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Wednesday, April 6, 2011

$10 minimum purchase for credit cards

How often have you seen this at local businesses? Ever wonder why? If you think about it hard enough you can probably figure it out, but I'll save you the effort.

See, merchant accounts come with a fee. Those are the accounts that allow merchants to accept credit cards. Every retailer that has one must pay a percentage of the purchase price (called a discount rate) and a hard fee or a per transaction fee (or settlement or whatever other "title" each individual provider calls it). In short, every time you swipe your card at any retailer, about 15 people or entities are making money. Pennies at a time albeit, but still, that many people. There's the guy that sold the account into the retailer, the bank that underwrites the transaction, the account that settles it, the equipment company, etc... you get the point.

Some local businesses don't even accept credit cards, although that has gotten few and far between because they need to compete. I see customers these days swipe their card for a $1.03 coffee at Wawa. Why is Wawa accepting credit cards for a coffee when you can't charge a medium pie at Joe's? Well because Wawa sells a billion dollars worth of coffee a year. Joe, not so much. And every little penny eats into Joe's right to make a profit.

Then there is debit card purchases. Ever notice that most local places will almost beg you to enter a pin when using your atm card? Reason for that is they pay LESS when a pin is entered. Considerably less. Used to be as little as a quarter although today I would think its gone up to at least $-0.75 per. Just a guess, but certainly no discount rate.

Now, let's not get into the debate of whether or not people should be using credit cards for purchases as little as $10 (or $1). This isn't about debt or responsible money management. If the Fed has their way, cash will be gone as soon as yesterday.

So where am I going with this?... Oh that's right... A little bill that not too many people know about. Passed sometime in 2010 this bill, or amendment to the bill puts the burden of those expenses back onto the consumer. That's right folks. You will now be paying for it. And don't think this benefits the local businesses. They don't do enough in sales to really make that much of a difference. It's the Large retailers, the Walmarts, the Home Depots, The Safeway Super markets who will benefit in retaining billions of dollars in fees that YOU will now be paying for with the passing of this amendment.

What was called the Durbin amendment was introduced and passed the floor in 2010. Check out what I'm talking about here.... This also goes far beyond who pays for fees. This will class consumers. This is what the thought of Big Brother was really about. You will be required to keep extra money in your account to guarantee purchases. Debit card purchases could be limited based on your desire to pay those fees. The type of information and how it will be used will be affected, basically rendering everyone a walking marketing survey with every purchase. You want companies knowing how many diapers you purchase? How about cigarettes? Think that someone along the line would like to raise your health insurance premiums because they can see how many cartons of cigarettes you purchased, or bottles of Jamesons?

I think it's time we stop getting ridiculous about big business in this country because they are the ones who pay for the political clout. After all, this is what it's about. Politicians are people. they do what they need to do to keep their job. If that's voting in favor of a rule that benefits a corporation who spends thousands, or even millions on campaign funding to help that politician keep his job, that's what he's going to do. Really, it's not rocket science.

A bill of this nature is only going to add to the destruction of the middle class. Peruse the link I set forth above. Read the other news stories about it via the links on the home page. And get angry! This is serious stuff. It's not only going to add more costs onto the American public, but it's going to add more rules, more restrictions, and more, ahem* control.

*Footnote

I am a regtistered Republican and small business owner. :)

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