The fees charged to businesses for accepting credit card is often a point of contention between credit card payment processing companies and merchants, but a proposed law in the state of New Hampshire could spark even more debate about them.
A piece of legislation introduced in the New Hampshire House of Representatives, House Bill 1319, has drawn some attention for the way in which it would drastically alter the credit card landscape between businesses and payment processors. The law will limit the amount banks chartered within the state are able to charge businesses for processing credit card transactions to just 1 percent of the total purchase value.
Currently there is no law governing the size of these interchange fees for credit card purchases at either the state or federal level, but many businesses pay costs that range from 0.67 percent of the transaction’s value to 4.76 percent, according to a report from the Nashua Telegraph. A spokesperson for MasterCard, the second-largest payment processor in the world, told the newspaper that the current average is somewhere around 1.75 percent.
The bill, introduced by Goffstown Republican John Hikel, is designed to give more cost certainty to merchants, and particularly small business owners, the report said. In most cases, these businesses don’t know the amount they’re paying on a given credit card transaction until they receive a bill. In addition, it should also help to buoy profit margins for certain types of companies that accept a large number of credit card transactions, such as grocers, which typically operate with margins as thin as 0.5 percent of a total purchase value.
If passed, the law would be applied in addition to federal limits on debit card transactions, which were put into place in July 2011 and cut the amount processing companies can charge for debit transactions to just 21 cents per purchase, regardless of its total size. That’s down from the pre-limit total of about 44 cents per purchase. However, it would only apply to banks chartered within the state itself, and there are just 18 of those in all. Six more are still small enough that the state fee cap would not apply to them.
Banks have already responded to the debit fee cap by increasing charges for certain types of accounts and other services that in the past had been free or very small.
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