Denver experiments with waiving credit fees, sees boost in card payments

Denver experimented with waiving credit card fees and saw plastic payments increase.

There are many things that go into the swipe fees that credit card agencies and banks charge, that trickle down to the merchants and consumers. One that doesn't get enough press is the role that states and cities can play in setting caps or eliminating them altogether.

An article from The Denver Post recapped an experiment recently conducted by the city of Denver. Over the first two months of 2014, swipe fees were waived for most plastic payments that were made for city charges. Previously, there was a standard 2.5 percent convenience fee on credit and debit cards for property and excise taxes, court fees (which have an in-percent $3 flat fee) and traffic fines.

During this time frame, the use of credit and debit card payments increased tenfold or more when compared to the same period last year.

For example, receipts for property taxes paid online with credit cards increased from $892,000 in 2013 to $17.6 million. At the counter itself, card payments went up 19 percent to $37.1 million. Overall city credit card receipts were up $68.4 million, or 48 percent.

"What we've learned is that any convenience fee turns people off," David Edinger, the city's chief performance officer, told the news source.

He added that while cash and check payments do not have merchant fees, they actually cost more to handle these payments. While the company must still pay processing fees for every card swiped, it will be offset if enough consumers are making payments with plastic instead of paper.

by Ty Hardison

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