New Hampshire Legislators Taking on Credit Card Fees
The retail industry contends with many issues on daily basis, but the one that seems to be a major sticking point is swipe fees.
In New Hampshire, state legislators are tackling the issue this session, considering a bill that would limit the amount payment processors can charge businesses for accepting credit card payments, according to Creditnet.com.
New Hampshire House Bill 1319 specifically states that “no bank shall charge a person doing business in this state who accepts a credit card or debit card issued by the bank as payment for goods or services an interchange fee, or ‘swipe fee,’ that exceeds 1 percent of the payment.” The legislation was introduced by Rep. John Hikel (R-Goffstown) and is currently before the House Commerce and Consumer Affairs Committee.
Hikel has firsthand experience with swipe fees. According to a report by the New Hampshire Business Review, he owns an auto repair shop, and his swipe fees vary from 0.65 percent to 4.76 percent. Hikel alleges that the fee subsidizes various benefits to the cardholder, so “I end up paying for the customers’ free gifts and miles.”
Hikel added that he only finds out the amount when he gets his credit card statement.
John Dumais, president of the New Hampshire Grocers Association, told the news outlet that the problem is simply the amount the retailer has to pay. Grocers run on a tight margin -- about a 1 percent profit on food for larger chains and 0.5 percent for independent grocers. Gas is a loss leader, he said.
“It’s a hardship when the cost is 3 percent and the profit is under 1 percent,” Dumais testified in support of the bill.
However, a representative of MasterCard told the news outlet that the average cost is closer to 1.75 percent. That’s the “blended rate” that merchants usually pay, although each deal with the merchant and its bank is different.
Banks are also raising their voices against the proposal, according to the report. The bill would “undermine the free market” and "create an unlevel playing field," said New Hampshire Bankers Association President Christiana Thornton.
New Hampshire’s bill follows close behind an anti-trust lawsuit that 5 million retailers have filed against Visa, MasterCard and 13 other large banks (including Bank of America and Citigroup) over the 2 percent interchange fees they charge retailers on credit card transactions.
The plaintiffs in the case include the Association for Convenience & Fuel Retailing (NACS) and the National Restaurant Association. The suit argues that the banks, Visa and MasterCard have illegally colluded to charge fees for credit card transactions that are far higher than an open, competitive market would dictate they should be. The case is set to be heard by Judge John Gleeson of the U.S. Eastern District Court of New York in September.