WASHINGTON--(BUSINESS WIRE)--The following press release was issued by Merchants Payments Coalition:

“Even so, the banks’ 500% markup in debit fees is a true measure of the marketplace inefficiencies that remain, in debit and even more so in credit card fees. That needs to change”

Who doesn’t love a good deal?

Millions of Americans will spend Presidents’ Day taking advantage of storewide sales blissfully unaware of how prices are impacted by how much banks and credit card companies charge merchants every time their customers swipe credit or debit cards.

Out of every George Washington dollar we spend, two Abe Lincoln pennies go right to the banks. This quickly adds up to 20 Andrew Jacksons a year per American household. That’s $400. All total? Over $50 billion a year.

“With credit and debit card swipe fees as high as they are, banks are quietly swiping Presidents right out of consumers’ wallets every single day. More specifically -- a combination of Presidents totaling $137 million on average every single day,” said Lyle Beckwith, Senior Vice President of Government Relations, National Association of Convenience Stores, a member of the Merchants Payments Coalition.

The Federal Reserve has estimated it costs only about 2 cents to process one credit card transaction, yet banks charge merchants 2 to 4 percent of the total of every purchase, generating enormous profit margins for themselves with the simple swipe of a card.

For debit, this greedy grab amounts to a 500% markup every time customers swipe their debit cards. Federal Reserve surveys recently documented by this Merchants Advisory Group study reveal it costs banks only 4.4 cents to process one debit card transaction. Banks, though, charge 25 cents.

Americans pay the highest credit card fees in the world, despite innovations in technology and cheaper processing costs. In Europe swipe fees are eight times lower.

Credit and debit card fees also exploit and hurt merchants, (especially small ones), a big chunk of our economy, and obstruct economic growth. The high cost of swipe fees not only cuts into merchants’ already slim profits but it also takes away their ability to reduce prices or take on new hires.

In 2011, Congress reduced debit card swipe fees from 44 cents to 25 cents by passing the Durbin Amendment, which also included measures to make the bank and credit card industry more competitive. It worked. The Durbin Amendment has saved consumers almost $18 billion and helped merchants create more than 100,000 new jobs in three years.

“Even so, the banks’ 500% markup in debit fees is a true measure of the marketplace inefficiencies that remain, in debit and even more so in credit card fees. That needs to change,” said Doug Kantor, counsel to MPC.

For example, the two credit card companies that control the payment industry, Visa and MasterCard, have slipped in other merchant fees to further pad their huge profit margins on swipe fees. Network fees of various sorts have gone up 40% since 2011.

Visa (V) and MasterCard (MA) collude with banks to fix fees, which makes the market uncompetitive and distorts what should be a free market, like the rest of our economic system. These fees are growing faster than retailers’ profits in some cases – for instance, convenience stores that sell gas pay billions more every year to the banks than they keep in profit.

Another astonishing fact few people know outside the retail and banking industries: Without a competitive market, these fees have grown to become many retailers’ second-highest operating cost after labor. That is a huge burden, especially for the small merchant.