It’s Easy to Predict the Winner of the World Series: The Banks

WASHINGTON--()--The following press release was issued by Merchants Payments Coalition:

The Kansas City Royals came in with the momentum, but the San Francisco Giants have won two of the last four World Series. Whichever team wins though, unbeknownst to you, your bank could be a big winner, too.

Consider the price of a ticket at the seventh game (if there is one) in Kansas City on Wednesday. The choicest seats left in the Diamond Club section right behind home plate will cost you more than $5,200. Even standing-room-only tickets in some sections are going for more than $600.

If you buy with a credit card, the bank may shave as much as 4 percent off that $5,200 ticket purchase, or more than $200, from Ticketnetwork, which posted these prices. Think of it: two hundred dollars to process a transaction that costs a mere few cents. The profit margins for the banks are staggering.

And you can be sure vendors have factored these costs into their prices, which means you pay that much more for a ticket.

And then think about this: The bank or credit union that issues your credit card charges these “swipe fees” on everything you buy. And retailing being the hypercompetitive business that it is, with profit margins of often only a percentage point or two, merchants have no choice but to pass at least some of the cost along in higher prices to survive.

That means everything you buy – not just baseball tickets, but groceries and gas and diapers and clothes and meals in a restaurant – are all more expensive because of swipe fees, even if you don’t use a credit card.

How could this happen in our free-market system? The two big credit-card companies, Visa and MasterCard, control most of the market. They each fix exorbitant rates for the fees banks charge merchants. This is price-fixing but so far they have been allowed to get away with it.

It’s the antithesis of the competitive capitalist system that made our economy the largest and most powerful in the world. Yet the banks thumb their nose at it.

In Europe, fees are seven or eight times lower than in the United States because the European Union made sure the banks and Visa and MasterCard play fair there.

Most merchants are finding that swipe fees are their second-largest operating cost after labor (and higher than rent). Some pay more in swipe fees than they make in profits. In fact, the convenience store industry as a whole pays billions more in swipe fees than it makes each year.

This unfair burden on merchants – a huge chunk of our economy – puts a tight squeeze on them, especially the small ones: the convenience store where you buy your gas; the local flower shop; and the corner restaurant. Retail touches our lives every day and affects us in ways of which sometimes we are only dimly aware.

Certainly that is the case with swipe fees, and that is the way the banks want to keep it. If people don’t know, they won’t complain, and the banks will keep their huge, unfair advantage over merchants to the tune of $50 billion a year.

All merchants ask is a square deal – an open, level market where fees are set based on competition, not on two companies having a lock on the market.

It’s unfair, it’s anticompetitive, and it hurts our local retailers and the broader economy.

So whichever team wins the series, you can be sure the banks will continue to win. And consumers will lose.

For more information about unfair swipe fees, go to the Merchants Payments Coalition website: http://www.unfaircreditcardfees.com/

The Merchants Payments Coalition - UnfairCreditCardFees.com - is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees.

Contacts

Merchants Payments Coalition
Michael Flagg, 202 253-4164
mike@hintoncommunications.com