Upon returning from Orlando, where I addressed the International Photo Marketing Association convention and a separate group of executives from a national portrait studio chain, I was immersed in nonstop celebratory cheers for taking on this interchange litigation.
Rather than reveling in the admiration, I was more weary due to a recent WayTooHigh.com posting where a consultant, published in a magazine, argued that the banks need to begin finding a voice to advocate on their behalf. Thus, this was more of an eye in the center of a thunderous storm cloud.
As the banks bunker behind walls fortified by high-paid PR and advocacy experts, I gathered with thousands of real people. No suits and ties, just ordinary retailers, from single-store to giant chains from across the globe. What I encountered at the convention was an endless number of stories about interchange. People were supportive and congratulating me for the antitrust litigation.
The banks had few friends among this group. But, they did when I arrived at the hotel.
By way of coincidence, a major bank, which is also a named defendant, was having a conference there. I kept to myself until I ran into a familiar and dear friend who previously worked at the Eastman Kodak Company. Although his new role as senior VP for that bank caused us to have a brief reintroduction, it was a wonderful opportunity to reminisce and share all the new technologies helping to re-energize the photo imaging business. Sydney, during the Summer Olympics was the last time we saw each other, so, there was much to catch up on.
Toward the end of our chat, I explained that I had some news that might cause some discomfort. I shared my title in the battle against the banks and, like a deer-in-the-headlights, he backed up. The first reaction was more of an impulse because he quipped that me and nearly everyone else are lined up against the banks. But, I then explained my role as class representative and the first to file a legal complaint. When he asked if I was blogging, I explained my additional involvement as co-editor of WayTooHigh.com – The Credit Card Interchange Report.
Being precluded from conversing with defendants, the conversation ended. But not before he tried to explain his bank’s challenge in facing several billion dollars in annual fraud charges and I guess the rational for justifying their interchange fees. With more than two-hundred previous postings, it is clear that the real issue still is not the focus of their argument. The fact of law is that it is illegal to fix prices.
Besides, the fraud rates are lower in the United States than abroad in some nations where the interchange fee is half the rates in the States. As the banks mail out over 5-billion direct mail solicitations each year, you would think they would attempt to limit their fraud exposure by limiting the solicitations so non-credit worthy cardholders would cease adding to the costs shouldered by retailers and consumers. With advanced technology today that wasn’t available when manual credit card imprinters were used this argument is deflated. Seemingly, the banks are treating interchange like a giant roulette wheel – if they loose they have merchants cover their exposure. This strategy sounds similar to MasterCard’s postponed IPO, where the investors could have been burdened with the potential exposure from the legal liabilities too.
We both realized the conversation had come to an end, smiled and wished each other well. And, I still think the world of him because I have always admired his intellectual and compassionate strengths. He was a recognized leader at Kodak and one of the first executives I met years ago who shared my vision for celebrating diversity of people and ideas.
[source: WayTooHigh.com commentary]