The debate over credit card “swipe fees” is surfacing again at the statehouse. The issue is pitting banks and credit card companies against retailers, both big and small. Jim Henter, with the Iowa Retail Federation, says businesses shouldn’t have to pay a fee on the tax portion of the bill when a customer buys something with a credit card. “We understand the need to cover the costs of these transactions, but we believe the big banks have gotten greedy,” Henter said. “That’s why we’re talking about this issue.”
The fee is two-and-a-half percent of the total purchase, including the tax, and Henter told a legislative interim committee that it amounts to a “tax on a tax.” Retailers want limits on the fee they pay every time a customer makes a purchase with plastic. But Justin Hupher, with the Iowa Credit Union League, said it would be “a mess” if every state passes its own laws on swipe fees. “In my opinion, this is the wrong venue because of the interstate nature of plastic payments. This issue has been lobbied and debated in Congress prior to the Dodd Frank act when Congress did take action,” Hupher said.
But, the federal law affects only the very biggest companies, so none of Iowa’s credit unions are covered by the law.