MONTPELIER, Vt. -
Credit card reward programs entice people to swipe the plastic but it isn't the credit card company that's actually paying for that. The money comes from the coffers of businesses you shop at and it ends up being one of retailers' biggest expenses. Swipe fees for rewards are paid by these retail companies but there's a tentative agreement between Visa and MasterCard and some retailers to make temporary changes to these rules. Some Vermont businesses aren't buying into it.
At Woodbury Mountain Toys in Montpelier there's a price on fun for owner Karen Williams-Fox, sometimes up to 5% of a sale when the customer takes out a card.
"They receive rewards which means they costs more for us to use," Williams-Fox said.
But Visa, MasterCard and some big banks have a potentially more than $7 billion settlement with some retailers that would give some money back to merchants and could include lower swiping fees for eight months...and a surcharge for customers that would cover reward programs.
Director Tasha Wallis of the Vermont Retail Association says that not all Vermont businesses back the settlement even though credit cards bring a lot of business to the door.
"We think that's great but we do have a problem with two large companies controlling the market place and setting the prices to high for retailers," Wallis said.
Retailers say part of the problem is customers don't always know those fees are being passed onto them but here at Capitol Stationers they took to letting them know at the cash register by putting up a sign telling customers the company paid $14,500 in credit card fees last year.
"There's so many people that come in here and they're shocked," Co-owner Bigglestone said.
"They're like I can't believe it's that much are you kidding me."
Wallis says that education of consumers is probably retailers' best tool in reducing swipe fees. Vermont legislators have passed laws allowing businesses to give discounts for customers using cash and refuse card payments on purchases of less than $10.
Williams-Fox said she just limits it to $5 and that the fifteen thousand dollars plus she pays in swipe fees could be enough to bring in another part time employee.
