Small businesses being penalized by excessive ‘swipe’ fees: Reader

Dear Editor:

Louisiana’s economy undoubtedly benefited from February’s perfect storm of the Saints’ Super Bowl win and Mardi Gras. However, any windfall came with the caveat that revenues from credit or debit card purchases were assessed interchange or “swipe” fees.

LOMCSA’s 300-plus members – operating more than 2,500 convenience stores – have been concerned with swipe fees long before Carnival and an NFL championship sent Louisiana into frenzy.

National Association of Convenience Stores (NACS) retail members cite credit card fees as their third-largest operating expense, following labor and rent. In 2008, the convenience and petroleum retailing industry reported pre-tax profits of $5.2 billion, with $8.4 billion in credit card fees. For motor fuel dispensers, credit card fees are often greater than profits earned on each gallon sold.

Greatest among these are swipe fees on electronic transactions charged by the cardholder’s bank to the retailer’s bank and passed on to the retailer. The Government Accountability Office reports that card swipes total half of all retail transactions since 2005. Debit transactions pull money straight from a consumer’s bank account, much like personal checks. But debit swipes are fee-assessed, while checks are not.

In February, the Credit Card Accountability, Responsibility and Disclosure (CARD) Act was enacted after Congress granted credit card companies a nine-month grace period. Congress passed the act mostly to protect consumers from arbitrary and excessive fee practices, but credit card companies still scoop their profits out of the revenue streams of independent businesses, negating profit margins and pushing added costs to customers.

Swipe fees are already far higher than the actual processing costs and risks involved, yet they continue to rise. Since 2001, swipe fees have tripled, costing Main Street businesses and American consumers roughly $48 billion in 2008.

Think of what that money can do in terms of economic stimulus and job creation! A report by former Clinton adviser Dr. Robert Shapiro estimates that if swipe fees were reduced to the actual transaction processing costs, the resulting increase in economic activity would generate nearly 242,000 new jobs across the economy.

Louisiana is more dependent on the success of small businesses than other states. Sen. David Vitter has stated he’s open to discussing reforms on this issue, and Sen. Mary Landrieu has indicated the same. I thank and continue to urge them and Louisiana’s other elected representatives to champion small businesses in reforming swipe fees.

Natalie Babin Isaacks,

Executive Director, La. Highway Louisiana Oil Marketers and Convenience Store Association