Many merchants large and small have recently made the decision to reduce the amount of credit and debit card transactions they will accept because they feel that the payment processing networks charge too much for doing so, according to a report from the Los Angeles Times. Typically, these fees can add up to as much as 2 percent of a total transaction.
The latest major company to do so is John Hancock, a massive financial services firm, the report said. It recently informed its long-term care insurance customers that it would no longer accept payments via credit card. Instead, payments can only be made by check or through automatic deduction from a checking account.
“The decision to discontinue this option is due to the high fees associated with this billing method,” the company said in a recent letter to ratepayers, according to the newspaper.
[Related Article: After Epic Battle, Swipe Fee War Ends in a Draw]
The Federal Reserve Board recently said it would impose a transaction fee limit of 21 cents on all debit card purchases on October 21. This is up considerably from the originally proposed rate of 12 cents per transaction, but down more than 50 percent from the current average of 44 cents.
For a closer look at how these new debit card fees end up hurting the American consumer the most, watch Credit.com’s Gerri Detweiler on The Daily Ticker for Yahoo! Finance as she breaks down what the “Durbin Amendment” really means for consumers.
Image by Michael Allen Smith, via Flickr