Credit Card Giants Like to Pretend
The credit card giants like to pretend that reforming swipe fees will only help large businesses, but that's just a way to hide what they're doing right now.
Visa and Mastercard systematically charge small businesses much higher swipe fees than their large competitors.
Between the two of them, they charge small grocery stores, convenience stores and retailers higher rates than bigger businesses.
- Mastercard also charges small businesses higher rates on commercial cards and debit cards that aren’t subject to regulation.
Just take a look at grocery stores as an example:
- Mastercard (just look at pages 2 and 3 for the rates and volume tiers they impose): Big grocers pay a rate of 1.32% plus $0.05 on World Elite cards while small grocers pay 2.1% plus $0.10. So $100 in groceries means the biggest chains pay $1.37 while the smallest pay $2.20. That is a 60% penalty for the small guys taking Mastercard.
- Visa (just read pages 7 and 10 for the rates and volume tiers they use): The big chains pay 1.4% plus $0.05 for Signature Preferred cards while small grocers pay 2% plus $0.07. On $100 in groceries, that is $1.45 for the big boys and $2.07 for the small independents. That’s a 42% penalty for small grocers on every $100 in sales.
There are similar penalties built into Visa and Mastercard’s rates for other small retailers as well.
The bottom line is that reform is needed much more by small businesses than big ones. The small ones are hit by Visa and Mastercard with a swipe fee rate disadvantage every day right now.
The credit card giants think people are not smart enough to see their deception, but you can read it yourself in their rate sheets – which the giant credit card banks all slavishly agree to follow.
COMPETITION IS BETTER FOR EVERYONE
IT'S TIME TO PASS THE CREDIT CARD COMPETITION ACT