Rally to Stop Skyrocketing MasterCard and Visa Fees on Gasoline

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NEWS RELEASE

Consumers and Merchants Tell Congress to Support the Credit Card Fair Fee Act

IRVINE, Calif.–(BUSINESS WIRE) Consumers and merchants alike will rally in Irvine on July 3^rd, Thursday morning at 7:30 – 9:00 am at the Chevron station at Jamboree and Barranca Parkway to call for independence from Visa and MasterCard’s hidden credit card fees that add another 8-10 cents a gallon on top of already skyrocketing gasoline prices.

Consumers and merchants will also be rallying in favor of the Credit Card Fair Fee Act which would end price-fixing by the credit card industry and help cut interchange fees. This bill would allow retailers to have a seat at the table to negotiate with the credit card industry for the terms and rates of the fees.

“Service station owners and consumers are paying record credit card fees as Visa, MasterCard, and their member banks reap the windfall from the 100% increase in the price of gasoline since 2007,” said Mitch Goldstone, event organizer and editor of WayTooHigh.com – The Credit Card Interchange Report. Goldstone is also president and CEO of 30 Minute Photos Etc. and ScanMyPhotos.com.

With $4-plus gasoline, gas customers typically shell out $2 or more to the credit card industry every time they fill up. Goldstone said, “Except for OPEC, nobody makes more money from skyrocketing gasoline prices on American consumers than Visa and MasterCard member banks – over $10 billion this year alone if gas prices stay above $4.”

“About two dollars of every $100 consumers spend in stores or buying gasoline goes directly to the credit card industry in the form of the interchange fee, the biggest credit card fee you’ve never heard of. Interchange has skyrocketed in recent years. Interchange is a hidden fee; the rates are set in secret by the credit card industry,” said Goldstone.

American businesses and consumers paid $42 billion in total interchange fees just in 2007 on all goods and services, far more than they paid in late fees, over-the-limit fees, annual fees, universal default, double cycle billing, exchange fees, and inactivity fees combined. Consumers not only pay more than they should through unfair fees but also through inflated retail prices, especially on gasoline.

The credit card industry has come under increased scrutiny from the public, consumer groups, the Federal Reserve, and Congress in the past three years for their unfair credit card practices, policies and fees. Interchange fees have been the subject of hearings three times in recent years under both the Republican and Democratic Congresses. Large number of Democrats and Republicans favor the Credit Card Fair Fee Act; it has bi-partisan support in both chambers of Congress.

 

 

A Big Fight Even for Activist Mitch Goldstone (Marshall Magazine)

[reposted from Oct. 2005]

Mitch Goldstone Leads A Rebellion, This Time Against Credit Card Fees

By Robert Barnett – University of Southern California “Marshall Magazine“It pays to read your mail, as Mitchell Goldstone knows and Visa and MasterCard are finding out.

Goldstone, a 1985 graduate of USC Marshall School of Business, and his partner, Carl Berman, are the co-founders of 30 Minute Photos Etc. and its online sibling, 30minphotos.com which, as the names suggest, develop photographs from film and digitized files, respectively.

Goldstone has made lots of news over the years, but nothing like this summer when his company became the lead plaintiff in a class action antitrust suit against Visa, MasterCard and major banks. The story made the pages of the Wall Street Journal, Time magazine and the New York Times.
Filed in federal court in Connecticut in June 2005 with four other small and midsize businesses, the suit accuses the credit card companies and the banks that issue their cards of illegally fixing the interchange fees that merchants pay for credit card transactions. The credit card companies have defended their interchange fees, with MasterCard’s general counsel calling them “beneficial, efficient and pro-competitive” in a statement the giant credit card company made during a recent Federal Reserve hearing. Controversy is nothing to new to Goldstone. He’s drawn to social and economic causes the way some people have hobbies, and thinks nothing of spending hours and time and money–and overlaying all that with entrepreneurial inventiveness–on an array of projects. In addition to the class action suit, he organized Operation Photo this year to collect digital cameras for families of soldiers deployed overseas. He promoted tsunami relief for the Red Cross on the company website. He ran for city council in Irvine, CA.But the lawsuit against the giant credit card companies represents the biggest, most formidable opponent that Goldstone has ever faced. If he and the other plaintiffs win, it could cost the credit card companies billions of dollars.As with many of Goldstone’s past crusades, this one started almost by accident. In February, Goldstone and Berman received a notice in the mail that their interchange fees were being raised. “I usually throw them away,” Goldstone explained, ”but Carl brought it to my attention. When we started the business in 1990, there were a handful of interchange fees. Now there are nearly 100 different rates. And they’ve all been going up steadily. For example, the fee for debit cards has gone up 300% since 1999.”Goldstone wrote to the senior management at Visa and MasterCard, asking them to rescind the increase. “Always start at the top,” Goldstone stresses. “It’s one of the greatest lessons I learned at Marshall.”

No answer. He followed up with a phone call to the two companies. Still no response. And that got the ball rolling.

Today, Goldstone and Berman write and edit the blog, “WayTooHigh.com,” posting articles and editorials on the interchange fees and arguing that the fees are a hidden tax on consumers since they become part of the cost of all goods and services purchased. Their retail rebellion appears to be spreading. Kroger and six other national retailers filed their own suit against Visa U.S.A., and charged it with anticompetitive practices.

Creating a national groundswell for a cause he believes in is nothing new to Goldstone. In fact, he enjoys it. “It makes it fun,” Goldstone insists, “knowing we’re doing something that is going to help somebody.” In a sense, he sees it as part of his job. “That’s what being an entrepreneur is all about,” as Goldstone sees it. “It’s not just about making money. It’s about doing something that’s good because that’s the ultimate scorecard.”

Organizing Operation Photo is a perfect example of how social and economic issues just seem to find Goldstone – and how he uses his entrepreneurial skills to identify and promote a solution.

“I got a phone call at 7:00 in the morning right after Christmas of last year from Jennifer Petersen, a former 30 Minute Photos Etc. employee who had left to become a full-time mom,” recalls Goldstone. “She’d had a dream the night before. What if her husband was serving in the military and he wasn’t able to see their daughter? Was there any way we could get people to donate cameras to give to military families? By 8:00, the business plan was already cemented and finalized.”

Within days, they had Operation Homefront onboard to coordinate distribution, secured pledges from Kodak and other digital camera manufacturers for hundreds of new cameras, set up a “Operation Photo” website with a link from the 30 Minute Photos Etc. homepage, the press had jumped on the story, and the first cameras were already flooding in.

By the time Operation Photo wrapped up on July 4, it had collected over $150,000 worth of cameras and distributed them to grateful and appreciative families in and around military bases all over the country. In fact, many of the photos of new babies and birthday parties now being shared overseas are being developed at 30 Minute Photos Etc., thanks to its military family discount.
Goldstone always wanted to be an entrepreneur. A New Yorker by birth, he applied to USC specifically so he could enroll in what is now USC Marshall’s Lloyd Greif Center for Entrepreneurial Studies.

Goldstone and Berman started 30 Minute Photos Etc. in 1990 on the premise that family photos were among our most treasured possessions. They separated themselves from the one-hour and overnight photo competition by beating them in turn-around time, delivering a higher quality photo, staying ahead with new technology, and building a client base that included Hollywood celebrities and California Governor Arnold Schwarzenegger.

In the late 1990s, 30 Minute Photos Etc. was blindsided by the digital revolution in photography. Suddenly customers weren’t bringing in rolls of film. They were printing them off their home computers. Business took a nosedive. Goldstone transformed the company into an online boutique photo service, creating a website for customers to format and edit their digital images, and with the click of their mouse, have high quality prints processed and shipped immediately to wherever they lived in the United States. He even put a 24-hour live support capability right on the website.

Still it was a struggle to rebuild the business. In 1997, Goldstone bought some local cable spots for the MTV Video Music Awards, only to discover that the show would be featuring rap singer Eminem performing live. Offended by the rapper’s lyrics, Goldstone bought up all the local commercial time for the awards program so that organizations including the Family Violence Prevention Fund, the Museum of Tolerance, and the Human Rights Campaign Fund could ran public service announcements educating viewers on violence against women, bigotry, and gay rights.

“That was extremely expensive,” Goldstone recalls. “This was our whole campaign to get younger adults excited about our business and to use it. Instead we ran those spots because we believed it was the right thing to do. As it turned out, we also got a lot of media coverage for the educational campaign and ourselves,” he continues.

So what’s next for Mitch Goldstone? Wait and see. Visa and MasterCard may regret not answering their mail.

[Robert Barnett, a freelance writer in Los Angeles, is a contributing editor ofthe University of Southern California's Marshall Magazine].

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click hereand read their daily blog: Tales from the World of Photo Scanning

Banks Using Record Gas Prices To Soften Mortgage Meltdown

Let’s not forget to add Visa and MasterCard – the two giant credit card associations – to the list of those effectively profiteering from the world’s economic energy crisis. 

With all the added money flooding into the banks from record energy costs and motorists paying with Visa and MasterCard’s, we can only assume they are using these windfall profits to help cover their disastrously mismanaged mortgage meltdown.

Who would have thought that Visa, MasterCard and their thousands of member banks would punish motorists to help cover their other banking misadventures?

As crude oil prices rose again to record levels (above $100 a barrel) the thousands of member banks that run the giant credit card cartels are making mint off motorists’ anguish. 

It is more likely that drivers will be forced to reach for plastic, as few have enough paper currency to cover the record price to fill-up a tank of gas.  This means that unprecedented profiteering is taking place again because more people are forced to use Visa and MasterCard, then pay among the highest merchant interchange fees ever. 

When gas was $1.50 a gallon, just a short time ago, the service station interchange fees were significantly less.  Now, with these record prices, the banks are profiteering with unparalleled greed. 

• Why exactly are the banks able to claim a percent from every sale, even when their costs are nearly unmoved? 
• Whatever happened to MasterCard’s proclamation that they would cap interchange fees at $50.00 a fill-up? 
• Why didn’t Visa join in the same interchange fee limit?
• The top question is: If MasterCard and Visa could put a cap on merchant interchange fees at $50.00 per transaction for a gas station car fill-up, why can’t they equally provide the same rate structure for all retailers?

Related Links

FAST FACT: Record gas prices leads to possible profiteering and windfall for credit card companies

Banks Benefit When Oil Surges

Crude-oil Futures Hit $100 a Barrel on Nymex

More Oil Profiterring. A Barrel of Gas Now at $86

Oil Jumps to Nearly $100, Generates More Interchange Fee Profiteering

Oil Surges Past Record High, Above $78 a Barrel; Yields More Windfall Profiteering For Banks 

Interesting Question: Why Only Cap Interchange Fees At The Pumps?

  

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Happy New Year!

We Pause to Remember The Life of Benazir Bhutto

The nation of Pakistan and the world lost a champion for democracy today.  Along with millions of people around the globe, we too pause in memory of former Pakistan premier Benazir Bhutto.

Goldstone at CES, Update

Click here to view offical CES schedule

click here to view Businesswire press release

“EU to MasterCard: Credit Card Interchange Fees Must be Cut” (via MPC news release)

U.S. Groups Opposed to Unfair Credit Card Fees Applaud Ruling, Urge Congressional Action Here

[Merchants Payments Coalition, news release] Washington, D.C. – December 19, 2007 – Today a coalition of U.S. merchants opposed to unfair credit card fees (unfaircreditcardfees.com) welcomed a ruling by the European Union (EU) Competition Commission that MasterCard’s credit card interchange fees for consumers must be cut across the 26 member nations of the European community. 

Calling the MasterCard credit card interchange fee system illegal and an unfair burden on European consumers and merchants, EU Competition Commissioner Neelie Kroes said “Consumers foot the bill, as they risk paying twice for payment cards:  once through annual fees to their banks and a second time through inflated retail prices paid not only by card users but also by customers paying cash.”

“The EU commission report underscores that Visa and MasterCard hit consumers coming and going.  Cutting credit card interchange fees is an important victory for Europeans as well as for anyone traveling there,” said Tim Hammonds, President and CEO of the Food Marketing Institute, a Merchants Payments Coalition (MPC) executive committee member.  “But American consumers and merchants pay more than twice as much as Europeans – two dollars out of every $100 directly to Visa and MasterCard issuers.  These exorbitant hidden fees are out of proportion to the amount that would be paid in a competitive market,” added Hammonds.

The EU competition commission concluded that MasterCard abused its dominant position in the market by setting credit card interchange fee levels too high.  In January, Commissioner Kroes referred to Visa Europe and MasterCard as “an effective duopoly” that make “outrageous profits”, and that consumers are being “ripped off” by card fees. 

“Global recognition that Visa and MasterCard engage in illegal price fixing is a call to action for the Congress in 2008,” said Hammonds, referring to moves by Britain and Australia that have dramatically reduced credit card interchange fees in those countries as well in recent years. Credit card interchange fees paid by U.S. consumers and merchants to Visa, MasterCard and their member banks is expected to total more $40 billion dollars this year.

Credit card interchange fees in the United States, ultimately paid by American consumers, are currently more than twice as much on average as they are in Europe — the same credit card interchange fees just ruled too high by EU Commissioner Kroes.  U.S. interchange fees on average are about 2 percent, while Visa Europe rates, for example, are capped at 0.7 percent.

Raising hidden credit card interchange fees is how Visa and MasterCard encourage banks to issue more credit and debit cards – as long as rising rates are kept secret, consumers have no way of knowing the extra costs they are paying.  “That’s why U.S. interchange rates are among the highest in the developed world,” said Hammonds. 

In fact, Visa and MasterCard still treat American merchants and consumers the same way they used to treat the Europeans.  Here, credit card interchange fees are set in secret and credit card company rules make it practically impossible for merchants to tell customers how much they are really paying. 

Interchange rates in the United States are now approximately two percent; in other words, two dollars out of every $100 spent on credit and debit cards goes to the credit card companies and consumers who pay whether they use plastic, checks, or cash.  In the United States, interchange fees are the biggest credit card fee you have never heard of, dwarfing all the other credit card fees:  late fees, over-the-limit fees, balance transfer fees, annual fees, inactivity fees, penalty interest fees, universal default, and even ATM bank fees.     

The MPC is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees. For further information, please visit: UnfairCreditCardFees.com

Speach: “Neelie Kroes – European Commissioner for Competition Policy Commission “

Neelie Kroes – European Commissioner for Competition Policy Commission Prohibits MasterCard’s intra-EEA Multilateral Interchange Fees Introductory remarks at press conference 

Brussels, 19th December 2007Ladies and Gentlemen,

The Commission has today adopted a decision that MasterCard’s multilateral interchange fees, or MIF, for cross-border payment card transactions with MasterCard and Maestro branded debit and consumer credit cards in the European Economic Area (EEA) violate EC Treaty rules on restrictive business practices.

The Commission has concluded that MasterCard’s MIF, a charge levied on each payment at a retail outlet when a card payment is processed, inflated the cost of card acceptance by retailers without leading to any advantage for consumers or retailers.

On the contrary, consumers foot the bill, as they risk paying twice for payment cards. Once through annual fees to their bank. And a second time through inflated retail prices, given that retailers set their prices taking account of all costs, including MasterCard’s interchange fees. MasterCard’s MIF therefore acts like a “tax on consumption” paid not only by card users but also by customers using cash and cheques.

The decision requires MasterCard to withdraw its MIF within six months. If MasterCard fails to withdraw the fees or circumvents the Commission’s decision, the Commission may impose daily penalty payments of 3.5% of MasterCard’s daily global turnover.

The Commission decision does not mean that all MIFs are illegal, but that MasterCard’s particular MIF is illegal. A MIF in an open payment card scheme such as MasterCard’s is only compatible with EU competition rules if it contributes to technical and economic progress and benefits consumers. And MasterCard did not manage to convince us that this is the case.

It is not sufficient that a MIF simply increases the sales volumes of a scheme to the sole benefit of the member banks. Rather, a MIF should contribute to objective efficiencies such as to promote more efficient payment means to the detriment of less efficient ones. Also, the proceeds from a MIF should not just increase bank’s revenues they should be clearly dedicated to the achievement of efficiencies.

So if after today’s decision MasterCard wanted to introduce a new MIF it would have to demonstrate clearly to the Commission that there would be advantages for both retailers and consumers, for example in terms of fostering innovation such as by improving the security of payments to combat card fraud.

Banks have traditionally set MIFs without involving either merchants or consumers.  The process of setting a MIF could benefit from more transparency. Both consumers and merchants should have a say.

By way of explanation, I should add that the “interchange fees” concerned by this decision are fees which banks charge one another for transactions with a payment card. For transactions in shops, the interchange fees are typically paid by the bank of the retailer to the bank of the cardholder. It is when interchange fees are decided multilaterally that they are referred to as a “MIF” or Multilateral Interchange Fee.

The MIF at stake in the present case is a charge levied on each cross-border payment with MasterCard and Maestro branded cards as well as on domestic payments in eight EU Member States (Belgium, Ireland, Italy, the Czech Republic, Latvia, Luxembourg, Malta and Greece). In some of these Member States, MasterCard’s MIF constitutes up to 70% of the price businesses pay for accepting credit cards.

The economic importance of MasterCard’s MIF – and of MIFs in general – cannot be underestimated. In the EU, over 23 billion payments are made every year with payment cards, with a value exceeding 1350 billion euros. MasterCard’s MIF is among the highest in Europe, set at more than 0.50% for debit card payments and more than 1% for credit card payments. This is twice as much as MasterCard charges in other continents such as Australia.

As you may know, the first phase of the Single Euro Payments Area will start in a few weeks, at the beginning of 2008. Today’s decision will support the SEPA project in two ways.

First, the decision orders MasterCard to refrain from implementing its new “SEPA” interchange fees for the Eurozone. This prohibition will prevent that, in the area of payment cards, SEPA leads to permanent price increases to the detriment of consumers. In several Member States (such as in the Nordic and the Benelux countries) efficient domestic payment schemes operate without a MIF at all. If banks replaced their existing debit cards with Maestro cards, MasterCard’s MIF would inflate the cost of card acceptance in these countries.

Second, today’s decision also provides more legal certainty. We know that some stakeholders are preparing the ground for new schemes. The question arises whether the Commission will once and for all prohibit all MIFs, including MIFs for new schemes in a start up phase. The answer is no. The decision cannot and does not prohibit MIFs as such. Every scheme and every MIF must be examined on its own merits.

Today’s decision is therefore important for SEPA. This comes at a time when – as I understand– the European Payments Council, the body setting up SEPA, has also decided to provide more clarity on what it actually takes to be “SEPA compliant” for banks, card schemes and payment cards.

There has been a confusion in the market. Many operators understand that a SEPA compliant card scheme must cover all of the 31 SEPA countries. Obviously, only MasterCard and Visa could have met this requirement. However, the European Payments Council has yesterday decided to clarify that there is no such requirement. This means that domestic card schemes in Europe can develop into genuine competitors of the international schemes. I congratulate the industry with this move forward.

Let me finally say a few words regarding the other large payment card scheme in Europe, VISA. Back in 2002, the Commission adopted an exemption decision concerning VISA’s MIF. This exemption expires in a few days, on 31 December and from that moment on VISA will be responsible to ensure that its system is in full compliance with EU competition rules.

As an “interested third party” in the MasterCard proceedings, VISA already knows about the Commission’s objections concerning MasterCard and will also obtain a non confidential version of today’s decision. We trust that the MasterCard decision will provide VISA with guidance for the way ahead. As I have already said, though, each case needs to be assessed on its merits.

Ladies and Gentlemen, let me conclude.

Card payments are increasingly important in today’s economy. Throughout the EU, SEPA will further enhance economies of scale in the cards industry to the benefit of consumers.

Today’s decision addresses MasterCard’s anticompetitive behaviour and removes the danger of inflated prices due to the MasterCard MIF.  Ensuring that the Single Market for payments can work efficiently is a priority of the Commission. We will remain particularly vigilant in this area and address any competition restrictions that threaten to hamper the proper functioning of the market.

For MasterCard’s Possible Appeal

First question after the EU’s charge that interchange rates are way too high, is this gem: why are the merchant interchange rates in the U.S. more than double the fees charged within many European nations?

Relax MasterCard.  This is a rhetorical question which has been previously addressed below through more than 875 previous WayTooHigh.com news and commentary updates.

MasterCard Expected to Appeal EU Ruling: The Financial Times

According to The Financial Times (Dec 18), “ Mastercard is widely expected to launch an appeal if, as expected, the European Commission finds that its interchange fees on cross-border payments breach competition rules in a decision due to be announced on Wednesday.”

Click here to view entire article.

More Holiday Cheer Planned For Merchants and Consumers

After more than two years and a non-stop battle against Visa, MasterCard and its member banks, we are pleased to be on the cusp of major news from our friends in Europe.

According to Bloomberg, “[t]he commission has been investigating MasterCard’s interchange fee for more than five years. MasterCard won’t be fined because it informed the EU about the fee, the commission has said previously.”

click here to read the entire article. 

News on Merchant Interchange Lead Plantiff, Mitch Goldstone at CES

click here for link.

ScanMyPhotos.com CEO Mitch Goldstone to Speak at the Consumer Electronics Show.   Goldstone to speak in Las Vegas at the “Spotlight on Imaging” CES panel on Tuesday, January 8th.

IRVINE, Calif., Dec 17, 2007 (BUSINESS WIRE) — ScanMyPhotos.com, today announced that president and CEO Mitch Goldstone will speak again at the 2008 International Consumer Electronics Show (CES(R)) as part of a panel discussion entitled: “Spotlight on Imaging.” The session is cosponsored by Picture Business Magazine and the Consumer Electronics Association (CEA(R)) which produces the 2008 International CES – the world’s largest consumer technology trade show.

The panel discussion at the 2008 International CES will take place on January 8, at 3:00 p.m.  It will include essential topics about the future of the photo imaging industry and the commercialization of new digital imaging technologies to inspire and enhance the consumer photo imaging experience.

ScanMyPhotos.com, a division of 30 Minute Photos Etc. operates a retail and ecommerce-based photo imaging company that provides super-fast nationwide digital scanning and related photo imaging services. Goldstone and partner, Carl Berman, well-known leaders in the photo imaging industry founded 30 Minute Photos Etc. in 1990 as a retail-based photo center in Irvine, CA.

Today, the company and its ScanMyPhotos.com division provides a variety of photo memory services and products to help picture-takers preserve generations of family memories. These include services using: “Perfectly Clear” photo enhancements by Athentech, professional DVD data discs produced by Microtech’s robotic DVD publishing system, Lucidiom self-service digital photo kiosks, and KODAK’s award-winning i660 document imaging scanners – the engine behind the company’s capacity to digitally scan 1,000 photographs in under ten-minutes.

ScanMyPhotos.com helped commercialize the KODAK document imaging scanners for the photo industry and is profiled on the Kodak.com website. The photo entrepreneurs created a local walk-in and “fill-the-box” scanning service for consumers to order prepaid USPS Priority flat-rate boxes which are mailed out the same day it is ordered. Consumers fill the co-branded USPS and ScanMyPhotos.com prepaid boxes with as many pictures as it can hold (more than 1,600 4×6″ photos). All orders are processed and digitally scanned as jpeg files at 300 dpi and mailed back the same day. The prepaid box costs just $99.95 – consumers also receive a free box when they purchase two prepaid boxes so they can have more than 5,500 photo snapshots scanned for $199.90.

ScanMyPhotos.com, has scanned nearly four million pictures from around the world and was recently profiled or mentioned in The Wall Street Journal, USA Today, The Chicago Sun-Times, The New York Times, Reader’s Digest, Women’s Health Magazine, The Orange County Register, Family Tree Magazine, Popular Photography, Direct Marketing News and scores of other media and Internet / blog coverage

“EU Seen Finding MasterCard Guilty Of Overcharges Wed-Sources” (via Dow Jones)

The European Commission is expected to tell MasterCard Inc. (MA) Wednesday that the fees it charges stores for international credit …

Click here to read article.

Wednesday’s Planned EU Ruling Against MasterCard

According to an updated Dec 17 Reuters article [click here], “MasterCard has said it should keep the principle of setting its own fees and that the EU executive has no power to cap them.”

Remember, it was MasterCard which last year, proposed a $50.00 cap on interchange fees at service stations for charge card electronic payments.  Since MasterCard announced that action more than a year ago, we are uncertain whether they ever followed through.  And, this raises a bigger question: if they agree to cap gas charges at service stations, then, why not for all transactions?  

Interchange fees are obsolete and on Wednesday, we anticipate that the EU will provide what will generate a substantial holiday gift to all retailers and consumers.

 [commentary: WayTooHigh.com, via Reuters article]

MasterCard Interchange Fees Are Illegal: EU Ruling Expected to Announce Next Week

According to Thompson Financial News (Dec 14) [click here to read article], next week the European Commission will rule that MasterCard’s charges are illegal and violated the law. According to the report, “[t]he commission has longed feared that interchange fees, set at around 1 per cent per purchase, paid by retailers’ banks to card-issuing banks, are being abused to collect the highest rate of return.”  Interchange rates for the identical services in the U.S. are nearly double the charges in Europe.

[Source, via Thompson Financial]

The Difference Between a Debit and a Credit Card

A customer just had us [ScanMyPhotos.com] digitally preserve 1,000 photos onto a DVD while they waited.  This is a very typical customer and because the payment card was identified as a “check card” we pressed the “debit” button on the electronic payment terminal and handed the person the key pad to enter their PIN number.

They paused and asked us to enter it as a credit card, even though the card was a check card.  Many sales clerks would have had difficulty even differentiating between a check / debit card and a credit card – this one had hard-to-read black lettering, which is part of Visa, MasterCard and its member banks design tricks to confuse retailers into accepting the card at the much higher signature credit card rate.

As the customer requested, we reentered the transaction as a credit card, even though the funds are quickly removed from their checking account anyway.  The merchant interchange charge to us was about $1.35, rather than a flat fee of about $0.25 – $0.50 if the transaction was processed as a PIN-based debit card.  Note: PIN transactions are much more secure than signature card entries, yet the fees are a flat, and often much lower rate. 

Eighty-five cents is not, by itself a great deal of lost revenues, but when added with millions and millions of other transactions every day, retailers are faced with extraordinary fees.

[Commentary: WayTooHigh.com]

Visa and MasterCard Gift Cards, Part II

Look at the back of a Visa Gift Card package to read their “important things to know.”

Visa’s solution for handling low balances on gift cards is to have you ask sales clerks to split the charge, which as a merchant we know is nearly impossible when the register is crowded with customers and adding any special transactions leads to nightmarish roadblocks.

In Visa’s own words: “If you try to purchase an item of greater value than your card balance, your card will be declined.  To purchase an item that costs more than the balance on your card, use a second payment method for the difference.”

If you thought the card associations’ and member banks reaped windfall profits from their merchant interchange fees, this is pure magic for them.  Declining cards leads to uncomfortable sales experiences and we think many consumers will just throw away the card with the small balances, and thus earning even more money for the banks. 

The film The Graduate had it right when telling Benjamin that the future was in “Plastic.”  How visionary they were.

[commentary: WayTooHigh.com]

Chicago Sun-Times Profiles ScanMyPhotos.com [30 Minute Photos Etc.]

Click here to view the Chicago Sun-Times’ Dec 10th profile.

Is MasterCard Intentionally Misleading Or Was The Credit Card Giant Misquoted?

See the below Buffalo First Business posting [link].  According to a comment by MasterCard Worldwide’s communications VP, Sharon Gamsin in today’s article about the card association’s interchange fees at service stations, she is wrong.  And, we know it.  According to the article she was reported to have said, “merchants don’t directly pay interchange fees, and these rates can be negotiated with their banks.”

Really now?

Fact. Interchange fees cannot be negotiated. The rates are so confusing, it takes MasterCard more than 100+ pages to post its fee schedule on the Internet.  The game is that Visa and MasterCard both don’t get the interchange fees. Well, someone is.  At $40,000,000,000 [that's billion] each year, it certainly isn’t going into a piggy-bank. The fact is that until MasterCard and now Visa restructured their companies, the member banks owned both companies. Bank of America owned Visa and they owned MasterCard, for instance.  The member banks still own a near majority of MasterCard, even after the IPO.  Even with an independent board representation, our litigation goes back years and calls into question the many years that the two card associations were owned by the banks.  

Recap.  Yes! MasterCard does make money from interchange fees. They earn a percent from each transaction.  No! merchants are unable to negotiate their merchant interchange fees, and I challenge any WayTooHigh.com reader to find retailers who know exactly what their customers just paid in each single interchange transaction.  [see fee schedule].  Yes! merchants do pay interchange fees; I write out a check each month for it.  The game Ms. Gamsin is playing is that I write a check out to Chase Paymentech, not directly to MasterCard.  But, guess who still gets it’s cut.  If MasterCard didn’t earn interchange fees its stock wouldn’t be north of $200. Either way, guess who owns the largest payment processing company: Chase, as in JPMorgan Chase, one of the named defendants in the Merchant Interchange litigation, which is a co-owner of MasterCard and Visa. It’s a big circle of greed.

[commentary: WayTooHigh.com]

“Fees Fueling Frustration for Region’s Gas Retailers” (Buffalo Business First)

Click here to view article. 

Abstract:

What’s more frustrating, experts claim, has been the inability to get straight answers from credit card companies such as MasterCard and Visa about how such fees are structured.

According to Jeffrey Lenard, spokesman for the National Association of Convenience Stores, approximately 70 percent of all gas purchases were made with a credit or debit card last year.

Lenard cited NACS data, which indicates profits for gas stations and convenience stores in 2006 totaled $4.8 billion.   Credit card companies made more at gas stations and convenient stores than the stores did themselves,” Lenard said.

“The reason for interchange fees, we’re told, is to pay for the technology infrastructure and fraud protection. The U.S. is arguably the best in the world in both these categories. To say that interchange pays for those things is unfathomable to me.”

The amount credit card companies made processing those transactions: $6.6 billion.

Anatomy of How an Anticompetitive Monopoly Works

Late last week, I was asked to fly east to meet with the president of a leading multi-national conglomerate. Because of the short notice, rather than sitting up front, I chose to fly economy but forgot that many flights now charge for food. 

The lesson, however, was a good reminder of how anticompetitive monopolies work.  The onboard snacks were five-dollars and if you want to eat, that was the choice.  But, it was not the only choice, I could have brought food from home, purchased a meal at the airport or anywhere else in advance.  While food is the gateway to our stomachs, Visa and MasterCard and its 80% market power are a principle gateway to commerce – they nearly own the market.

Unlike the many choices for selecting a meal, there is one leading choice for electronic payments and nearly all ecommerce.  Businesses, like us, are forced to accept both payment cards. 

Food on planes are a good example, and so too is one new theme of the board game Monopoly.  There is now an electronic banking version. No kidding. Click here to view. 

 

According to the game, you “wheel and deal your way to a fortune even faster using debit cards instead of cash! All it takes is a card swipe for money to change hands. Now you can collect rent, buy properties and pay fines – with the touch of a button! It’s a new way to play the family classic that’s been brought up-to-date with modernized tokens (including a Segway personal transporter, an Altoids tin, space shuttle, flat-screen TV, baseball cap and a dog in handbag!), higher property values and locations based on your favorite landmarks.” 

Very modern, but the only thing nearly as antiquated in design as was the original board game is the payment twist.  When merchant interchange fees were created, it was cost-based and used to cover the fees associated with a four-party clearing house.  They were created back when there were hand-swipe manual card imprinters.  The new board game version is training people to use debit cards.  And, MasterCard and Visa are coincidently spending millions to train debit card holders to insist that retailers process the cards at the much higher, non-fixed fee credit card rates

[commentary: WayTooHigh.com]

“Examine Credit Card Reward Offers Carefully (The Wilmington, Del. News Journal)

Excerpt [click here to read article]

Rewards cards aren’t free,” said Emily Davidson, a credit card expert at Credit.com. “Credit card marketers are very, very smart… They make a lot of money just by having you use the card.”

Credit card companies collect interchange fees from merchants every time a card is used, so card issuers profit even when consumers pay the cards off in full each month, Davidson explains.

Message to Brad Pitt: Did you Know Visa and MasterCard and it’s Member Banks May Profit From Your Rebuild New Orleans Fundraiser?

In the spirit of the holiday season, the news that Brad Pitt is leading a campaign to help raise vital funding to rebuild the Ninth Ward in New Orleans is welcomed news.  The actor is calling on all Americans to support the families of New Orleans.

See website for more info: MakeItRightNoLA.org

According to the Dec 3rd PRNewswire release, Brad Pitt and residents of the Lower 9th Ward of New Orleans launched a national fund-raising campaign to help the city recover from the lasting devastation caused by Hurricane Katrina, starting with the Lower 9th Ward.  The project’s first initiative is to build 150 affordable and sustainable homes in an area leveled by Katrina.

While this is such a vital project, we wonder whether Mr. Pitt and the entire group of contributors know that Visa, MasterCard and its member banks are also playing a key role as well?   The website and recent news articles (ex: NY Daily News) explained that “there is no minimum” and “no donation is too small”.   If a group of children wanted to each donate 50-cents, 25-cents for even a nickle, but use their parent’s credit card, the only recipient will likely be Visa, MasterCard and its member banks.  Unlike the American Red Cross, for instance, which on its website requires a five-dollar minimum donation [which is in violation of most merchant card agreements], this group has no posted minimum.  With minimum and a multitude of other electronic payment interchange fees, it’s anyone’s guess what the actual cost per transaction will be.  One thing is certain, those “no donation is too small” messages will transfer the much needed contributions right to the financial institutions, Visa and MasterCard when their cards are used to donate.

Either way, this is such an important cause.  To donate, click here.  Consider sending a check, and yes, there are no interchange fees when you use paper, rather than plastic.

Payment Card Fees Make No Sense, And Here’s Why

Have MasterCard and Visa pulled out of the Australian market?

Hardly.

But, studying their fee schedules in Australia raises very clear questions:

1) With rates less than half as much as in the U.S. how can they afford to stay in business? 

2) Why are rates so much higher in the U.S? 

3) Why are some fee categories entirely derailed from reality?  

4) Charitable organizations in Australia pay no interchange fees (zero), yet in the U.S., interchange rates can be as high as 4% – 5% for some non-profit donation due to various fees, such as manual card imprinting and payment terms. 

Fact: The standard commercial interchange fee in Australia is under 0.50%, while it is nearly 1.70% in the U.S. 

Here are more facts as outlined by MasterCard on it’s website. Click here to view the “MasterCard Domestic Purchase Transactions Interchange Fees for Australia.”

Click here to view Visa’s similar fee structure.

Overview

According to the MasterCard website, here are some of the posted fees that ”apply to MasterCard purchase transactions in Australia where the card issuer and merchant acquirer are both Australian members.”

MasterCard Credit Card Transactions

Interchange Category	Interchange Rate (inc. GST)
Charities	0.00%
Tiered Merchants	0.374%
Governments and Utilities	0.33%
Petroleum	0.374%
Recurring Payments	0.33%
Quick Payment Service	0.33%
EMV Premium	1.265%
EMV Commercial	1.485%
EMV Consumer	0.693%
Commercial	1.265%
Consumer Premium	1.045%
Consumer Electronic	0.473%
Consumer Standard	0.473%

Debit MasterCard Transactions

Interchange Category	Interchange Rate (inc. GST)
Charities	0.00%
Tiered Merchants	$0.04
Governments and Utilities	$0.32
Micro-payments	0.55%
Petroleum	$0.10
Recurring Payments	$0.10
Quick Payment Service	0.55%
EMV Commercial	$0.45
EMV Consumer	$0.15
Commercial	$0.40
Consumer Electronic	$0.10
Consumer Standard	$0.40

Zero Merchant Credit Card Interchange Fees: Right On!

Credit card charges face RBA scrutiny
NEWS.com.au – Australia
The country’s two biggest retailers, Woolworths and Coles, presented their case for a zero interchange fee policy and regulation, while the banks and …

This is amazing. The banks and MasterCard suggest that zero interchange fees threaten innovations. Really. As a point of fact, we, as lead plaintiffs reinvented our business due to innovations.  In January, at the Intl Consumer Electronics Show in Las Vegas, we are again presenting and speaking on how technology and innovations have increased efficiency and lowered costs; that is for everything but merchant interchange fees.  The member banks, along with Visa and MasterCard’s argument is weak and antiquated.

Click here for more info on the recent News.AU.com article.

Citigroup, America’s Largest Bank Sells 4.9% to Arab Interest

Click here to find out more about Citi’s largest shareholder [via Bloomberg].

CBS “60 Minutes” Program Takes on Credit Cards

Click here to view the CBS “60 Minutes” Credit Card profile [originally aired Sunday, Nov 25]. 

The real “high tech heist” is perpetrated by Visa, MasterCard and its thousands of member banks who are charging $40 billion dollar each year in hidden fees.  The card associations will challenge our argument by explaining their fees are transparent. But, they are wrong. 

How wrong? 

Click on the links for Visa and MasterCard below and see if you can figure out what merchants are charged by Visa USA and MasterCard from their website’s fee schedules, but make sure you have lots of coffee and time…

The National Retail Federation was also interviewed for this “60 Minutes” segment. 

U.S. Chamber of Commerce Silent on Interchange Fees. Why?

As a longtime member of our local [Irvine] Chamber of Commerce [since 1990] we are wondering why the U.S. Chamber has not played a more active role in our battle against Visa, MasterCard and its thousands of member banks?  Could it be that the member banks are more active and well-funded members than 30 Minute Photos Etc. and ScanMyPhotos.com?

The closest to informational activism we came across was from a search of the word “interchange” which linked to this advisory written by one of the nation’s card processor’s, so really not much meat there. 

From the US Chamber website:

 Representing your ideas—and interests—in Washington for nearly a century.

The U.S. Chamber of Commerce is the world’s largest business federation representing more than 3 million businesses of all sizes, sectors, and regions. It includes hundreds of associations, thousands of local chambers, and more than 100 American Chambers of Commerce in 91 countries.

Whether you own a business, represent one, lead a corporate office, or manage an association, the Chamber of Commerce of the United States of America^®  provides you with a voice of experience and influence in Washington, D.C., and around the globe. Our core mission is to fight for business and free enterprise before Congress, the White House, regulatory agencies, the courts, the court of public opinion, and governments around the world.

From its headquarters near the White House, the Chamber maintains a professional staff of more than 300 of the nation’s top policy experts, lobbyists, lawyers, and communicators. The Washington staff is supported by eight regional offices around the country; offices in New York and Brussels; an on-the-ground presence in China; and a network of grassroots business activists.

Our members include businesses of all sizes and sectors—from large Fortune 500 companies to home-based, one-person operations. In fact, 96% of our membership encompasses businesses with fewer than 100 employees.

Mission Statement:

“To advance human progress through an economic, political and social system based on individual freedom, incentive, initiative, opportunity, and responsibility.”

Programs and Affiliates

• The National Chamber Litigation Center—our law firm that defends business interests and sues government agencies.
• The Institute for Legal Reform—the Chamber affiliate that challenges lawsuit abuse on many fronts, fights for legal reform legislation, and educates voters in state judicial and attorney general races.
• The National Chamber Foundation—our public policy think tank that drives the debate, develops the data and arguments, and influences policy options on the most critical business issues.
• The Political Program—the Chamber’s aggressive political action component that endorses, supports, raises money, and turns out the vote for pro-business congressional candidates from both parties who are engaged in key races.  
• Business Civic Leadership Center—an organization devoted to facilitating corporate civic and humanitarian initiatives.

Will Visa USA’s “Consumer Education” Tool be Silenced During Their IPO?

Americans for Consumer Education and Competition, Visa USA’s PR and advocacy machine, which ”has the financial support of Visa USA” has been quiet of late. 

Normally that are countering our comments and issuing press releasesthat taunt millions of merchants which accept Visa’s network of electronic payment cards.  They explain how helpful debit cards are and how it helps train teens about conserving money.  However, we wonder whether Visa’s Washington D.C.-based tool will pull up tent and move on, as their source of funding is required to lay low during their planned IPO period?   When industry experts begin to question why any investor would want to purchase equity in a company that faces possible insolvency due to their pending litigation, the company can be voiceless.  One of their most comical press releases appeared right after our first class-action complaint in 2005.  This one was adorable: they suggested that our litigation would force consumers to pay more. Instead, over the years, the member banks have vastly raised their rates and today we are paying $40 billion in hidden interchange fees each year.  They failed to mention that while their release provoked the courage to demand that consumers need efficiency and choice, Visa is the giant monster which, along with MasterCard control, 80% of the total electronic payment network and the only thing that is efficient is how easily they can fix prices and practice anti-competitive illegal maneuvering to enrich their pockets.

Also notice how convenient it is for the giant card association to be wedged in the midst of a “quiet period” imposed by the Securities and Exchange Commission.  Visa will be unable to comment when the EU Fair Trade ruling is announced within the next few weeks.  They will also have to be silent as more and more merchants question the foundation of the interchange fees.  They will have to be silent as motorists ask why Visa is reaping windfall profits for its member banks during our economic energy crisis.

[Background: When The Bill Comes Due," Businessweek]

[commentary: WayTooHigh.com]

“First Data To Fire 1,700 Employees”

Click here for Digital Trasactions article.

Why Visa, MasterCard and its Member Banks Are Accused of Illegal Price-Fixing by Agreement

We found this very simple defination of price-fixing on the Wikipedia site [click here for more info].

Price fixing is an agreement between business competitors to sell the same product or service at the same price. In general, it is an agreement intended to ultimately push the price of a product as high as possible, leading to profits for all the sellers. Price-fixing can also involve any agreement to fix, peg, discount or stabilize prices. The principal feature is any agreement on price, whether express or implied. For the buyer, meanwhile, the practice results in a phenomenon similar to price gouging.

Methods of price fixing will include selling at a common target price; setting a common “minimum” price; buying the product from a supplier at a specified “maximum” price; adhering to a price book or list price; engagement in cooperative price advertising; standardizing financial credit terms offered to purchasers; using uniform trade-in allowances; limiting discounts; discontinuing a free service or fixing the price of one component of an overall service; adhering uniformly to previously-announced prices and terms of sale; establishing uniform costs and markups; imposing mandatory surcharges; purposefully reducing output or sales; or purposefully sharing or “pooling” markets, territories, or customers.

Generally, price fixing is illegal, but it may nevertheless be tolerated or even sanctioned by some governments at various times, particularly among those whose countries are developing economies. See also Collusion.

In neo-classical economics, price fixing is inefficient: the anti-competitive agreement by producers to fix prices above the market price transfers some of the consumer surplus to those producers and also results in a deadweight loss.

In the United States, price fixing can be prosecuted as a criminal felony offense under section 1 of the Sherman Antitrust Act. ^[1] In Canada, it is an indictable criminal offence under section 45 of the Competition Act. Bid rigging is considered a form of price fixing and is illegal in both the United States (s.1 Sherman Act) and Canada (s.47 Competition Act). In the United States, agreements to fix, raise, lower, stabilize, or otherwise set a price are illegal per se.^[2] It does not matter if the price agreed upon is reasonable or for a good or altruistic cause; or if the agreement is explicit and formal or unspoken and tacit. In the United States, price-fixing also includes agreements to hold prices the same, discount prices (even if based on financial need or income), set credit terms, agree on a price schedule or scale, adopt a common formula to figure prices, banning price advertising, or agreeing to adhere to prices that one announces. ^[3] Although price fixing usually means sellers agreeing on price, it can also include agreements among buyers to fix the price at which they will buy products.

Under American law, exchanging prices among competitors can also violate the antitrust laws. This includes exchanging prices with either the intent to fix prices or if the exchange affects the prices individual competitors set. Proof that competitors have shared prices can be used as part of the evidence of an illegal price fixing agreement. ^[4] Experts generally advise that competitors avoid even the appearance of agreeing on price. ^[5]

Under U.S. law, price fixing is only illegal if it is intentional and comes about via communication or agreement between firms or individuals. It is not illegal for a firm to copy the price movements of a de facto market leader called price leadership, which has been seen to be the case in markets for breakfast cereals and cigarettes. But informal agreements or unspoken agreements to fix price also can violate the antitrust laws. The price-fixing laws apply to industries and professionals, for-profit concerns and non-profits and charities. ^[6] The United States Department of Justice Antitrust Division and United States Federal Trade Commission are responsible for enforcing federal price fixing laws; see also Sherman Antitrust Act. The Department of Justice handles both criminal and civil cases. As of 2004 under US law corporations may be fined up to $100 million for criminal price fixing; individuals can be charged and sentenced to prison sentences of up to 10 years for price-fixing violations. The Federal Trade Commission can prosecute firms for price fixing as a civil matter. Many State Attorneys General also bring antitrust cases and have antitrust offices, such as Virginia, New York, and California. Private individuals or organizations can bring their own lawsuits for triple damages for antitrust violations and also recover attorneys fees.

[Source: Via Wikipedia]

Oil Jumps to Nearly $100, Generates More Interchange Fee Profiteering

With crude oil prices topping $99.29 a barrel, Visa and MasterCard’s member banks are reaping extra rich rewards this holiday season. Few motorists understand that a percent of most credit card transactions paid at the pumps goes to the acquiring and issuing member banks of the card associations’ electronic payment network.  As the global economy faces this economic energy crisis, the banks are reaping windfall profits. Why exactly are they able to charge a percent of each transaction, when the cost to clear an electronic payment is just about 13% of the total interchange fee cost?

But, there are more questions to also be asking this Thanksgiving holiday.

At supermarkets and other stores, you will find a variety of retailer gift cards.  Guess which ones include an “activation fee?”  That is right Visa, but not any of the restaurants, book stores or other merchants.  Why are the card associations able to charge an additional activation fee anyway?  The privilege of using their network, rather than dealing directly with merchants, like Starbucks generates even more fees for them.  

[Commentary: WayTooHigh.com]

“Long-Awaited Visa Offering Tests The Power Of Plastic” (via IBD)

Excerpts from Investor’s Business Daily [click here to read Nov. 20th IBD article]

• …”IPO Desktop’s Francis Gaskins warns not to expect MasterCard redux. Visa must go public by contract to its shareholders, partly to pay for litigation it’s involved in. That means that the yet-to-be-named price may reflect more desire for quick cash than for a good aftermarket.”
• “Like the rest of the credit-card industry, Visa has been in the middle of a legal controversy over interchange fees. Several countries are taking regulatory action, and some 50 class-action lawsuits are in the works over the issue. The battle is leeching money from Visa, and could result in damages.”
• “Only four banks account for 23% of Visa’s revenue, with JPMorgan providing 10% by itself. A disruption in any of these relationships would hurt the company.”
• “It will reserve an unspecified amount of this for litigation, some for redeeming preferred stock and the rest for general corporate purposes.”

[Source, via Investor's Business Daily]

Returns After “Black Friday” Cause Losses For Retailers

The 40-billion dollar merchant interchange hidden tax is a mystery to many, and few understand how these fees work. 

A little known fact is that when shoppers return an item, the retailers can be out the interchange fee.  Depending upon the payment processing contract, reimbursments for the electronic charge payment do not always occur, even though a full refund to consumers are applied during returns.  Think of the billions of dollars in merchandise returns after “Black Friday,” traditionally the busiest shopping day of the year, following Thanksgiving.  Visa and MasterCard, along with its thousands of member banks’ motto should be “thanks for giving, but we might not refund your interchange charges for returned goods and services.”

[Source: WayTooHigh.com]

Supporting Hollywood Writers and Broadway Stagehands

Click Here For BusinessWire Release.

During the Writers Guild of America and Theatrical Stage Employees’ Walkout, Watch Your Own Pictures: Says ScanMyPhotos.com

Free Photo Scanning for all WGA and IATSE Members

IRVINE, Calif., Nov 16, 2007 (BUSINESS WIRE) — “Hollywood and Broadway might be dark, but people can still be entertained,” advised photo industry entrepreneur, Mitch Goldstone.

“People should revisit their own, long overlooked shoeboxes of snapshots, have it digitally preserved and be entertained while they share and watch their own pictures during the Thanksgiving holiday weekend and beyond,” said Goldstone, ScanMyPhotos.com president and CEO.

Support for the Writers and Stagehands

The entertainment industry strikes have impacted many, but none more than those walking the picket lines. The shutdown is causing widespread hardship. To help show support from the business community, ScanMyPhotos.com has been providing 250 free photo scans to all members of the Writers Guild of America (WGA) and International Alliance of Theatrical Stage Employees (IATSE). But, not to the corporate chieftains and industry tycoons who reap much of the revenues gained by those behind-the-scenes workers.

To take advantage of the 250 free photo scans, members of the WGA and IATSE are visiting ScanMyPhotos.com. The ordering information includes a link for accredited members to have 250 photographs digitally scanned and mailed back without charge.

Today’s digital world has triggered a revolution of change in the entertainment industry and beyond. From the film and television writers’ walkout in Hollywood, to the dark marquees on Broadway, technology is creating havoc, but also opportunities. For the photo imaging industry, consumers can now have generations of photo snapshots digitally preserved in minutes at a cost much less than even the balcony seats at an off-Broadway play.

ScanMyPhotos.com helps people watch their own generations of family photographs with its super-fast ecommerce photo scanning and retail digital imaging business. They scan 1,000 pictures in ten-minutes for just $49.95, and have prepaid fill-the-box service – the carefree way to have more than 1,600+ 4×6″ snapshots scanned and mailed back the same day for just $99.95.

ScanMyPhotos.com and its parent company, 30 Minute Photos Etc., are longtime advocates for supporting important causes. After “9/11,” the company brought 5,000 people to the Big Apple to support commerce and the city’s recovery (EPICCUSA.com). More recently, they are known as the first lead plaintiff in the merchant interchange antitrust battle against Visa, MasterCard and leading member banks, including Bank of America, JPMorgan Chase, Citigroup, Wachovia and others. A daily website with news and commentary updates on the antitrust litigation is co-edited by 30 Minute Photos Etc. cofounders, Carl Berman and Mitch Goldstone. (WayTooHigh.com).

ScanMyPhotos.com has a treasured history of trust. As well-known photo imaging industry leaders, Berman and Goldstone operate a nationwide ecommerce and retail photo center.

“Retailers Call on EC to Stop Card Price-Fixing” (ePayNews.com)

Excerpt:

Top executives at 14 major European retailers are asking the European Commission (EC) to lower what they call excessive interchange fees charged by payment card companies. Card companies earn €13 billion euro (US$19.08 billion) in annual revenues from card transaction fees, which the retailers say is excessive.

 The letter appears to be timed to coincide with the final stages of the EC’s enquiry into the charges currently levied by MasterCard on cross-border transactions within the European Union. A decision by the EC is expected in mid- to late November 2007

Click here to read more.

(Source: ePayNews.com)

“Visa’s Pending IPO”

Highlights from Digital Transaction Nov 10th article – click here.

1. “Under the planned IPO, which could happen as soon as 120 days after the global reorganization Visa completed Oct. 3, Visa would sell an approximately 51% interest in the company to the public through so-called Class A shares. The rest of the shares—Class B held by Visa USA members and Class C held by other financial-institution members internationally—have no voting rights.
2. The filing says Visa will use the IPO’s net proceeds for …, and for a deposit into an escrow fund to cover settlements or judgments from litigation.
3. … Visa still faces a host of suits and regulatory challenges involving everything from interchange to antitrust to currency- conversion fees.
4. Despite MasterCard’s encouraging experience, Visa’s success on Wall Street is by no means guaranteed. Shares of Discover Financial Services LLC have fallen 37% since Morgan Stanley spun off its card subsidiary in late June.

Welcome to WayTooHigh.com – The Credit Card Interchange Report (c) 2005-2007. Daily news and commentary updates

Understanding the Word "Insolvency" Is Crystal Clear (WayTooHigh.com)

If our merchant antitrust litigation is successful, and the facts are on our side, Visa® and Mastercard® could face insolvency. These aren’t our words, but those warning statements published in both card associations’ offering documents.

However, the news of what could be the second largest IPO in U.S. history is garnering little attention. Other than a few wire service updates, so far the news has been deafeningly silent. The big news is that with the American Express® settlement solved, according to the news stories, it’s clear sailing for Visa’s IPO.

Not!

We think, just like with MasterCard, the thousands of banks which own Visa will try to cash out as fast as possible. So fast, that it might even topple and overturn the offering.

Last time, the member banks were not in the fiscal calamity that they face today. When MasterCard went public, the member banks were not realizing billions in mismanaged losses. Today, they are in much greater need of enhancing their capitalization; what better way than to pass off their ownership in Visa? Their earlier rush to sell off part of their MasterCard investment , and its overshadowing price-fixing litigation, turned into one more multi billion dollar fiasco – the price they set was $39.00 a share. Oops – with MasterCard nearing $200.00, it seems that nothing they do is right. Are they so distracted by our lawsuit that they have lost their focus and spirit?

Whether it was buying up the subprime housing mortgages and loosing billions, to their other poor decisions that even forced CEOs to flee, they just cannot get it right. This time, they might get extra greedy at the exit and seek an offering price that will melt even the appetites of the most drunk-on-risk thrill-seeking investors’.

Reporters are not writing about the warnings of insolvency, nor are they explaining that our litigation is a much larger threat than even their pay off to AmEx.

[Commentary: WayTooHigh.com]

Welcome to WayTooHigh.com – The Credit Card Interchange Report (c) 2005-2007. Daily news and commentary updates

Visa’s Inc’s® $10,000,000,000 Misguided Hedge From Litigation (WayTooHigh.com)

Visa Inc’s® hope to raise $10 billion, in what would be the second largest U.S. IPO, and could then transfer partial ownership to outside shareholders. This seems to mirror MasterCard’s® strategy to limit the member bank’s antitrust liabilities. But, not so fast. Our litigation doesn’t start on the day of the IPO, but, instead goes back years. Similar to how if someone breaks the law then, after the fact turns good, they still violated the law.

The credit card network in its filing said that from the proceeds they hope to raise, they plan to deposit a portion of it into an escrow account to pay settlements or judgments related to litigation.

Visa Hopes to Raise $10B in IPO

[Source: via AP, Commentary: WayTooHigh.com]

Welcome to WayTooHigh.com – The Credit Card Interchange Report (c) 2005-2007. Daily news and commentary updates

WayTooHigh.com Prepares To Change Format

Editors note: If you are eager to help the cause and have experience with Blogger and WordPress, please let us know. We are preparing to transfer this site to a more modern, high tech service because our first postings took place way back when Blooger was just beginning – so much has changed.Email us with your portfolio of other blog experience and a link to your existing WordPress site.Thanks for your interest.

Welcome to WayTooHigh.com – The Credit Card Interchange Report (c) 2005-2007. Daily news and commentary updates

NEW YORK (AP) _ Analysts said Thursday that MasterCard Inc. is next in line to settle with American Express Co., which is seeking legal damages for being blocked out of the U.S. bank-issued credit card business.

Welcome to WayTooHigh.com – The Credit Card Interchange Report (c) 2005-2007. Daily news and commentary updates

"$5.00 Gas Now In California – Think of the Windfall Profiteering From Credit Card Interchange Fees at the Pumps (via KSBW-TV)

Welcome to WayTooHigh.com – The Credit Card Interchange Report (c) 2005-2007. Daily news and commentary updates

AP:Analysts Say MasterCard Inc. is Next to Settle with American Express Co (via AP)

Click here to read the AP story. Which included a mention by “Bear Stearns analyst David Hochstim [who] said Mastercard® may not feel pressured to resolve the litigation quickly. Visa, he said, was concerned about resolving the issue before its upcoming initial public offering.”

This news is most significant, as the AmEx® suit is tiny in relation to the much larger and more widespread merchant antitrust litigation, which has the potential not just to distract from the VISA IPO, but cause the company to face insolvency.

[Commentary, WayTooHigh.com, via AP news story]

Welcome to WayTooHigh.com – The Credit Card Interchange Report (c) 2005-2007. Daily news and commentary updates

"AMERICAN EXPRESS REACHES $2.25 BILLION SETTLEMENT AGREEMENT WITH VISA" (via, company press release)

Interesting that MasterCard put $650,000,000 in reserves from its IPO to cover litigation expenses, yet, it was Visa who agree to settle first. From the below American Express press release, they explain that: “[a]s the sole remaining defendant, MasterCard would be liable for the full amount.”

—————————
Reprinted AmEx Release in it’s entirety.

AMERICAN EXPRESS REACHES $2.25 BILLION SETTLEMENT AGREEMENT WITH VISA
NEW YORK, November 7, 2007 —

American Express said today that it has reached an agreement to drop Visa as a defendant in a lawsuit alleging that MasterCard, Visa and their member banks had illegally blocked American Express from the bank-issued card business in the United States.

Under terms of the settlement agreement, Visa will pay a maximum amount of $2.25 billion to American Express. Individual banks named in the lawsuit will also be dropped as defendants. These include: J.P. Morgan Chase, Capital One, U.S. Bancorp, Wells Fargo and Providian. The agreement is subject to the approval of Visa’s member banks.

MasterCard remains the sole defendant in the American Express case. The lawsuit, which was filed in Federal court (November 2004) by American Express, seeks monetary damages for the lost business opportunity that resulted from the illegal conspiracy to boycott American Express. American Express is expected to seek damages in the billions of dollars. As the sole remaining defendant, MasterCard would be liable for the full amount.

“The size of this settlement, along with earlier court rulings, underscores the seriousness of the damage done by the illegal boycott,” said Kenneth I. Chenault, chairman and chief executive. “We plan to move forward with the litigation to hold MasterCard accountable for the illegal actions that blocked banks from working with us for many years and to seek full compensation for the value that would have been generated for our shareholders.”

Under terms of the agreement reached with Visa, Inc., Visa USA, and Visa International, American Express will receive an aggregate maximum payment of $2.25 billion. An initial
payment of $1.13 billion will likely be recognized by American Express in income during the fourth quarter 2007. The remainder, payable in installments of up to $70 million per quarter over the next four years, is subject to achieving certain quarterly performance criteria within the U.S. network services business of American Express.

“Given the strong growth momentum we have built within that business, we are highly optimistic in our ability to meet those performance requirements,” said Mr. Chenault.
In light of the settlement, American Express said that it is likely to incur a number of significant additional fourth quarter expenses, including:

Incremental investments in marketing, promotion, rewards, cardmember services and other business building initiatives designed to capitalize on competitive opportunities in the payments industry at a time when some competitors are pulling back.

Additional funding for the American Express Foundation, which will support the company’s ongoing philanthropic activities.

Litigation expenses related to the lawsuit against Visa and MasterCard.

Given the continued evolution of its rewards programs, the Company also said that it is currently evaluating enhancements to its method of estimating its liability for Membership Rewards®, including the consideration of an actuarial based approach for estimating the ultimate redemption rate. These enhancements could result in a significant one time addition to reserves upon implementation.

“Rewards and customer loyalty programs have been a key element of our success, and we expect them to continue to be a centerpiece of our strategy going forward,” said Mr. Chenault. “The overall economics of a rewards-based strategy are very favorable: higher spending, stronger loyalty and superior credit metrics. Our expectation is that more Cardmembers will enroll in rewards programs and generate a growing share of their overall spending with American Express. Our higher enrollments and improvements to the program in recent years are causing us to continually evaluate and enhance the method to estimate the ultimate usage of points earned by our Cardmembers.”

The aggregate cost associated with this potential addition to the Company’s Membership Rewards liability and the other items mentioned above could represent a significant portion of the payment expected to be realized this quarter.

The Company said that any decisions about whether to reinvest future payments into business building activities will be made on a quarter by quarter basis over the next four years. “This settlement compensates us in part for past damages in a way that allows us to invest in our future,” said Mr. Chenault. “We intend to be consistent with our approach of the last several years, capitalizing on marketing and promotional opportunities and enhancing our network when we see chance to gain a competitive advantage. We have been generating very attractive returns on our investment spending of the past few years and believe that the pipeline of market opportunities will continue to be strong in the years ahead.

American Express Reaches $2.25 Billion Settlement Agreement With Visa
“At a time when weakness in parts the economy is affecting many financial services companies, the settlement will give us greater flexibility and confidence to meet our financial goals while continuing to fund business building initiatives and support future acquisitions.”

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"Visa and Member Banks To Pay American Express $2.25 billion (via Reuters)

According to Reuters, CNBC is reporting that Visa® will pay rival American Express® $2.25 billion to settle a separate antitrust suit.

[Click here to view the American Express press release, via American Banker]

From our prospective, this is encouraging for our class-action and important news as the world’s largest credit card company prepares for a multi-billion dollar IPO early in 2008. [Then again, pending current stock market conditions, who knows when the right market timing will be?]

The case was initiated a year before our complaint filing, in 2004 by American Express which charged the two leading card associations and some of its member banks of preventing thousands of banks from using the American Express cards through anti-competitive practices. As with our class-action, the two credit card associations were accused of being co-owned by the very same banks. The acquirers and issuers are the same – the leading difference between the giant 80% Visa and MasterCard® market power is the spelling of their names. Yes, the card associations explain they are in head-to-head competition, but what they don’t explain is they are on the same team. Think of two pro football players on the same team; yes, they are different, but they have the same ownership, controls and game plan.

American Express claimed that Visa and MasterCard both violated antitrust law by barring banks from issuing credit cards for rival networks. Just as with our litigation, Visa faced triple damages.

We are very encouraged by this news and expect that MasterCard will quickly come to the same conclusion as Visa. As this litigation faces settlement, the associations and banks legal teams will have more time to read WayTooHigh.com and its message that interchange fees are too high, unjustified and in violation of antitrust laws.

[Commentary: WayTooHigh.com , via Reuters]

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"Antitrust Claims Against Credit Card Companies and Major U.S Banks" [MSN Groups: USBanks Complaints]

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"Credit Card Fun Page" (Nov. NACS Magazine)

Click here to view the Credit Card Fun Page featured in the November issue of NACS Magazine.

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Visa and MasterCard’s Merchant Rules Are Irrelevant (WayTooHigh.com)

Last week, we posted a commentary on the fact that the American Red Cross was in violation of their payment processing agreements. They were “requiring” a minimum payment to accept donations from electronic payments. What did Visa® and MasterCard® do? Nothing, as far as we could see. This helps draw renewed attention, not to the invaluable contributions of the American Red Cross, but rather to the breakdown in oversights for the silly interchange fee rules.

Here’s another posting on the topic.

Credit Card Fees Force Red Cross to Impose Minimum Donation Amounts

[commentary - WayTooHigh.com]

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Breaking News on Citigroup [one of the named defendants member banks]

Several news sources are reporting on the imminent ouster of Citigroup Inc.® chief executive Charles Prince.

The WSJ’s Robin Sidel is reporting [click here, subscription required] that “Charles Prince, the beleaguered chief executive of Citigroup Inc., is planning to resign at a board meeting on Sunday, according to people familiar with the situation…. Citigroup has lost more than a fifth of its market value since Oct. 12.”

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OIL NEARS $100.00 A BARREL – GENERATES HUGE NEW INTERCHANGE FEE PROFITEERING

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Understanding Interchange Fees Requires a Master’s Degree in Finance at Disney (WayTooHigh.com)

Back when interchange fees were first created, it was cost-based to cover the electronic payment transactions. Today, this job posting shares one more example why interchange fees are out of control. The Walt Disney Company is seeking an executive with a master’s degree to analyze interchange costs.

Job description [GadBall Jobs]:

• This role on the WDP&R Credit Card Management team will be responsible for planning and forecasting credit card commission expense for the Walt Disney World Resort and the Disney Cruise Line and producing variance analysis for actuals versus plan, prior year and forecast. This role will analyze interchange expense to identify and evaluate the source of transaction downgrades and propose remedial action to mitigate the effects of transaction downgrades. This role will also be responsible for identifying industry trends and developing analyses to evaluate the effects of the trends on Segment operations. Additionally this role will be responsible for project management of planned initiatives and for creating executive presentations related to issues, projects, and opportunities.

[Source, commentary, WayTooHigh.com, via GadBall Jobs posting, see link]

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Crude Oil Nearly Doubled Since February (WayTooHigh.com)

Back in February, when we thought $50.00 a barrel crude oil was too much, the banks were reaping huge windfalls from their merchant interchange fees. But now. Now, with gas nearly 100% higher – in just eight months, think of the shared gouging that is being practiced by the financial institutions. What other business can demand a nearly 100% price increase and in a matter of a few months? We are talking billions of dollars, but the banks and their market power are remaining silent on how they can justify these fees.

“$105 a Barrel” Would Mean More Windfall Profits for Credit Card Companies (WayTooHigh.com) (Originally posted on May 26, 2006)

[Commentary: WayTooHigh.com]

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Repost: Printing The Exact Interchange Fee on Every Electronic Charge Receipt (WayTooHigh.com)

Printing Exact Merchant Interchange Fee on Charge Receipts by Thanksgiving (WayTooHigh.com)

Seventy-two pages, five-pages or one line? (WayTooHigh.com)

Why not post exact interchange fee on receipts? (WayTooHigh.com)

Every credit and debit card receipt should include interchange charge (WayTooHigh.com)

MasterCard® interchange rate schedules on website (via PRNewswire)

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On a Personal Note, Today, ScanMyPhotos.com [30 Minute Photos Etc.] was Profiled in USA Today (Click here to read)

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What’s Higher: Gas Prices or MasterCard’s® Market Capitalization? (WayTooHigh.com)

With gas prices nearing $100.00 a barrel and MasterCard’s® stock price soaring towards $200.00 a share, we cannot help but draw a comparison. More motorists are paying with plastic because they simply do not have enough money in their wallets. The windfall earnings to the banks with still own a hefty percent of the world’s second largest payment network continues to rise.

In May, 2006, Forbes’ Liz Moyer wrote an article about MasterCard’s pending IPO, and questioned, “How priceless is this IPO?” Click here to read. Moyer’s was questioning the risk factors to the card association and its investors due to its “considerable litigation risks.” As the lead plaintiff in this antitrust case, we haven’t seen a significant change of direction and the case continues. So, why exactly is MasterCard a buy at $190.00, when within its SEC offering documents they, like Visa has too, explained that my victory could lead to the company’s insolvency. Perhaps, the only thing that has changed are investor’s memories of this case. With nearly 800 below WayTooHigh.com news and commentary updates, there is a wealth of reasons to be even more worried than was Forbes’ reporter.

[commentary: WayTooHigh.com]

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The Flood of Banks’ Windfall Profiteering at the Pumps Rises (commentary, WayTooHigh.com)

Oil leaped to a record high – surpassing $93 a barrel, which means the thousands of credit card association member banks are reaping even greater rewards as they charge a percent of each fill up from their credit card interchange fees.

During one U.S House hearing from time ago, the question was asked why the banks [Visa® and MasterCard®] are charging such high fees. That question was raised when oil was a tiny fraction of today’s $93.00 a barrel.

We ask the question again.

• Whatever happened to MasterCard’s proposal to cap interchange fees at the pumps at $50.00?
• Why, as best we can identify, did Visa remain silent and not join in the cap on interchange fees?
• If they can put a cap on gas station fees, why not all fees, since, it is our contention that the bulk of the actual costs are tiny (only about 13% of interchange fee costs are used to cover its transaction costs).
• If MasterCard could issue a press release that touted a cap on interchange fess at the pumps, why not in everything else too?
  
  Interesting that Visa enable its much smaller card association ally to come up with the cap in interchange fees at service stations without matching the program. If they were truly competing with each other, you would have thought the price elasticity would have snapped in place. By the way, whatever happened to that MasterCard’s interchange fee limit, did it ever take effect that was promoted in their press release more than a year ago? [MasterCard was reported to explain that they were establishing this cap, but, was it ever imposed]?
  
  Remember: both Visa and MasterCard are/were owned by thousand of the same member banks, so they were more like a giant Starbucks-type business, then separate, like McDonald’s and Burger King. Could you imagine if two independent, competing multi-national business conglomerates had the same board representation and the same group of owners? Think of Richard Branson’s Virgin Airlines and its arch rival, British Airlines. I doubt they even talk to each other, other than in biting advertisements taunting each other, and thus much less likely to meet together and use their market power to illegally fix airline prices. Hey, that is our argument for how the electronic payment network regularly operate[s]d.
  
  MasterCard’s® Planned Interchange Fee Cap For Gas Retailers (WayTooHigh.com) Dec 16, 2006

  [Commentary: WayTooHigh.com

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Bank of America® Website: "Fee and Process Explained" (WayTooHigh.com)

One of the named defendants in our antitrust litigation has a website link and theatrical-like polished video to explain its fees and, in their words “how to prevent fees.”

Lots of useful data, but conspicuously void are any links for merchants to help us, and therefore consumers, prevent our $40 billion annual hidden electronic payment fee.

In their words, click here to view.

[Commentary: WayTooHigh.com]

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Where is the Outrage – $92.00 Oil! (WayTooHigh.com)

Barrel of Gas Reaches $92.00

Remember, when motorists choose credit cards as payment at the pumps, they are typically paying a percent of each fill-up in merchant interchange fees. How can the card associations, along with its thousands of member banks be so conspiring to engage in this windfall profiteering during our nation’s economic energy crisis?

Few motorists understand that as gas prices reach new record levels, with crude oil now hitting $91.10, they are more likely forced to pay with plastic, as they simply do not have enough cash. Furthermore, record levels of profiteering is being reaped at their expense.

Where is the outrage?

Is anyone noticing that we are talking about billions of dollars in excessive hidden taxes on service station owners, motorists and our entire economy. The same is true overseas, as other nations face equally exaggerated fuel costs.

[Commentary: WayTooHigh.com]

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Are Interchange Fees Set to Soar Upwards Again? (WayTooHigh.com)

For the past several months, we have been noticing the banks’ missteps, from the sub prime mortgage fiasco, to plunging earnings. Today, Bank of America (a named defendant in our litigation) announced the firing of 3,000 people and that the head of its corporate and investment banking unit will leave too, following their recent 32% decline in profits for the quarter.

The question is whether the banks will again conspire to fix interchange rates at an even higher rate to cover their losses? How will they justify the new round of potential hidden merchant taxes? And, will anyone notice?

We will.

Also, we are just months from Visa’s® planned IPO. If you thought the banks made bank from their selling off a percent of interest in MasterCard®, just wait for its big sister. Visa is three times the size of MasterCard, so the payoff to the banks could be even larger. And, just as with MasterCard’s IPO, the Risk Factor warnings are equally as ominous; if we win our litigation, Visa could become insolvent, and a new cookie jar of windfall profiteering will have to be identified by the thousands of member banks that control the world’s largest credit card association and electronic payment network.

[Commentary: WayTooHigh.com]

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"Shops Denounce Credit Card Costs" (via BBC News)

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Crude oil touches above $90 a barrel in electronic trading.

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Interchange Fees Should Have Gone the Way of the IBM Selectric Typewriters

Unlike the fee structure of interchange rates, it is transparent that the named defendants along with their legal and advocacy teams are regularly reading WayTooHigh.com, yet, they remain nearly silent on many issues.

So, let us step back and remember the history of technology. Whatever happened to the millions of manual typewriters? How about the IBM Selectric typewriters – which were the staple for most offices just decades ago? The same question can be directed towards the manual credit card imprinters and sizeable carbon copy paper payment receipts?

All are now obsolete.

Today, you can buy a keypad for your computer for a couple of dollars on EBay, but only the Smithsonian in Washington is interested in those antiquated manual credit card imprinters. They all served a purpose, back when interchange fees were cost-based, but, one part is still around. The merchant payment system is still with us, and now amounts to a nearly $40 billion annual hidden tax that few retailers or consumers even understand.

Today, as the banks continue reporting dismal profits, due to the housing sub prime mortgage fiasco and other egregious mismanagement, the interchange boondoggle continues to fill an otherwise failing levee of corporate wretchedness. If it was not for the political and massive financial might of the banking industry (its member banks jointly owned Visa® and MasterCard®), these fees would have nearly disappeared.

Just as how the health care industry got a kick in the head after Michael Moore’s film “Sicko,” perhaps that is what Visa and MasterCard needs too.

Today, due to extraordinary political and economic schemes and collusion, the interchange rates in the U.S. are more than double, and often even more than that of collections in other, economically and technologically less developed nations.

Today, their market power is desperately grasping to hold on to these fees, especially when their other sources of revenues are being threatened.

Today, just as the Selectric typewriter and other ancient-like products abdicated to new technologies and innovations, we still have confidence that businesses and consumers will soon wake up and recognize that the banks’ electronic payment system are also relics; built on what we assert are illegal, price-fixing schemes to fill their vaults with billions of dollars that are being misdirected due to their absolute market power and price-fixing by agreement.

Whether it is forcing credit card paying motorists to toss over upwards of nearly two-percent of the total cost of a fill-up, to demanding that an inner-city mom, shopping at her local convenience store for a gallon of milk is helping to subsidize the premium affinity cardholders’ free mileage trip to the tropics, this must come to an end.

During the previous nearly 800 postings by WayTooHigh.com over the past nearly three years, we have provided news, commentary and updates on what we assert is an extraordinary conspiracy by the Visa and MasterCard associations to wield their market power to fix the price of credit card interchange fees.

Visa is wrong.MasterCard is wrong.

And, their member banks are wrong.

To quote from the movie “Network,” the payments network has enraged merchants, who, like us are mad a hell and are not going to take it any more.

Crude-oil futures close at record-high $89.47

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Oil Surges Above $88 a Barrel (WayTooHigh.com)

Is it just us, or are others wondering how the banks and two leading credit card associations are realizing windfall profiteering from the now $88 a barrel cost of oil? We ask again: Why is it that motorists and service stations are forced to pay a percent of each credit card transaction to the banks?

[Commentary: WayTooHigh.com]

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More Oil Profiterring. A Barrel of Gas Now at $86 (WayTooHigh.com)

Now we are at a record $86.00 for a barrel of gasoline. Why is it that the credit card associations are ablw to continue gauging service stations with a percent of each transaction at the pumps? As more people are forced to pay with credit cards, as gas prices continue to soar, the banks are reaping even higher windfall profits.

[commentary: WayTooHigh.com]

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Will Banks Dip Into Interchange Cookie Jar to Help Earnings? (WayTooHigh.com)

We can’t help but raise warning signs that the banks might look toward again reaching into their $40 billion annual interchange cookie jar to help fund their other disastrous fiscal flops. Citigroup, which is one of our named defendants in the multi-billion-dollar merchant interchange litigation just announced its its third-quarter profits slumped 57%. Will the banking giant and the thousands of other member banks seek to further choke retailers and consumers by scheming to further raise interchange fees? Remember, merchants overseas are also fuming over paying even less than half the U.S. interchange fees. We are poised and tracking our mail to see whether their hostility against their core business and consumer customers continues.

[Commentary: WayTooHigh.com]

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Question from the UK: Why Are Rates More than Double in the U.S.? (WayTooHigh.com)

A good question.

Having just returned from addressing an international photo conference, I asked merchants and retailers I met during a separate visit to London, why their merchant interchange rates are more than half that in the States? The typical reply was one of confusion, especially because electronic payment technology and the card associations’ network, they would think, was more advanced in the U.S., and thus should be even lower than their rates, which they too say are way too high.

[Average interchange fees in the UK is about 0.70% and 1.70% in the U.S., respectively].

[Source: WayTooHigh.com]

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"Merchant Group’s Report to Lawmaker Triggers Interchange Tussle" (Digital Transactions)

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Why Exactly Are the Interchange Fees More Than Double in The U.S. (WayTooHigh.com)

When people ask us about the antitrust litigation, one of the first questions is why exactly are rates in the U.S. more than double other nations’ merchant interchange fees? They too do not understand how the world’s more technologically advanced country is forced to pay about 1.7% from every credit card transaction in these fees, when less industrialized nations with inferior electronic payment network infrastructures are afforded such significantly lower rates.

During our trip to Europe, we are eager to get feedback from other retailers to better understand these out-of-control multi-billion dollar charges.

The reason? GREED and unbridled, price-fixing by agreement market power!

[Commentary: WayTooHigh.com]

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"EU’s Kroes to Take Decision on MasterCard Interchange Fees by End of the Year" (via Newstex)

Excerpt: BRUSSELS, Oct. 3, 2007 (Thomson Financial delivered by Newstex) — EU competition commissioner Neelie Kroes said her competition services hope to complete an inquiry into MasterCard Inc (NYSE:MA) and rule on the credit card group’s interchange fee payments network by the end of the year.

[Source: Newstex]

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"Merchants Respond To Questions About Impact of Interchange Fees" (MPC)

Facts About Interchange Fees Contradict Card Company Claims

Washington, D.C. – October 1, 2007 – The Merchants Payments Coalition today delivered to members of the House Judiciary Committee’s Antitrust Task Force a detailed report responding to questions about Visa and MasterCard’s hidden credit card interchange fees raised by Representative Ric Keller, R-Fla., at a recent hearing.

“This report separates facts from fiction on credit card interchange practices,” said MPC Chairman Mallory Duncan, senior vice president and general counsel at the National Retail Federation. “The credit card industry has made numerous questionable statements. We have attempted to set the record straight.”

Duncan testified on behalf of the MPC during a July 19 hearing on credit card interchange held by the Antitrust Task Force, arguing that Visa and MasterCard practices in setting interchange rates constitute a violation of federal antitrust laws that costs merchants and consumers more than $40 billion a year. During the hearing, Keller identified a number of key issues on which merchants and witnesses for the credit card industry had made conflicting statements.

Following are key points raised by Keller, and MPC’s responses. [Click here] for the full MPC report….

Merchants say Visa and MasterCard keep their operating rules secret, but Visa and MasterCard say the rules are posted on their web sites. Fact: Visa and MasterCard both post excerpts from their rules on their web sites, but not the complete rules needed for a full understanding. Visa offers to show merchants a fuller set of the rules, but only if they sign a non-disclosure agreement prohibiting discussion of what they see.

Merchants say they are not allowed to offer cash discounts, but Visa and MasterCard say cash discounts are allowed. Fact: Federal law prohibits a ban on cash discounts, but credit card company rules make cash discounts extremely difficult to offer. Visa in particular has attempted to characterize some cash discounts as a prohibited surcharge on credit card use, and has threatened some merchants with fines of $5,000 a day for offering cash discounts.

Merchants say interchange rates are non-negotiable, while Visa and MasterCard say they can be negotiated. Fact: Merchants are not part of the process when interchange rates are set and cannot negotiate interchange rates with Visa or MasterCard. Courts have held that Visa and MasterCard dominate the credit card market, and the Kansas City Federal Reserve found that the popularity of cards among consumers gives merchants no realistic choice but to accept Visa and MasterCard regardless of rates.

Merchants say interchange fees hurt consumers while Visa and MasterCard say interchange fees benefit consumers. Fact: Interchange fees do pay for rewards programs offered by credit cards, but the fees mean that all consumers pay for rewards whether they take advantage of them or not. All consumers shoulder the burden of interchange as the fees are passed along in higher prices, with the average family paying an extra $300 because of interchange fees in 2006.

Visa and MasterCard claim retailers are asking for price controls, while retailers say they want only competition. Fact: Merchants have not advocated price controls, either in testimony before Congress or in meetings with members of Congress. Claims that merchants are advocating price controls are false.

Visa and MasterCard say retailers who accept any Visa credit card should be required to accept all Visa credit cards and the same for MasterCard, while retailers say they should be allowed to choose which cards to accept. Fact: Visa and MasterCard each have an “honor all cards” rule requiring merchants who accept any credit cards under the Visa name or MasterCard name to accept all credit cards issued under that name. Merchants believe this is a key part of the problem, because even if banks competed to offer lower interchange rates, merchants would still be required to accept those with high interchange rates. Also, card issuers do not currently provide merchants with the information necessary to know the exact interchange rate being charged when a card is presented at the register.

The MPC is a group of nearly 30 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses that accept debit and credit cards fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees. For more information, visit www.unfaircreditcardfees.com.

[Source: MPC, press release]

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"Sleazy Credit Card Tactics Under Fire" (via MSN)

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[repost, May, 2006] MasterCard’s® Legal Bill Could Be $26 Bln (from report in CardLine)

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More Bank Profiteering From Record Gas Prices (WayTooHigh.com)

Regularly, interchange fee increases take place in the Fall and mid-Spring. We are closely monitoring to see whether Visa® and MasterCard® will be even more brazen and again hike their fees. But, one sector of our economy is posed to create unheard of profiteering for the card associations and its tens-of-thousands of member banks. We also wonder if the financial turmoil in the world credit cards, might create an opportunity for the banks illegally raise prices by agreement as they seek new profits by raising their interchange fees to cover the mortgage meltdown?

As gas prices continue to soar, so too is interchange fee profiteering, due to what we assert are illegal price-fixing by agreement and absolute market power (Visa and MasterCard’s network controls about 80% of the electronic payment business).

Rather than rescinding their unjustified hidden-taxes on motorists and our entire economy, we are alarmed to learn that, according to The Wall Street Journal (page 1. Sept 29) [click here to read the article - subscription required], gas prices could rise to $100.00 a barrel. The two WSJ reporters, Peter Fritsch and Kelly Evans, explained how the U.S. economy could withstand $100 a barrel oil, but they were absent in also mentioning exactly what that stratospheric rate would do to the banks’ bottom line. Nor did they explain how the banks can possibly justify this extraordinary profiteering as our nation faces such a burdensome economic energy crisis.

Forget, for a moment, ExxonMobil and other gas companies’ earnings, and pause to ask why exactly are credit card interchange fees based on a percent of each sale? Even Realtors are dealing and lowering their once standard 6% commissions; in this case the banks are reaping about 1.7% off the top from every credit card charge at the pumps. Could they be earning as much as $2.00 – $3.00 from every fill-up, especially as motorists are now more inclined to use plastic, as they do not have enough cash on hand?

Last year, MasterCard announced they were instituting a $50.00 interchange fee cap at the pumps. Visa, however, has been silent on the issue, and we are unsure whether the fee limit by MasterCard ever took effect.

Either way, since many of the same banks which control MasterCard, also have stakes in Visa, it is really a giant shell game anyway.

[Commentary: WayTooHigh.com]

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The Battle Against Interchange Fees is Global [See Website: StopUnfairCardFees.eu

WayTooHigh.com – The Credit Card Interchange Report has been providing daily news and commentary updates on our battle against merchant interchange fees for nearly 2 1/2 years, but our cause is not just domestic within the United States. EuroCommerce is hosting an outstanding website that further cements the critical multi-billion dollar issues that affects all retailers in Europe and across the globe. Next month, we [30 Minute photos Etc. and ScanMyPhotos.com] will be attending and speaking at a photo industry convention in the UK and will be interested in gaining first-hand prospectives from other retailers on how the interchange extortion is affecting them as well.

The below highlights are from the StopUnfairCardFees.eu website. Click here to read more.

• Did you know? Visa and MasterCard argue that the hidden fees – which cost Europe €25 billion every year – are essential to run card schemes. Why then are there some card schemes in Europe which operate successfully without hidden ‘interchange’ fees?
• “My bank told me the fee covers processing costs for Visa and MasterCard. But I read that only 13% of the fees go toward these costs, with the rest going to bank profits, and rewards for the select few cardholders. What’s the deal?”
• Europe’s retailers want the best for Europe’s shoppers – in terms of price, quality, service and choice. But prices in Europe are artificially inflated because of hidden fees for debit and credit cards – fees which all shoppers end up paying for. We believe Europe’s shoppers have the right to know …
• What is happening in Europe is not an isolated case. Visa, MasterCard and the banks that hide behind them try around the world to continue and spread their anti-competitive activities. Yet in some countries, they are no longer able to get away with it.
• According to US Senator Arlen Specter: “We may need to modify our antitrust laws to stop credit card companies from engaging in activities to gouge and jack up prices.”
• According to Philip Lowe, Assistant Governor of the Reserve Bank of Australia: “These fees are not subject to the normal forces of competition and in the RBA’s view were distorting the use of payment methods in Australia.”
• MasterCard and Visa and their interchange fees have also aroused the interest of regulatory authorities and central banks in a range of further countries across the world. These include: Brazil, Columbia, Mexico, South Africa, Singapore, Switzerland, and Israel.
• What is happening in Europe is not an isolated case. Visa, MasterCard and the banks that hide behind them try around the world to continue and spread their anti-competitive activities. Yet in some countries, they are no longer able to get away with it.
• Why is it anti-competitive? Unless constraints are imposed by regulators, payment card companies and their banks can increase interchange rates at any time by any amount. In the words of the European Competition Commissioner, Neelie Kroes, “these high fees are a result of a lack of competition in a market where 95% of cross border payments in Europe are made by two companies. The situation is even bleaker in some Member States, where there is only one single acquiring bank servicing retailers.”
• Why are interchange fees unfair? First of all, Visa and MasterCard do not inform customers of these interchange fees, they simply set them with the banks behind them and charge retailers and their shoppers accordingly. We believe you have the right to know more about these fees. It is even more unfair for shoppers who do not use the credit or debit cards. That’s because these hidden fees are not charged just to cardholders – that is forbidden the rules of by some card schemes and banks. The high cost of card payments must be passed on across all purchases. This drives up the cost of goods and services for all consumers whether they pay with plastic or cash. This has a serious knock on effect for the wider economy.
• What’s it about? Whether you use a credit card or not, you pay a hidden fee on virtually every transaction you make. The fees have an inflationary effect and they add up. They cost European shoppers tens of billions of Euros every year.

[Source: Above abstracts from StopUnfairCardFees.eu]

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