BRUNSWICK – In recent months, consumers have been rocked by sharp increases in the price of everyday products like food, clothing and gasoline.

Despite the fact that the economy has been struggling and prices are already increasing, banks and credit card companies have been working overtime lobbying Congress so that they can continue to increase fees that they charge whenever a consumer uses a debit card.

Swipe fees are an amount charged by credit card companies for processing a debit or credit card transaction.

Originally, these fees were entirely unregulated, allowing banks and credit card companies to charge retailers unreasonable amounts for processing credit and debit transactions. Transactions typically resulted in fees equal to or more than 2 percent of total purchase price.

Under this system, credit card companies generated enormous profits for the credit card industry. Indeed, the total amount spent on debit and credit swipe fees tripled from 2001 to 2008, when fees reached a total of $48 billion.

Like all hidden fees on retailers, the cost of the swipe fees is ultimately paid by consumers in the form of higher prices on everything that can be purchased with a debit or credit card.

For example, on a gallon of gas at $4, the 2 percent fee is now 8 cents per gallon. For comparison, the convenience store owner has a net profit average of 2 cents per gallon.

But last year, in response to complaints from consumer groups, Congress finally stepped in to do something about the swipe fee problem.

The Wall Street Reform and Consumer Protection Act, signed into law just last year, included swipe fee reforms for debit card purchases that earned bipartisan support from both houses of Congress.

Under these reforms, debit swipe fees must be “reasonable and proportional to the processing cost incurred,” and small businesses are now free from credit card company rules which prevented them from rewarding consumers who chose cheaper forms of payment than a credit card.

Though the law exempts small banks and credit unions from the new regulations, the swipe fee reforms are a big victory for consumers. As a result of the new law, swipe fees are expected to come down dramatically.

Late last year, the Federal Reserve recommended that the banks and credit card companies covered under the bill charge no more than 12 cents for each debit card transaction; that’s a far cry from the 2 percent of total purchase and it is more in line with the actual administrative costs required to process debit card transactions.

As you might expect, banks and credit card companies are not happy about the new reforms.

Even now, lobbyists from the credit card industry are working behind the scenes in Washington to pass legislation that would repeal swipe fee reforms.

If that happens, credit card companies will raise fees back to previous levels, or higher, simply because they can.

Killing swipe fee reform will be a huge step backward that would increase prices for American consumers at the worst possible time.

Allowing credit card companies to increase swipe fees would lead to higher prices for consumers, adding to our economic troubles and making it more difficult for working families to make ends meet.

The credit card industry is powerful, well-funded, and well-connected in Washington.

As head of the Maine Energy Marketers Association, which represents heating oil, biofuels, propane, motor fuels and convenience store owners who employ 12,000 workers and serve more than 415,000 Maine households, I know that it is up to us — local small-business owners and citizens — to let our members of Congress know that we are paying attention to their votes on this issue.

If we do not take a stand against higher fees now, we will end up paying for it every time we swipe our debit cards at the grocery store or the gas station.

– Special to The Press Herald