The Swipe fee settlement issue

I’ve been following the swipe fee settlement issue with great interest. My primary source of information has been the NRF’s Retail Big Blog. The NRF is diligent in fighting this issue and in particular the conditions for retailers to accept the settlement. The swipe fees are currently $30 billions dollars a year and that represents a 300% increase over the last decade. I’ve tried to audit credit card statements for clients to determine their true rate. The statements are a maze of confusing fees, out of network and reward card up-charges. On balance I’ve agreed with the NRF on this issue but last Fridays’ blog post glossed over a couple important aspects of the consumer use of credit cards. The blog cited an example of a jewelry store losing hundreds of dollars in fees when selling a Rolex watch. Sure the fees can amount to $400 plus dollars on a $20,000 watch but what percent of the high end or any purchase is determined by the use of a credit card. If the customer had to pay cash maybe they would have purchased a less expensive watch. The second is the consumer’s demand to use their credit cards to get the “reward points”. The misconception is that the company that issued the card is supporting the rewards program when in fact the retailer is. The retailer pays an up-charge on their processing fee when a consumer uses a rewards card. As with most issues it’s bit complex but for now the retailer has limited options, but hopefully that may change soon.