With the wholehearted support of NFIB Idaho, Senate Bill 1055 is working its way through the Legislature. Its goal: to reduce the swipe fees merchants have to pay to process credit card transactions.

As the credit-reporting company Experian explains, “A credit card swipe fee is a charge a business pays each time a customer makes a purchase using a credit card. It includes fees paid to each company that plays a role in processing a credit card payment. That includes the credit card network, the credit card issuer and the merchant’s payment processor.”

In Idaho, tips and state and local taxes are also included in swipe fee calculations, and this is what SB 1055 wants to put a stop to. According to the bill’s statement of purpose, “This legislation relates to interchange fees (also called swipe fees) charged to merchants on credit and debit card transactions … It requires a payment card network to either deduct the amount of any tax and/or gratuity imposed from the calculation of interchange fees on purchases, or rebate an amount of interchange fees imposed on the state or local tax portion or gratuities portion of purchases.”

Swipe fees are no small matter for small business. “… if a business is charged a swipe fee of 3.5% per transaction, a $100 purchase would incur a $3.50 fee,” according to Experian. “Retailers have battled with the credit card industry over swipe fees for years.

“While accepting credit cards increases sales and lowers labor costs for businesses, swipe fees also reduce business revenue. The fee charged on each transaction varies based on several factors, including the card used, business type and transaction location. It’s difficult for businesses to budget for swipe fees partly because the fee varies, but also because they cannot accurately predict the type of card consumers will use. Businesses can’t avoid swipe fees if they want to accept credit card payments. Many are frustrated by their limited negotiating power. The interchange fee portion of the swipe fee is set by card networks like Visa and Mastercard and can’t be reduced. Other components of the swipe fee can occasionally be lowered depending on the payment processor.”

NFIB Idaho is encouraging its members and all small business owners to take action here by sending your state legislator a message in support of SB 1055. You can also testify remotely before the Senate Commerce & Human Resources Committee where SB 1055 and two other similar measures are getting their first hearings. Finally, presences is persuasion. Join us for NFIB’s Small Business Day at the Capitol and tell lawmakers directly how you feel about this and other small business issues.