Myth vs. Fact: The Truth About Swipe Fees
Myth:
"The fee retailers pay to electronically transmit money is a cost of doing business. It is voluntary. They do not have to accept cards."
Fact:
Just like electricity is expected by customers, accepting credit cards is a necessity. The pandemic accelerated electronic payments, making card acceptance even more critical for small businesses.
Myth:
"The real cost of handling cash ranges from 4.7 to 15 percent."
Fact:
The actual cost of handling cash is well below 1%, with many businesses managing it for less than 0.2%. Swipe fees, however, often exceed profit margins, directly cutting into small business earnings.
Myth:
"Systems don’t support separating sales tax from swipe fees."
Fact:
They already do. Visa and Mastercard require system updates twice a year, meaning any necessary changes can be easily implemented.
Myth:
"Merchants pay less for accepting cards than for accepting checks."
Fact:
Federal law mandates that checks settle at face value, making their acceptance cost zero. Meanwhile, credit card swipe fees create a significant and growing financial burden for businesses.
Myth:
"The penalties in some state bills are excessive and could cost merchants millions."
Fact:
Visa and Mastercard already impose fines of $50,000 to $200,000 per violation— far higher than penalties proposed in state bills. Businesses that comply with the law will not face any penalties.
Myth:
"The benefits of credit cards outweigh the fees. They guarantee payment, provide fraud protection, and increase sales."
Fact:
There is no guaranteed payment. Banks can reverse transactions for up to 90 days, leaving businesses to absorb both lost funds and merchandise, in addition to hefty swipe fees.