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Yet Another Way The Banks Screw Us All

WASHINGTON — Charlie Chung runs Cups & Co., a coffee and sandwich shop in the basement of the Russell Senate Office Building. Known on Capitol Hill simply as “Cups,” the shop — a rickety 20-second train ride away from the elevator to the Senate floor — is always swarmed with lobbyists, staffers and the occasional senator.

If customers flash an American Express card to buy a banana, Chung waves them off: “Just take the banana. Don’t give me the card.”

Chung has run Cups for about a decade and says that plastic has allowed him to better serve a hurried and harried clientele. But Chung is still routinely frustrated with the card networks — Visa, MasterCard and American Express — that dictate the fees storeowners like himself must pay to process credit and debit card transactions. Why charge for a banana when card fees make it a losing proposition?

Fees are annoying, Chung says, but not debilitating. “They’re just like a phone company,” he says. “Delivery surcharge. Paper charge. Equipment charge.” There’s an additional fee for using cards from banks outside his contract, but Chung says he has no way of knowing until he’s gotten his bill how much of that pricier plastic has been swiped.

The fees Chung pays are a tiny fraction of Wall Street’s swipe fee windfall; banks take in a combined $48 billion a year from these “interchange” fees on debit and credit cards, according to analysts at The Nilson Report. That money comes out of the pockets of consumers as well as merchants, as stores pass on whatever costs they can to their customers.

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