Written by aaa   

You may be taking a vacation this summer, but you can be sure your bank will not.

As the economy improves, most surveys show more Americans are hitting the road and also spending more on vacations this summer.

And every time they swipe a debit or credit card to pay for a hotel room or a meal or gas, the bank will be there to grab an unconscionably huge chunk from the hotel or restaurant or gas station.

Consumers won’t notice because the bank gouges the seller, not consumers directly. But the practical effect is higher prices for consumers because retailers have no choice but to pass along these bloated swipe fees in the form of higher prices. In fact, for many retailers the fees are more than their profits.

Visa and MasterCard control the vast majority of the card market and each illegally fix at outrageously high levels the swipe fees that their banks charge retailers. (They do this to attract banks to their brands.)

How outrageous? Say you rent a cottage at the beach for a week at $2,000 and pay with a credit card. At 4 percent, the bank grabs $80 on a transaction that costs it only a few pennies to process. That’s a profit margin that retailers – some of whom subsist on a percentage point or two of profit margin – can only envy.

As more people hit the road this summer, according to those surveys, more predatory profits will pile up in the banks’ coffers.

The big insurer Allianz Global Assistance USA, for instance, recently predicted Americans would spend an unprecedented $100 billion on summer vacations this year, up 20 percent from last year.

More than half the 1,000 Americans surveyed said they would go more than 100 miles from home.

The average vacationer intends to spend almost $1,900, said Allianz. Even if the swipe fees are as low as 2 percent, the banks will gobble up almost $38 of that if people – as seems likely – use cards to pay.

The pollsters at Rasmussen said that about the same number of their 1,000 interviewees – 44 percent – plan to take a vacation, although those people said they’ll be spending less.

And American Express was far more bullish. Although people told its interviewers they intend to spend only $1,200, three-quarters said they would be getting away for a vacation this summer.

Swipe fees have swollen to the point where they are now many retailers’ second-largest operating cost after labor, ahead of rent and utilities. The fees are as many as seven or eight times higher here than in Europe – for the exact same service.

It’s not just a retailer’s fight to get the banks and credit-card companies to play by the rules of our capitalist system. It’s a consumer problem too, even if they don’t know it because only the merchants who labor under these obscure swipe fees the banks have heaped on their backs ever see the fees.

So the next time you rack up a big credit-card bill, think about where much of the profit is going – to the bank, not the merchant. And understand that for the sake of the economy, for job creation, for small businesses, we have to change this unfair system that goes against every tenet of the free market.
Source: Merchants Payments Coalition
http://www.unfaircreditcardfees.com/site/press/banks_paying_you_for_your_business_not_really