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Press Release: U.S. consumers are spreading the love this Valentine’s Day, especially in jewelry stores, but banks are breaking hearts with exorbitant credit and debit card swipe fees that merchants and consumers must pay to charge their gifts, said the Merchants Payments Coalition (MPC) today. More than half of all U.S. consumers are expected to buy their sweeties gifts, spending around $19 billion during the Valentine’s festival this year, according to the National Retail Federation Valentine’s Day Consumer Spending Survey. Of that, $4.8 billion will be for jewelry. By closing time on February 14, one in 10 consumers will have walked into a jewelry store and purchased the perfect gem for their sweethearts. That’s largely good news for jewelers but with one caveat: the growing costs of swipe fees – what banks charge merchants and consumers to swipe their cards – is eating away at their profits, preventing them from lowering prices and hiring more people. According to the Retail Owner Institute, jewelry stores realized a 5.4 percent profit before taxes in 2014. Meanwhile, banks are marking up swipe fees by 500 percent and higher, depending on the type of card. “That’s five compared to 500! How do banks justify a 500 percent profit?” asked Lyle Beckwith, a member of the MPC, a group of merchants and retailers concerned about growing swipe fees. “They can’t justify it, but they don’t have to. Banks have a monopoly on card payments. Until that changes, we are at their mercy.” In the U.S., banks make about $50 billion a year in swipe fees, which are eight times higher than in Europe. The swipe fee represents the second largest expense for many merchants, especially small business owners. What many don’t realize, though, is that high swipe fees trigger a chain reaction and impact the cost of goods and services, costing an average U.S. household about $400 a year. Do the math on the estimated $4.8 billion that consumers will spend on Valentine’s Day jewels this year and discover that we are talking about a lot of money for a little work. If everyone paid with a credit card, $96 million to $192 million (2 percent to 4 percent) would go straight to banks. Factor in the estimated $19 billion on all Valentine’s gifts and the banks’ stash jumps to $380 million to $760 million. Valentine’s Day represents only one buying season for jewelers. For the entire year of 2013, jewelers generated close to $78 billion in fine jewelry and watch sales. Again, if everyone paid with a credit card, the banks’ take would be $1.6 billion to $3.2 billion in one year. “This is serious money for any merchant, especially in the context of being able to lower prices and create more jobs,” said Beckwith, the senior vice president of government relations at the National Association of Convenience Stores. In 2011, Congress reduced debit card swipe fees from 44 cents to 25 cents by passing the Durbin Amendment, which also included measures to make the bank and credit card industry more competitive. It worked. The Durbin Amendment has saved consumers almost $18 billion and helped merchants create more than 100,000 new jobs in three years. The Merchants Payments Coalition - UnfairCreditCardFees.com - is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, online merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike.
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