Some companies to stop accepting credit cards
Even after winning a major lobbying battle against the banking industry, some merchants still believe that the price they pay whenever they process credit card debt is simply too high to continue to bear.
High interchange fees – those they pay to credit networks for processing debit and credit card transactions – are forcing companies both large and small to reconsider accepting plastic for purchases, according to a report from the Los Angeles Times. One such business is financial services firm John Hancock, which recently advised some of its insurance policyholders that it would stop accepting credit cards for premium payments.
Now, the company warns it will only accept payments made by check or through automatic withdrawals from checking accounts, the report said. Typically, the fees associated with processing credit card purchases – which account for about 2 percent of a transaction’s value – were passed on to customers.
A recent decision by the Federal Reserve Board saw debit card interchange fees reined in considerably, from the current average of about 44 cents to a new limit of 21 cents per purchase. This limit will take effect on October 21.