Money may make the world go ‘round, but digital and plastic make the money go ‘round the world faster. It all happens in swipes and pin numbers. But all is not quiet on the swiping front as merchants realize how the long arm of interchange fees is impacting business. Interchange fees, paid by anyone selling anything, are required for merchants to be able to accept plastic money in place of paper. And between the setup fees, chargeback fees, number of plastic transaction fees, and fees for not meeting the minimum volume of plastic card business, merchants paid $63 billion in fees. So naturally some would like to keep some of that $63 billion. But if you don’t take plastic, you’re pretty much merchant non-grata. You get no respect because customers have been conditioned to swipe their debit cards and credit cards, so they rarely have cash.
Credit cards in the fountain?
It is said that credit card companies make more money from interchange fees than from interest on credit card balances. So what’s a merchant to do? Should they simply accept that this is the price of doing business in digital age, or should they try to do something about it? Quietly, behind the scenes there are inklings that sellers of goods and services would like a change. Some ask for government intervention. Others have taken to offering discounts to customers for paying with paper rather than plastic. But such a system is unpopular with customers. Also spending paper money doesn’t have the same reward programs as paying with plastic. This is probably why some companies are offering their own debit cards that are tied to customer checking accounts. Either way, it brings new meaning to the term – paper or plastic.