| January 23, 2012

Credit card swipe fee limit for New Hampshire?

The state of New Hampshire is currently weighing a bill introduced in its House of Representatives that would cut the amount payment processors can charge businesses for accepting credit card purchases significantly.

Currently, there is no cap on credit card swipe fees in the state of New Hampshire, but House Bill 1319 would change that, according to a report from the Nashua Telegraph. The bill, introduced by Republican John Hikel of Goffstown, is said to be intended as a way of giving small business owners more cost assurance by limiting these costs to just 1 percent of the purchase’s price for state-chartered banks. Currently, the interchange fees they pay can range anywhere from 0.65 percent of the total purchase value made with a credit card to 4.76 percent – the average is around 1.75 percent – and the problem for merchants is that they don’t know the size of that fee until they pay it.

That law would be put in place in addition to the current limit on federal swipe fee laws imposed on major banks for transactions involving debit cards, which limits those costs to 21 cents per purchase, the report said. In all, 18 banks chartered in New Hampshire would be affected by the state limit on credit card fees.

Merchants say this would be a boon because many smaller businesses run on extremely small profit margins, the report said. Most grocers in the state earn as little as 0.5 percent on purchases made, and therefore limiting swipe fees could significantly boost revenues. However, the banking industry is understandably opposed to the rule, with New Hampshire Bankers Association President Christiana Thornton telling the newspaper the bill would “undermine the free market.”

The debit card swipe fee imposed at the federal level went into effect in July and applies to banks with assets exceeding $10 billion. Already, many of these financial institutions have tried to find ways to make up the revenues lost to the limit, which cut interchange fees by about half, on average. This includes adding or increasing the fees for bank services that were previously free or low-cost, though there was also significant consumer backlash against some of these proposed measures, which dissuaded some institutions from putting them into place.

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