Reform of debit card fees considered - KWWL - Eastern Iowa Breaking News, Weather, Closings

Reform of debit card fees considered

WATERLOO (KWWL)--- More people are opting to not carry cash these days, instead making purchase with credit or debit cards.  But not all businesses accept those cards, mostly due to the high fees banks charge them when cards are used.  But that may change soon.

If you've got a craving for ice cream, you might step up to the counter of Moo Roos in Waterloo to get a scoop of your favorite flavor.  But if you're out of cash, you're out of luck.  That's because Moo Roos doesn't take credit or debit cards for payment.

"For someone to come in and want to use a debit card or credit card on a $1.81 ice cream cone, that's just not feasible," said Jeanne Hansen with Moo Roos.

That's because stores pay nearly a two percent fee when you pay with a debit card.  And that rate has shot up more than 300 percent in the past decade.  In fact, it's estimated that so-called "swipe fees" cost businesses around $48 billion a year.  So this business came up with a plastic payment alternative called a Moo Roo card, that even offers customers savings on products when they use it.

"We did as the question in one of our newsletters, ‘Would you like us to increase our prices to cover our fees, or continue using our gift cards?' Very few people wanted us to raise prices to accommodate those fees," Hansen said.

But for some businesses, like Kitchen Essentials in Cedar Falls, credit and debit card fees are just a part of doing business.  Store owner Gretchen Behm says around 75 percent of her customers pay with cards.  Still, it would be a big help if card fees were to stabilize.  It's a measure that's currently being considered by the U.S. legislature.

"If there's a cap on fees, certainly it will be less expensive, and I won't have as many different companies soliciting my business, because there is lots of competition among companies that process cards," Behm said.

Keeping "swipe fees" under control keeps the bottom line for businesses in check.  And that means prices don't have to be increase, just so you can pay with plastic.

Currently more than 200 state and national retailers, including Iowa's Grocery Industry Association and the Iowa Restaurant Association, are supporting the proposed swipe fee reform.  Congress is expected to continue debating the bill this week.  Illinois Senator Dick Durbin has sent a letter to the House of Representatives asking it to adopt the same measure approved in the senate last month.  This new legislation will probably not eliminate swipe fees, but it will require banks to keep them reasonable and proportional to the cost of processing each transaction.

KWWL Reporter: Kera Mashek

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