Retailers in Maine Petition Congress to Lower Processing Service Fees

In a move to urge Congress to pass legislation that would increase transparency in the fee structure of credit card companies, a petition is now being circulated in the state of Maine to combat what merchants feel is hurting their businesses.

According to John Babb, company president of J&S Oil, his company is required to pay high percentage and fixed fees for every transaction involving the use of credit cards. He continued that because of this set-up, credit card issuers are “actually making more money on a gallon of gas” than the company itself.

Babb is one of the entrepreneurs who are affected by high interest rates that credit card companies charge on sales with the use of plastic. Processing fees are charged to a business enterprise to enable them to accept payment from anywhere at anytime with the use of major credit cards, debit cards, electronic checks and traditional checks. It is also called processing service.

He explained that the scenario they are in is like a “take-it or leave-it” situation wherein they really do not have a choice. In order to serve more customers, they must accept payment in whatever form and what purchasers demand. This petition contains, among others, giving retailers more power to negotiate with credit card companies. It is also a part of a larger movement by a retail industry group.

Babb admits that they have little refuge to refute major credit card companies. However, with the growing habit of customers of not using cash, he believes that it is not only businesses which are being adversely affected, but the consumers as well. Complaints had also been filed by purchasers even before because of high fees charged with the use of credit cards.

However, in a statement released by some credit card companies, they explained that retailers are actually enormously benefiting from the acceptance of electronic payments. They cited guaranteed payment as an example. Since purchases made are backed by the card issuer, defrayment is secured. They also mentioned benefits such as the prospect of increased sales, faster checkout times and security.

They also rebutted this petition by stating that it is a part of a long effort and failed attempts by retailers and trade associations whom they described as wanting “to pad their profits by shifting their normal cost of business onto consumers.” In what retailers see as unfair interest rates, the credit card industry sees it as a fair share of the former.

The signatures gathered in the petition would be submitted to a national trade group who would then forward it to legislators.