Credit card swipe fees are going up, costing businesses and could eventually cost all of us more money too.
The fees are charged every time we swipe a credit card while shopping. Here's an example:
You spend $50 filling your gas tank. When you swipe your credit card, the business must pay a fee to a payment-processing company. For Visa and MasterCard, it's about 2 percent of the purchase price, meaning. If you spend $50, the business ends up with 49.29.
“It's not free to use a credit card or even a debit card. There is a certain percentage that either the merchant, or sometimes those costs are passed down to the consumer, have to be paid when a credit card or debit card is used," said David Chang, contributing credit cards expert with the Ascent.
Those fees add up. Last year, Visa and MasterCard collected over $77 billion in credit-card swipe fees. That's about $700 for each U.S. family.
“And since it's not a flat rate, when inflation drives up prices, the fees go up, too. When the price of goods go up, what's happening is the credit card companies are getting a higher percentage on a higher sale. That means there's more cost that we have to bear and pass along to our customers," said Laura Shapira Karet, CEO of Giant Eagle Supermarkets.
Visa and MasterCard just increased their fees again last month. The companies said the money is used for security and fraud protection.
On Wednesday, leaders from Visa and MasterCard testified on Capitol Hill. Several lawmakers say something has to change.
Senator Dick Durbin floated the idea of a “swipe fees" line item on your monthly statement, as a way to increase transparency.
“I think the American people need to know the story about these fees that cost merchants and customers, and why they're not disclosed," Durbin said. "There's a reason. I think there'd be a revolt, even more strongly, against them. We're facing inflation and the last thing the American people need is a higher swipe fee."
Other experts say we should put limits on swipe fees for credit cards.
The U.S. already limits those fees for debit cards thanks to a law passed in 2010.
