October 30, 2006
[Commentary: WayTooHigh.com – The Credit Card Interchange Report]
We wonder whether last week’s WayTooHigh.com press release helped speed up MasterCard’s® decision to just one-week later begin posting the long awaited fees online?
MasterCard has issued a press release today announcing that their anticipated posting of U.S. merchants interchange fee schedules are now posted on its website. Click here to download the MasterCard interchange rates and criteria; it is 72 pages long.
Think how much time and effort would be saved if the exact fee was instead listed on every charge receipt?
If we are confused, and we are the lead plaintiff in the merchant antitrust litigation, imagine the local shop owner who downloads the rate schedules?
Take a look for yourself – try to identify what the exact interchange rates are. Can you? How do these U.S. merchant rates differ from other nations? What accounts for the difference and why are rates averaging 1.7% in the U.S. all the way to zero in other nations? [There are no interchange fees in Canada for PIN debit cards].
The merchant classifications are broken down by category, from cruise lines, airlines, car rental charges to restaurants and even as detailed as the fees for MasterCard PIN debit POS for convenience stores.
According to the MasterCard press release, Walt Macnee, president, Americas, MasterCard, said “… [The] merchant community has asked us for greater transparency, and we are pleased to accommodate their request… Just publishing rates alone could lead to confusion among merchants who may be seeing this information for the first time… We are confident that we are providing merchants with the information they need to understand the interchange rates and structure and determine which rates may apply to their transactions. We want to have an ongoing dialogue with merchants, acquirers and other interested parties about the format and content of our rate disclosure, as we plan to update this document regularly.”
Also mentioned within their press release was a quote from Joshua Peirez, Group Executive, Global Public Policy for MasterCard, who said “MasterCard has been a leader in providing greater transparency in the payments industry…”
If MasterCard really wants to comply with the above comments, there is no more transparent, simply way to disclose interchange fees than to actually post the exact charge on every cardholders debit and credit card receipt. Click here for background.
[Source: via MasterCard press release and WayTooHigh.com commentary]
October 28, 2006
The International Consumer Electronic Show (CES) has invited Mitch Goldstone to address what is the world’s largest annual tradeshow for consumer technology on January 9th in Las Vegas.. CES is America’s largest annual tradeshow of any kind. For session info, click here. Goldstone is president and CEO of 30 Minute Photos Etc., which is also lead plaintiff in the merchant interchange litigation. His company was the first to file a federal complaint in June, 2005.
[Source: via CES, and WayTooHigh.com]
October 27, 2006
Decades ago, when Fred Smith founded Federal Express®, their shipping labels necessitated the use of dense stacks of multilayered carbon copy order forms. Just the cost of printing and distributing those forms must have been a high-priced outlay of materials for the freight carrier. The unused forms, waste and processing costs were staggering.
The two leading credit card associations had similar costs to process payments. It was manual. Today, it is electronic, instant and highly efficient. Back then, merchants like us ordered bundles of carbon copy credit card receipts. We mailed it to a clearing house and it took days to process each payment. Fraud and other costs must have been mountainous. But, back then, the merchant interchange fees were cost-based.
Moving forward to the present.
We primarily use FedEx for all rush deliveries for our online boutique photo service. With the push of a few key strokes, the labels are designed and printed on standard paper. Everything is super fast, efficient and cost effective. Costs are streamlined, even with the recent ascending fuel prices. But, we can choose other freight carriers too.
Today, it seems that the banking and card payment industry are among the few which continually raise rates. Like OPEC, the banking cartel is in charge of setting fees. Even though other industries are embracing technology to lower costs, the card associations are raising theirs. In many cases, merchant interchange fees are the third most significant cost after rent and payroll. We even read that without intervention, the fees may even grow to exceed the cost of rent in coming years!
Through gimmicks and reward contests, retailers are being forced to pay more. These billions of dollars in hidden taxes levied on merchants and consumers are no small change. The fees are controlled by the banking cartel which stands accused of conspiring to set merchant fees at artificially high levels and illegally fix prices by agreement.
October 27, 2006
According to the Wall Street Journal (Oct. 27, page A6, U.S. edition), E.U. regulators have set a hearing in mid-November on MasterCard International’s® role in setting bank fees and to discuss lowering banking costs. The article reported that the average fee for credit and debit cards in Europe is 1.16% and 0.8%, respectively. This raises the question of how can the banking cartel force extraordinarily higher rates in the U.S.?
Carl Munson, an associate MasterCard general council was quoted in the article as saying: “We continue to assert that interchange fees are necessary in a four-party system.” While Mr. Munson explained that the value to the system is to elevate the level of competition and efficiencies. To us, it seems that the greater benefactor of the fees are the banks at the expense of retailers and consumers.
[Source: via WSJ]
October 26, 2006
Small business owners Mitch Goldstone and Carl Berman are the lead plaintiffs in a lawsuit against big credit card companies.
By YOLANDA SANCHEZ IRVINE WORLD NEWS, [Oct 26, p 19]
Last year, 30 Minute Photos Etc. received notice that interchange fees, the fee that banks charge retailers when customers pay with credit cards, would increase for frequent-flier cards.
Mitch Goldstone, co-owner of 30 Minute Photos Etc. and 30minphotos.com, wouldn’t hear of it.
Goldstone became lead plaintiff in a lawsuit filed in June 2005 against Visa, MasterCard and a host of banks that issue the credit cards. The lawsuit accuses banks of violating antitrust laws by conspiring to fix the fees at levels that aren’t justified by the costs of processing transactions.
Credit card companies counter that the rates are determined by the open marketplace and the services they provide increase sales.
Here’s an interview with Goldstone.
Why did you decide to take this on and be named as the lead plaintiff?
It upset me because it meant customers were being taken for a ride. After we received the letter I contacted Visa and MasterCard but received no response. I was then quoted in the Wall Street Journal. (Goldstone was then contacted by the law firm that filed the suit). I never thought I would be the lead plaintiff representing all of these merchants, but it is something that is very important to me.
Why do you think this is such an important issue?
Because it impacts every retailer and consumer. The banks are doing what the railroad industry did 100 years ago when it said to farmers this is what we are going to charge you to transport goods. Farmers had no choice because otherwise their goods would spoil. Visa and MasterCard account for 80 percent of all credit card transactions.
How have you seen these fees change?
In 1990 we had to take a credit card and imprint it on a stack of carbon copies. We mailed our copies to a facility in Florida where they were checked for fraud and other things. That is what the fees were created for. Back then there were about 10 interchange fees. Now there are about 100. But if you pay with a check the interchange fee is zero even though there are a lot of clearing costs.
When and why did you launch WayTooHigh.com?
We launched it in spring 2005. I was receiving so many calls and inquiries from the media and merchants all over the U.S. and I couldn’t talk with everyone. Now I just say go to Way Too High.
What stage is the lawsuit in and what’s the next step?
It is being heard in federal court in New York. It has been merged together with the other lawsuits – there are upwards of 50 separate lawsuits – in a multi-district litigation, with my law firm being lead firm. The next step is to get class action status. This will get all retailers in on the case.
What resolution would you like to see come out of this?
Ultimately there should be no interchange fees; there’s no need for it, and that is why this case is so important. I’d like to have Visa and MasterCard print out on every receipt the exact amount that goes to interchange fees.
[Source: Irvine World News]
October 25, 2006
Our European readers already know that added to their purchase receipts from retailers are several extra fee identifications. Along with other fee items, receipts often post the charge in Euros and the former local currency.
- sample receipt one
- sample receipt two
Even though tax is added to the charge, that too is broken down on receipts. With technology today, posting the exact merchant interchange fee on every credit and debit card receipt would improve transparency and explain why consumers and retailers are battling the credit card associations and their member banks.
Providing retailers with the choice of adding these unambiguous and transparent interchange fees as an item on each receipt should be made available by ‘Black Friday’ – the busy shopping day after Thanksgiving. If the credit card associations can flip a switch to raise fees, they should also look into flipping another switch to print those fees on receipts. As retail business owners since 1990 and owner of a national ecommerce business, we would chose to include those fees on every customers receipt.