Lowering debit card fees can help small businesses

Lowering debit card fees can help small businesses

The rules of the proposal are still being drafted in Washington.


Jai West asks her regular customers at Casa Blanca Café to pay with cash, even checks, so that she doesn't have to pay the credit card and debit card fees.

There is a proposal on the table in Washington, D.C., that can help with the debit-card swipe fee, lowering it as much as 70 percent per swipe.

The Federal Reserve in December unveiled proposed rules that would limit fees to 12 cents per transaction, a drop from the current average of 44 cents. The idea was born out of the financial reform legislation that requires the Fed to impose limits on interchange fees.

"The fees, I think, are high as they are," said the Broad Street coffee shop owner. "Anytime, especially in this economy, that we can lower anything that's hitting small businesses, such as myself, I'm all for it."

Amy Kiel, a co-owner of Hogie Joe's in Thomson, said paying 12 cents per transaction would be a big drop from what she's paying right now. She figures she is paying an average of $1.05 per transaction, but she's not even sure about that because her bill is so confusing.

"It's a ripoff," she said of the fees. "My bill makes absolutely no sense, but there's not much I can do."

Nearly three-quarters of her customers pay by cards, so it wouldn't make sense for her to accept only cash, despite the cost to her of the plastic.

"You would be surprised how many $2 drafts I have to put on cards," she said. "It costs me money every time."

The financial overhaul law requires the Fed to issue final standards by April 21, but there has been hefty lobbying from the banking industry to stop or delay the implementation.

The heart of the argument by proponents is that the new fees would help consumers, and the cost savings could be passed along to customers.

The banking industry, however, says the consumer doesn't pay the fee. It is a negotiated fee between retailers and banks that was implemented to maintain the technological infrastructure.

"The banking system built the interchange fee so that retailers could get their money quicker. And now retailers are looking for any way to make profit. And they've come after this fee," said R. Daniel Blanton, who is in charge of Georgia Bank & Trust and sits on the board of the American Bankers Association.

Blanton said the swipe-fee limits could be worse on the consumer because banks will try to make up the lost income, which would mean more fees to consumers.

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