TOPSHAM – Maine merchants work hard to offer high-quality products at a fair price to their customers. When expenses increase, these business owners usually look to reduce other costs instead of raising prices.

Sometimes, however, an expense increases so much that a business owner has no choice but to raise prices. This is the case with credit and debit card swipe fees.

Whenever consumers pull out plastic to make a debit card or credit card payment, credit card companies collect a swipe fee from merchants.

These fees average 2 percent, but can be as high as 5 percent, depending on the card, and can increase the price of products and services anywhere from 1.5 percent to 2 percent.

Merchants seek to give consumers the best value. But to remain in the black, many have no choice but to pass along the hidden swipe fees in the form of higher prices.


A recent study called “The Costs of ‘Charging It’ in America,” by Jiwon Vellucci and Robert J. Shapiro, former U.S. undersecretary of Commerce, found that if swipe fees were held to levels that reflected the actual cost of transaction processing, economic activity would increase enough to create 242,000 new jobs.

Instead, on average, every American household paid $230 annually in higher prices in 2008 because of swipe fees. With unemployment around 8 percent, our nation needs the infusion of nearly a quarter-million new jobs born of reasonable swipe fees.

Swipe fees are not only impacting small businesses. Because of the increased costs of swipe fees, some Maine towns stopped accepting credit and debit card payments in certain situations.

For example, Scarborough has stopped accepting credit card payments for property and excise taxes.

The town determined it simply couldn’t afford the swipe fees credit card companies were charging — some $114,000 in 2009 alone. Scarborough put into effect new credit card restrictions that will save the town $25,000 this fiscal year.

In the past, other Maine towns, such as South Portland, have restricted credit card payments for municipal taxes, services and licenses, but the state passed a law in September allowing local governments to pass along transaction fees to card holders rather than to absorb them into the local budget.

Backed by this new law, we can expect more and more Maine municipalities to return to their policy of accepting credit cards. However, the card companies are quietly pushing for changes in some state laws, including Maine’s, in anticipation that something may happen at the federal level. In Maine, LD 1779 was introduced after the bill deadline at the request of the credit card companies to prohibit merchants from adding their own surcharges on debit cards to compensate them for the fees.

As any Maine merchant will tell you, merchants are already prohibited from doing so on their agreements with credit card processors. It seems this legislation is being proposed in a handful of other states as a preemptory strike against the increasing federal scrutiny of swipe charges.

One thing is clear: Business’ swipe fees will continue to raise the price of your purchase. Scarborough’s actions were a good first step to highlight the previously hidden fee, but it does nothing to reduce fees in Maine. That’s why Congress, including the Maine delegation, needs to act.


One simple process for reform is to allow debit cards to process at the same rate as paper checks. Over the past decade, the debit cards, which are subject to swipe fees, have largely replaced checks.

However, these debit card transactions have higher fees than the fee merchants pay for scanning and processing your check electronically. In some cases the rate for processing checks can be half as much.

Does it make sense to anyone that using a paper check costs less than a debit card swipe? Debit card transactions are essentially electronic checks and should not cost any more to process than paper checks.

Swipe fee reform will help merchants keep their doors open and put more money back in consumers’ pockets. We need to tell Congress that this is reform America needs.


– Special to the Press Herald


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