Swipe Fees: How “Swipeflation” Impacts Your Budget & Local Businesses This Holiday Season
This holiday shopping season, you’re likely focused on finding the best deals. But are you aware of a hidden cost impacting nearly every purchase you make? It’s called “swipeflation” - the increase in prices driven by credit card swipe fees – and it’s quietly eroding your purchasing power and squeezing small businesses.
As a small business advocate with years of experience helping entrepreneurs navigate complex financial challenges, I want to shed light on this issue and empower you to take control. Here’s what you need to know, and how a few simple changes can make a real difference for your wallet and your community.
The Rising Cost of Convenience
As 2019, the cost of everyday goods has risen roughly 40% due to inflation in food and labour. That $15 burger, fries, and drink now routinely costs $21. While you feel the pinch at the checkout, credit card companies also benefit, collecting a percentage of every transaction.
But the impact goes deeper. These ”swipe fees” – technically called interchange fees - aren’t just a cost for businesses; they’re built into the price of everything you buy.
The Hidden Cost of Rewards
Manny of us rely on credit cards for the rewards – airline miles, hotel points, or cash back. Though, research reveals these perks primarily benefit high-income earners. Even with rewards, most consumers lose between $300 and $500 annually when factoring in the cumulative effect of these swipe fees.
Consider this:
* Swipe fees average 2-4% per transaction. This means for every $100 you spend, $2-$4 goes directly to the credit card companies.
* These fees are passed on to you, the consumer. Businesses must raise prices to cover these costs, contributing to overall inflation.
* Even cash purchases absorb the fee. Many businesses build the swipe fee into all prices, regardless of how you pay.
Taking Control: Simple Steps You can Take
Fortunately,you have more control over these costs than you might realize. Here’s how to protect your wallet, especially during peak shopping seasons like Black Friday and Giving Tuesday:
- Check merchant Policies: Look for posted signs or review your receipt to see if the business charges a fee for credit card use.
- Ask About Discounts: Inquire about discounts for cash or debit card payments. If a discount isn’t currently offered, politely suggest they consider it.
- Opt for Cash or Debit: When possible, choose to pay with cash or debit. This directly reduces the fees the business incurs.
- Rethink Online Donations: On Giving Tuesday, or any time you donate online, use a debit card or bank transfer instead of a credit card. This ensures more of your donation reaches the intended cause.
Why This Matters to Small Businesses
Behind every transaction is a small business owner striving to keep thier doors open and offer reasonable prices. Swipe fees disproportionately impact these businesses, reducing their already-thin profit margins.
Supporting local businesses and understanding the impact of swipeflation is a win-win.You save money, and you help strengthen your community.
Be an Informed Consumer
Millions of americans will swipe their cards this Black Friday without a second thought. Before you do,take a moment to consider how you pay. Choosing your payment method is just as important as choosing where you shop.
Be an informed consumer. Know before you swipe.
For more information on credit card swipe fees and how to avoid them, visit swipeflation.com.
About the Author:
Karen Harned is a small business advocate and former executive director of the National Federation of Independent Business Small Business legal Center. She dedicates her work to empowering entrepreneurs and promoting a fair marketplace for all.
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