Bill may cut 'swipe' fees for schools

A new law may reduce the fees the University pays when students make purchases on campus or pay tuition with credit cards.

The Credit Card Interchange Fees Act of 2009, which is being debated by the House Financial Services committee, seeks to lower interchange or “swipe” fees, the extra processing charges added to purchases made with credit cards.

Richard Hershman, director of government relations for the National Association of College Stores, said college bookstores pay one-half to three percent of each credit-card purchase directly to the card’s company in the form of swipe fees.

“They’re paying right now more in costs for accepting credit cards and debit cards than shipping costs,” he said.

Hershman added that the fees apply to more than just bookstores and raise prices campus-wide for students.

“For food services or anywhere else on campus that you’re using your credit or debit card, it costs the school money,” he said. “That in turn gets factored into their operating expenses and in turn into what they charge.”

There are over 220 different categories of swipe fees that depend on everything from the type of card to where it is used, said Sheila Hernandez, vice president of merchant operations for Priority Payment Systems.

The new legislation may also lower the fees in relation to student tuition payment.

Right now, the University only allows students to pay their tuition bill with American Express cards because that company offers the lowest fee, according to Michael Merritt, senior director of administrative support for Penn Student Financial Services.

Paying tuition with AMEX adds a 2-percent fee directly to a student’s bill, according the SFS web site.

Merritt explained that the University does not receive any compensation for only allowing tuition payment with AMEX and would potentially open payment to more cards if the law changes.

“The specifics on costs and charging the convenience fee back to the payer would need to be evaluated as part of the decision making process,” he wrote.

Hernandez said said swipe fees have become more expensive and more complicated in the last few years.

“Even on a $10 transaction [a fee] can be another 1.1 cents and it adds up,” she said. “You’re talking about hundreds of thousands of transactions and millions of dollars.”

Hernandez, who has been in the credit card business for 24 years, said she does not believe the legislation will pass because the credit card lobby will be stronger than that of merchants who pay the fees.

“I really don’t give it a lot of hope,” she said. “There’s a lot more money on the issuing side of the business.”

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