Sioux City Journal

The hidden credit card 'tax'

Posted: Thursday, May 31, 2007

ANKENY, Iowa -- In addition to providing patients with the care and therapy they need and want, chiropractors perform another function. Whether we like it or not, we are tax collectors for governments at all levels. Whether it's a federal tax, state and local sales tax, or other fees associated with individual products and services, government tasks business like chiropractors' clinics to collect certain taxes and fees and then remit them.

But you might be surprised to know that there's another fee businesses are forced to collect from consumers, but you don't know about it, or how much it is, and merchants are prohibited from telling you about it at all. And, even more surprisingly, it's not a fee collected for and by any government - federal, state, or local.

It's called the "interchange fee" and it's added to every purchase made with a credit card, and it's remitted to the credit card companies. Consumers don't know about it because the credit card companies, as part of their contracts with merchants, prohibit us from disclosing its existence and how much it is.

The interchange fee - or more accurately interchange "tax" - costs consumers about $2 for every $100 they spend on goods and services. That amounts to a hidden bill of about $300 for the average American family. Credit card companies used this hidden tax to collect nearly $36 billion from American consumers last year alone.

Since 2001, this fee has risen by a whopping 117 percent and it benefits no one but the credit card companies themselves. There is a solution, but it won't happen unless consumers and merchants demand it. Congress can act to eliminate or significantly limit and regulate the interchange fee. It's time for Congress to act and eliminate this unfair hidden tax on consumers. To get this done, consumers and businesses need to make our opinions known to lawmakers. Unfortunately, the first step in this process is to make consumers aware of the facts, something the credit card companies will fight on every front. Wouldn't you if $36 billion in pure profit was on the line? -- Jay Iverson, executive director, Iowa Chiropractic Society/Advantage Chiropractic Network

Story Comments

Keith wrote on May 31, 2007 9:10 PM:

" Bryson - You must be doing a good job of that paycheck to paycheck thing if you still have credit cards to use. Congrats! If a company is being charged over the standard rate for transactions it may have something to do with the risk involved. If you simply swipe the card in the reader or can provide identifying information about the card holder the standard rate will apply. If orders are taken over the phone and the proper security checks are bypassed then the risk goes up and so does the fee. Many merchants pay more than they need to because they don't understand how the fee works and sales clerks get lazy about entering information or are afraid to ask the customer for it. Simply supplying the house number and zip code may save 2% and provide security for the customer's card. Some processors simply charge more if the card isn't present at the transaction point. "

Hey "Free Enterprise" wrote on May 31, 2007 2:25 PM:

" You comparing the processing of a transaction (which a child could do, or a computer) to something that takes years of training and hard work to achieve shows your stupidity. Chiropractors have the sense to speak up for the benefit of all, whereas the greedy credit card companies keep their mouths shut and take your money! I can pick up the phone and talk to my chiropractor, but have you ever tried to get a live human being on the phone from you credit card companies? "

Bryson wrote on May 31, 2007 2:15 PM:

" Anyone who tries to justify this major rip-off clearly does not know what it is like to live from paycheck to paycheck. Sometimes I have to use my credit cards because I have no other money. I know businesses that pay 4% instead of the average 2%. Why can't the greedy credit card companies charge everyone the same? "

Free Enterprise wrote on May 31, 2007 12:44 PM:

" It's called free enterprise....don't use them if you don't like it. "

FNG wrote on May 31, 2007 12:08 PM:

" That new skyscraper in downtown Omaha, the First National Center..... -The lobby includes a 60 foot high glass winter garden, whose south wall incorporates part of the ornamental terra cotta facade of the previous building on the site. - There are three fountains in the project, two inside the building and one outside. - All exterior stone on the facade is granite...I don't know how much the building cost, probably over $100 million, they make lots of money off of all of us in finance charges and transaction charges that are passed on by the retailers. They are one of the biggest credit card processors in the country. "