There are some merchants who have declined accepting credit card payments because of high fees while processing transactions, as per reports from The Los Angeles Times. Small business owners have chosen to just stop accepting cards altogether in order to avoid pushing the high fees onto their customers.
According to reports in the LA Times, many small businesses are totally against processing fees also better known as interchange fees on card transactions. This fee is presently at 2% of the transaction amount.
So, if you spend $100 then the merchant has to pay $2 to the card company. Although, this may not seem like a huge amount, it does end up to quite a huge sum since there are so many transactions that are carried out on plastic cards on a daily basis.
Hence, even the big companies such as John Hancock have started declining the acceptance of credit card payments. This financial services giant has recently made an announcement that it would no longer be accepting the payments through plastic cards on its insurance premiums. This is due to the high fees that are being charged during the billing process.
The Fed Reserve has put a cap on its base fee that could be charged while processing debit card transactions. The average is now 21 cents for every transaction. However, the banks are claiming that they need to charge high fees in order to maintain their safety networks and anti-fraud efforts.
But, the Fed has stated that 21 cents is a reasonable price for making these transactions.