Just about everyone uses a credit card and most people are aware of the credit card swipe fees associated with. For those who do not know, swipe fee is the amount that is paid to bank by the retailer when a credit card transaction is done.
Following the increase in debit card swipe fees by the Federal Reserve Board, authorities are now considering increasing the swipe fees on credit cards. This can prove to be detrimental to consumers. Take the example of debit card, following the increase in debit card swipe fees, some banks now charge monthly fees to use your debit card. The amount is balanced, one way or the other, by the banks and retailers but in the end it is out of the pockets of consumers. Same goes if there was to be a restriction on credit card swipe fees then the difference would be adjusted from the consumer. The hidden charges or interchange fees comes in effect every time you swipe a credit card.
In this falling economy, we cannot think of adding new ways to exploit consumers, even though if the restriction of credit card swipe fees is good on paper. This can be of considerable effect on consumers who use credit cards on a regular basis. In essence, this is not helping the average consumer at all but is more inclined in favour of the banks and retailers. Considering the fact that the industry is an important aspect of our economy and should be overlooked, it is benefitting only the retailers and not consumers.
Credit Card companies recruit different banks by prognosticating better fees to be paid by consumers and retailers and the banks end up doing the same thing with the consumers. At the end of the day all these fees are hidden from them and ultimately, the cost is borne by the consumers. Many of the costs are circulated from the credit card companies to banks and eventually to consumers. Normally, 1% to 3% is charged as fees.
In 2010, the American economy spent $48 billion on swipe fees and from the $48 million around $10 billion constituted processing and transaction charges. These figures tell us how we are paying for the charges set up by the credit card companies. Setting a restriction on swipe fees would actually mean taking more from the consumer and a bigger hole in the American economy.