Bob Sullivan covers Internet scams and consumer fraud for MSNBC.com. He is the winner of multiple journalism awards for his coverage of online crime and author of Gotcha Capitalism:
How Hidden Fees Rip You Off Every Day and What You Can Do About It.
and Your Evil Twin:
Behind the Identity Theft Epidemic.

Bob was recently in Pittsburgh, where he spent some time with a small business getting taken to the bank with credit card swipe fees.

From Bob’s blog, The Red Tape Chronicles:

You probably swipe a credit or debit card through a magnetic stripe reader dozens of times each month. It’s a simple act, but it’s it at the core of a battle between titans with billions of dollars at stake. On one side are big banks, which take a cut every time a card is swiped. On the other are retailers like Mike McArdle, who are tired of paying Visa, MasterCard and their member banks $1 or $2 every time a customer makes a purchase.

McArdle runs McArdle’s Pub on Pittsburgh’s South Side, the very definition of a family business. It opened in 1939, and the sign above the front door doesn’t look like it’s been changed since. It once held a prime spot near two of the Steel City’s largest steel plants. Both of them have long since been converted to shopping malls, but McArdle’s plugs away, thanks to its position just off the main entertainment strip in Pittsburgh’s hippest neighborhood.

For years, banks have held the upper hand in the fight with the McArdles of the world, but no more. Last week, the U.S. Senate approved legislation that could drastically change the way banks are compensated for card swipes, and that could impact what happens every time you pull out your wallet. In fact, the legislation could provide incentives — that means money — for Americans to leave the plastic in their wallet and pull out old-fashioned cash instead.

As part of its omnibus financial reform bill, Congress is taking on what are called interchange fees — the price that merchants pay for banks to process their credit card transactions. Formulas vary, but generally stores pay a flat 50 cents or $1 per transaction fee, plus 1 to 2 percent of the purchase price.  Retailers have screamed for years that the fees are too high and that the card associations impose anti-competitive restrictions on them – given the limited choices among standards like Visa, MasterCard, American Express, and Discover.

Read more here.