchant still gets paid, Gamsin said. "Merchants offload all their risk to the credit card issuer. That’s a pretty valuable service in today’s society," she said in the report.
Representatives from Visa did not immediately return a call seeking comment.
Jim Smith, president of the Florida Petroleum Marketers and Convenience Store Association, said he hopes legislation recently introduced in Congress to address the credit card fees will bring relief to the roughly 5,200 businesses his agency represents.
"The continuing burden of swipe fees on small business owners throughout Florida has become heavier and heavier to bear," Smith said. "For the majority of my membership, most of whom are small business owners, it is the second largest expense behind payroll and it is something we are extremely worried about."
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NACS Applauds Re-Introduction of Credit Card Fair Fee Act
Mallory Duncan, senior vice president and general counsel for the National Retail Federation (NRF), told the newspaper interchange or "swipe" fees that the credit-card companies, such as Visa and MasterCard, charge on each transaction are making it harder and harder for small businesses to remain profitable.
In 2001, Visa and MasterCard collected about $16 billion in fees. Last year, the two companies combined collected roughly $48 billion, Duncan said.
Doug Kantor, counsel to NACS, said the fees have become so burdensome that Marion, Walton, Osceola and Brevard counties in Florida have stopped accepting Visa for tax payments.
"Obviously, we’re in a day and age where these local businesses don’t have the option to say, ‘I won’t take Visa,’ or ‘I won’t take MasterCard.’ So many people now have those cards," he said. "They simply can’t stay in business and do that in any realistic way. County tax collectors can because people have to pay their taxes."
Ken Burton, Manatee County tax collector, said the fees can add up, but Manatee County has no plans to discontinue taking credit cards for tax payments. Credit card payments are taking over the Internet and the fee is added to the customer’s bill, Burton noted.
Dave Edleman, manager of Westway Shell in Bradenton, Fla., agreed, telling the Bradenton Herald the fees, which are based on the percentage of sales, are among the highest portion of the station’s operating cost.
"They’re based on a percentage of sales. The higher the sales, the higher the fees," he said. "When the gas prices continue to climb, our fees continue to climb." The fees also make planning difficult from a business standpoint, according to Edleman.
"You have no way of projecting it," he continued in the newspaper report. "You can project rent, you can project utilities, you can even project payroll. But you can’t project your credit card fees because of the craziness of the gas prices."
Business operators typically end up passing on the increased fees to consumers, said Duncan of NRF. "The net effect of all of this is to drive up prices for everybody," he said. "The average household in Florida will pay about $427 in hidden swipe fees every year and that number is rising."
Sharon Gamsin, spokeswoman for MasterCard, told the newspaper retailers are free to stop using a particular card if the fees are too high. She also said the fees are not hidden and any retailer can post them for his or her customers. "We have no rules that would stop any merchant anywhere from posting what they pay for card acceptance," she said, citing increasing credit card defaults as a reason the fees are charged.
If a customer doesn’t pay his or her credit card bill, the merchant still gets paid, Gamsin said. "Merchants offload all their risk to the credit card issuer. That’s a pretty valuable service in today’s society," she said in the report.
Representatives from Visa did not immediately return a call seeking comment.
Jim Smith, president of the Florida Petroleum Marketers and Convenience Store Association, said he hopes legislation recently introduced in Congress to address the credit card fees will bring relief to the roughly 5,200 businesses his agency represents.
"The continuing burden of swipe fees on small business owners throughout Florida has become heavier and heavier to bear," Smith said. "For the majority of my membership, most of whom are small business owners, it is the second largest expense behind payroll and it is something we are extremely worried about."
Related News:
Electronic Payments Coalition Opposes Interchange Reform Legislation
NACS Applauds Re-Introduction of Credit Card Fair Fee Act