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Lower debit, credit card swipe fees could be in retailers' future

By ALLISON MILES
July 1, 2010 at 2:01 a.m.


DID YOU KNOW ... ?

Retailers faced $48 billion in swipe fees from Visa and MasterCard in 2008, according to a June National Retail Federation news release. That resulted in higher prices for consumers, ringing in at an estimated $427 per average household, according to the release.

It's an everyday scene at Pete's Fina Mart: drivers pull into the lot, gas up and often step inside for a snack or two.

And, while customers are a welcome sight at most any business, not every method of payment is. When people pay for gas with debit or credit cards at Pete's, for instance, the business faces fees that equal about 5 cents per gallon, said Joe Canales, a partner in the business.

"Sometimes, when people come in and buy gasoline only, it costs us to take that credit card," Canales said. "It comes out of our pocket."

But an upcoming congressional decision could ease those costs.

The House on Wednesday approved the conference report for H.R. 4173, the Dodd-Frank Wall Street Reform Act of 2010, according to a National Retail Federation news release.

The bill includes an amendment that would require the Federal Reserve to set regulations for "reasonable and proportional" card swipe fees, according to the release. The Senate will likely vote on the issue later this week.

A fee cut would be good news for small-business owners, allowing them a larger profit on credit card transactions, said Randy Vivian, president of the Victoria Chamber of Commerce.

Many cards boast rewards programs for mileage and the like, he said, but those are taken out prior to the merchant receiving their money for the purchased items.

"It doesn't penalize the individual, but it does the merchant when a credit card is used," he said. "If they cut the fees, that would be great for small businesses."

Chit- Chat & Jewels spends about $200 a month in credit and debit card payments, and a decrease would help, said Teresa Schneider, who owns the Victoria gift boutique.

"It's astronomical what we pay in fees," she said, explaining about half of her customers pay with cash and the rest pay with checks or cards.

Although some stores pass card charges off to customers, Schneider said her shop absorbs them as part of operating expenses.

"I'd rather that money go for supporting something out there, whether it be a school or a softball team," she said, "rather than a credit card company."

Most customers probably don't even realize businesses face expenses when it comes to card use, but the fees add up, said Gerald Zengerle, who owns Reuss Pharmacy in Cuero. His pharmacy spends upward of $2,000 per month on fees.

Cutting back the expenses would help, he said.

"Everybody wants to save money," Zengerle said. "That's pretty universal. And it would also help us lower our prices."

Although the business owner said he supported the cutback, he wasn't sure exactly how it would work, since credit card companies can't work for free.

"They have operating costs, too," Zengerle said.

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