When you run a business, you have multiple things to deal with on a regular basis. You must consider your profits, schedule adequate employee coverage, and provide a positive customer experience.

And while convenience is important to your customers, it often comes at a cost to you. By allowing customers to pay with credit or debit cards, you very likely increase your sales. At the same time, due to the swipe fees charged by credit card companies, you are also increasing your expenses.

Why do businesses have to pay to accept credit cards?

When consumers swipe a card to pay for their purchases, they often think they are doing so without additional cost. However, while charging a total on a card might be “free” for your customers, that is not the case for your business.

Swipe fees cost businesses up to 5% of the overall purchase, to cover the various steps the information must go through to verify, and fund, a transaction. In some circumstances, your percentage could be higher than those of other businesses due to your:

  • History of accepting fraudulent payments
  • Unestablished credit history
  • Unwillingness to install security features on your credit card readers

And while other fees may apply, in some cases you might want to explore your options.

Recent settlement with the American Booksellers Association

Over 12 million retailers who were part of a class-action lawsuit against Visa and MasterCard will now be included in a settlement of between roughly $5.5 and $6.25 billion.

Based on swipe fee disputes which started with 19 trade associations and retailers in 2005, the lawsuit seemed to lose momentum when 10 of them rejected a $7.25 billion settlement in 2012. Also, at that time, nearly 8,000 others opted out of the antitrust lawsuit, due to the stipulation that by participating, they waived the right to file against the credit card companies in the future.

While varying opinions on swipe fee reform remain, some might argue that those who suffer most are the retailers who want to do what is right by their customers. Others encourage transparency from credit card companies.