Posts tagged: Credit Cards
For Idaho restaurant owner Kevin Settles, the fees that credit card companies charge for every transaction are outrageous - 2 to 2.5 percent off the top, in a business where the average profit margin is 3 to 5 percent. “It’s almost equal to my utility bills, gas and electricity,” said Settles, who owns the Bardenay restaurants in Boise, Coeur d’Alene and Eagle. “That’s a big number.” He joined the Idaho Lodging and Restaurant Association and a national group called “Consumers for Competitive Choice” to speak out Thursday for legislation to regulate the transaction fees that credit card companies charge. Robert Johnson, president of the national group, said Americans paid $48 billion in such transaction fees in 2008, triple the amount paid by consumers and small businesses in 2001. “We’ve created an unregulated financial behemoth,” he said. “We’ve reached the point where we’ve got to put brackets on it, and make sure that there’s fairness and not price-gouging that’s going on.”
It’s an issue because these days, people are putting everything on their credit cards, particularly at restaurants. “About 85 percent of all restaurant sales are paid for with a credit card, and the number has been gradually rising over the years,” Settles said. He said it costs him only 10 cents to process a check, but 2 percent or more of the transaction for a credit card. Contracts the major credit companies require businesses to sign prevent them from offering discounts to those who pay with cash or checks. Johnson said, “Is 2 percent correct? I don’t know. We know that is the highest rate in the world, so I suspect that’s a subject worthy of inquiry.” His group is trying to generate attention to the issue as Senate Finance Committee Chairman Christopher Dodd crafts credit card reform legislation. So why did his group reach out to Idaho? Our senior senator, Mike Crapo, is a member of the Senate Finance Committee.