As Indianola convenience store chain owner Walton Gresham sees it, the debate over whether to limit swipe-card fees comes down to whether Congress wants to provide an economic stimulus to businesses like his or give more charity to the banks that issue the cards.
Last Wednesday, he had a name for the bill a bi-partisan group of U.S. senators introduced the day before that would delay caps on swipe-card, or debit, fees for two years beyond their scheduled start on July 21: TARP Two.
“It’ worth a billion dollars a month to the big banks for each month it’s delayed,” Gresham said.
It’s a sequel Gresham said threatens to hurt the economic health of Gresham Petroleum, operators of 45 or so Double Quick stores, and other businesses throughout Mississippi. He said he has been looking to the fee caps as a way to put more money back into his businesses.
Those expectations dimmed some last Tuesday with introduction of the Senate bill to delay implanting the caps for two years. Right now, Gresham pays anywhere from 19 cents to 11 cents on each debit card transaction as well as extra charge of 1 percent to 2 percent on the amount of each transaction.
“This is the third-largest expense behind labor and utilities for business and we have no control over this cost,” he said.
The costs to the banks for processing each transaction: 4 cents, according to testimony given to Congress.
The cap, as part of the banking reform overhaul passed last summer, would apply only to banks that have $10 billion or more in assets. But banking consultants say the capped fees would become the norm because merchants would decline cards for which higher fees were in place.
Gresham said with a cap in place — even the 12 cents proposed by the Federal Reserve Board of Governors — tens of millions of additional dollars would go into Mississippi’s economy.
Getting rid of the 2 percent extra charge on each transaction would generate $57 million for Mississippi gas retailers, he said, explaining he based his figure on a charge of $3 a gallon for gas and Mississippi’s annual gasoline consumption of 2.24 billion gallons.
“That’s on petroleum alone,” he said. “Think what it would be on restaurants, clothes stores and furniture stores.”
The cap would result in card issuers receiving transaction fees 70 percent lower than their 2009 average, according to Federal Reserve calculations.
Gresham said the money the banks would not be making would be made by businesses in Mississippi.
“No merchant I know of is going to put it in his pocket. He’s going to hire a new worker, build a new store…”
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