A recent article in the New York Times highlights that small business owners are lobbying for credit card transaction companies such as American Express, Mastercard and Visa to lower fees charged per transaction. Typically, these companies charge an average 1.7% "interchange fee" of the total sale price along with a flat transaction fee - around .04%.
With small businesses facing stiff competition and a difficult economy, the upcoming Holiday season could be even gloomier. People are spending less versus last year, so its more challenging to pay fees that don't change with the times. Last year, Nilson reported a 26.7% increase in merchant fees compared to 2005. Merchants are turing to Congress to relieve credit card fees or to place a ceiling on the amounts that credit card processing companies can charge on each transaction. With fewer profits to fight fraud, credit card processors may place additional constraints on credit card issuers.