Font ResizeEmigration Market owner J.T. Martin pays more every month to credit card companies than he takes home in profit.
It is a financial burden the Salt Lake City businessman wishes somehow could be lightened.
"If I want to stay in business I have no choice but to accept my customers' credit cards," Martin said. "It is extremely costly, though. Every time a credit card gets swiped it costs me 2 to 3 percent of the transaction price."
Although Congress recently adopted legislation to rein in what it perceived to be some of the abusive practices of credit card companies, many small-business owners argue the government did not go far enough and that charge card transaction fees are another way consumers unknowingly get gouged.
They now want lawmakers to take a look at the $48 billion merchants pay each year to the credit card companies in "swipe," or transaction, fees -- money that business owners contend ultimately must be passed on to consumers in the form of higher prices.
But the Electronic Payment Coalition, which describes itself as a "broad-based group of payment card networks, financial services companies and trade associations," argues that small businesses would be harmed by any legislative effort to regulate the fees.
John Hill, state director of the Utah Petroleum Marketers and Retailers Association, said at the current price of around $2.50 for unleaded regular gasoline, credit card companies are making about 5 cents
"Those fees are outrageous," said Hill. "Over the past several years credit card companies made more from gasoline sales than the retailers did."
Bob Johnson, president of Consumers for Competitive Choice, argues that business owners are virtually powerless to counter the might of the big credit card companies and their issuing banks.
Since 2001 those big companies have watched the amount they collect in transaction fees triple. And worse, the average credit card transaction fee in the U.S. is as much as six times the rates in Australia and Europe, where such charges are regulated, Johnson said.
MasterCard, Visa and American Express control 93 percent of all credit card transactions in this country, Johnson said. "In a way they are like a big utility. They have all the market power, only in this case there is no one who is policing their rates."
Without some effort to rein in those fees, there is a threat that the market power of the big credit card companies will keep increasing as American consumers continue to abandon cash and checks in favor of plastic, he said.
But the Electronic Payment Coalition disagrees that transaction fees -- they also are known as interchange fees -- are a problem.
"Small business would be harmed -- not helped -- by interchange legislation," the EPC said on its Web site.
The coalition said studies show that revenues jump 50 percent for small retailers when they begin accepting credit cards.
And it maintains legislation could result in the tightening of consumer credit, which would mean fewer sales for small merchants and potentially the loss of their ability to accept credit cards altogether.
The EPC also disputes the contention fees are any different abroad, and that merchants are helpless in dealing with credit card companies.
"Merchants can, and do, shop around and negotiate for the best possible rates and terms for accepting credit and debit cards from among thousands of banks and card processors," the EPC says on its Web site.
The National Association of Convenience Stores, though, said that is just not the case.
"A small-business owner certainly can call up the credit card companies and ask to negotiate their fees. They will either get laughed at or hung up on. What the credit card companies won't do, though, is talk," said Jeff Lenard, vice president of communications at the NACS.
Credit card fees typically are the second largest expense that convenience store owners face, behind only the cost of labor. "Those fees are the only cost that business owners face that can't be dealt with," Lenard said.
Businesses can adjust their work force to get a handle on their labor costs. They can negotiate their rent and try to reduce their utility costs by being more energy efficient, he said. "Everything can be examined except for credit card fees."
Lenard said from mid-December through mid-January convenience stores across the country will be asking their customers to sign petition asking their congressional representatives to look at the issue of charge card fees.
"What we want as an association is for businesses to have a seat at the table and a say in how much those fees should be," Lenard said.
"We recognize that every business [including credit card companies] should be allowed to make a profit. But right now, those profits are excessive and for most businesses it is take it or leave it," Lenard said.
