WASHINGTON--(BUSINESS WIRE)--The following press release was issued by Merchants Payments Coalition:
Memorial Day weekend starts the summertime travel season. According to AAA Travel around 33 million happy vacationers will be driving to their Memorial Day getaways. Millions will be tuning-up the engines, checking oil levels and filling up gas tanks to prepare for the first vacation. Banks and credit card companies will be busy as well, pocketing a big chunk of every auto repair bill paid with a credit or debit card.
In the U.S. swipe fees– the fees that merchants pay every time a customer uses a debit or credit card – are higher than in any other country. These fees are merchants’ fastest-growing cost and their second-highest operating expense – only labor is more. Banks and credit card companies are price-fixing swipe fees and marking them up to make huge profits.
An oil change typically costs anywhere from $20 to $55. For every payment made by credit card, banks charge two to four percent in swipe fees depending on the card. So, if half of Memorial Day travelers get a $55 oil change and pay with a credit card, banks and credit card companies will charge repair shops from $18.15 to $36.3 million just for Memorial Day oil services.
Meanwhile, auto repair shop owners compete to survive in an incredibly labor intensive industry. The most recently available data from Sageworks, a financial information company, shows that car mechanics average a 9-percent profit margin on what they charge you to fix your car. The banks, by comparison, gouge shop owners with fees earning a 500 percent profit on debit cards and up to 10,000 percent on credit cards. Those huge and unfair costs make it harder for repair shops, often small businesses, to survive.
“The credit card industry shouldn’t be able to centrally price-fix its fees,” said Doug Kantor, Counsel for Merchants Payments Coalition and attorney at Steptoe & Johnson LLP. “It’s time banks work in the same competitive market conditions as all other businesses.”
Unjustifiably high swipe fees affect vacationers, too. Consumers, whether using cash or credit, will be paying more because shop owners have no choice but to pass along the cost of fees in the form of higher prices.
Read more about debit reform and credit card swipe fees here: The Facts About Debit Reform and The Facts About Credit Card Swipe Fees.
The Merchants Payments Coalition is a diverse group of retailers, supermarkets, drug stores, convenience stores, restaurants, fuel stations, on-line merchants and other businesses that fights unfair credit-card fees and advocates for a more competitive and transparent card system that works better for consumers and merchants. The coalition’s member trade associations together represent almost 3 million stores with 50 million employees.