Debit cards and credit cards, let’s make them all “free”

Customizing a debit card
Image by sotheavy via Flickr

The uproar over BoA charging some customers a monthly fee to use a debit card is a perfect example of the impact of the President’s anti business, scapegoating rhetoric having an impact on the common sense thinking of the average person.

While Congress saw fit to cut the fees banks charge merchants for a debit card transaction resulting in banks making the fee more visible by charging a small portion of it to customers, we hear no outcry over the fees credit card organizations charge merchants for a credit card purchase. These charges are typically a percentage of each sale with the percentage dropping as the total volume and dollar value of each purchase rises.  Thus the fees are structured to benefit the largest volume retailers and cost the most for the mom and pop local store.  The percentage can range from 1% to near 5%.  In addition, there are various other processing fees paid by the merchant who hopes to offset this expense by increasing sales volume and adjusting prices accordingly.  The variation in credit card fees is why some merchants accept Visa or Mastercard, but will not accept American Express which of course, they are free to do. It is also why some merchants will not accept any credit cards, that and they want to have only cash sales…I wonder why (that’s another story).

Do people think all this convenience is free?  Given that most people now think that preventive health care services and even contraceptives are “free,” perhaps it is not unexpected that they also think it outrageous that they must pay directly for the convenience of a debit card.  Who should pay? 

Sure banks save money by encouraging the use of debit cards, so do merchants and all of us grain a great deal of convenience, does that mean that every time an industry finds a way to be more efficient and save money those savings are all passed on to someone else.  What do you think is the profit margin on an iPhone, do you really care?

I tried to transfer frequent flyer miles from my wife’s account to mine just to consolidate them, the fee was $15.00 for each 1,000 miles, now there is a rip off. Or how about paying $99.00 for extra leg room in the exit aisle where the seat only reclines on a limited basis only to learn that “limited” really means not at all – and we get excised over a $5.00 monthly fee for unlimited use of a debit card? Where is the uproar when a gas station charges ten cents a gallon more if you use a credit card?

None of this is logical, it is more of the mainstream press jumping on the scapegoat campaign bus. If you don’t think the convenience of a debit card is worth $5.00, change banks or to really make a statement about the value of debit cards, give yours up!  Don’t we have more important problems to whine about?

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