(WICHITA, Kan.)—It's something that impacts you every time you use plastic to pay, but you probably don't even know it.
Right now -- businesses pay fees to accept debit and credit cards. The fees vary depending on which card is used, if it's a consumer, government, or corporate card, or a rewards card, or other variables.
Ask a small business owner about those fees, like Sarah Bagby, and she;ll tell you "it's a huge expense." A fee can be up to 5% of card transactions. "But as a business owner, I don't have time to go through and check every single one," for differing fees. "But I know that the bottom line is these fees are expensive for a merchant."
Those fees go to the card provider (like Visa or Mastercard) and the institution that issued the card (like your bank, or American Airlines).
Banks and credit unions use that money for security safeguards, fraud protection, and replacing a card that is compromised. Jim Holt, President of Mid American Credit Union, said those fees bring in about $30,000 a month.
But when Congress passed a financial reform bill last summer -- the debit card fees were dropped. So while business owner Bagby would like that, financial institutions would lose those fees and the money it brings.
"Which means, we pass that cost along, somewhere," said Holt. "I mean, we can't just lose $30,000 a month, and just not have it show up."
"It'll be harder to get a card, maybe only certain people will qualify," forecasted Holt. "Maybe you'll have to have great credit, and lots of money on deposit so in case things go bad, we can get it out of your account, instead of pay it ourself. Maybe you'll have to pay a fee to get a card." Holt said account statements may go out via email, instead of paper statements.
Currently, some lawmakers are debating delaying the debit charge fee, so a study on the potential effects can be done. If that happens, businesses would continue to pay the fee.
While it may be easier for a business to insist on cash or check only, Bagby said that's not feasible for her Watermark Book Store. Bottom line, it all comes down to convenience for the consumer.