Check out this video that ideally demonstrates how much credit card processing fees affective small businesses and consumers.
http://fightswipefees.com/cardfeesgame/main.swf
This is an interesting demonstration of the gas station/convenience store dilemna. Gas stations are in a tough position with constantly changing gas prices and stiff competition. I have consulted many gas stations that confide in me that they actually lose money on American Express transactions because the merchant fees eat away at their profit and then some. Convenience stores have very low average sales and the transaction fees (ranging from 10 to 25 cents per item) can eat away at the profit entirely. Remember, in most states merchants aren't able to require a minimum charge for customers to pay with a credit card.
Do I have much faith in the video? I think it is a great visual tool for consumers and merchants alike to realize that there is a problem in the processing world. The video seems to want to turn to the government for help regulating the interchange fees. What customers and merchants don't realize is that if this were to happen they would run into the following issues:
1. Government interference in private business matters is slow, painful, and often ends up with little or no benefit for the intended recipient. If legislation were to pass regulating interchange, there would likely be a very watered down version of the initial bill with tons of pork and earmarks to give incentive for the bill to be passed. Any changes may take up to 10 years for merchants to see effective changes. Will that really help today's merchants?
2. Government regulation implementation takes a lot of time and resources. How are we going to fund those things as a nation? We may end up seeing interchange fees go UP because the governemnt wants to tax them like they do for cigarrettes and gasoline.
3. Just because interchange is reduced, there is no guarantee that there will be a savings passed onto a customer. Just because the cost of doing business becomes reduced, merchants would likely feel entitled to that savings rather than passing it onto their customers.
What is the solution? Hire a private company to work with you rather than waiting around for the Government to solve your problems. Ideal Cost is an industry leader and helps merchants save up to 40% off of their monthly processing costs WITHOUT switching their credit card processor. Visit www.idealcost.com today to learn more.
