President Bush Isn’t Aware of $4-a-gallon Gas, But We Are

We are troubled that at yesterday’s (Feb 28) Presidential news conference, Mr. Bush was surprised and unaware that Americans are paying nearly $4-a-gallon to fill up their cars. 

Click here to view video 

Of equal concern is that if the President was surprised and unaware of what motorists are paying at the pumps, then he must also be in the dark on the nearly $40 billion siphoned out of our wallets each year by the banking cartel for merchant interchange fees for Visa and MasterCard’s electronic payment network.

But, now that he knows it, the next question is why are the banks able to force motorists using plastic at service stations to fork over a percent of each fill-up? These fees were designed to be cost-based, not to enrich thousands of banks who use these revenues to cover their billions in losses from misguided mortgage and other fiasco’s.

MasterCard had earlier announced a $50 cap at the pumps, but we are unsure if that ever took hold, and we are not sure if Visa followed along.  Did they?  And then two more questions:

1. Why are the banks still able to get upwards of 1.7% for each charge? 
   
2. If the credit card associations can place a limit on interchange fees at the pumps, why not for all electronic payment transactions elsewhere, from Rolex watches to a latte at Starbucks?

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

“Are Visa and MasterCard Hurting Capitalism?” (via RedState.com)

Click here to read blog posting from RedState.com

Pausing in the Battle Against Visa and MasterCard: The Next “American Idol” Superstar, David Archuleta

Click here to watch!

Many of you have been reading our news and commentary updates on our multi-billion dollar merchant interchange fee litigation against Visa, MasterCard and its member banks since 2005.  Since then, we have provided nearly 1000 news and commentary updates.  Mostly, we have stayed on message…. until now.

Outside our role in representing millions of businesses, we take this moment to pause, step back and salute a real American icon and the world’s next mega-superstar,  David Archuleta. 

While unrelated to our antitrust litigation against Visa, MasterCard and the world’s leading banks, this young singing sensation is capturing the world’s attention.  With our international readership, many overseas will be wondering who this singer is?  Why he is so special?  And, how can he capture the world’s attention to become the most famous of “American Idol’s” stars? 

Along with thousands of other bloggers writing similar words of support, WayTooHigh.com applauds our country’s next sensation and gift to the world. 

This Spring, David will become the second most Googled name in the world, after U.S. Senator Barack Obama, who we predict will be elected as the next President of the United States of America.  [Especially after earning the endorsement from fellow U.S. Senator Christopher Dodd (D-CT), Chairman of the Senate Committee on Banking].

Along with millions of fans, we too are so confident that David Archuleta will win the hearts of America, that it was worth this pause from our daily news and commentary updates in the battle against Visa, MasterCard and its member banks to celebrate our nation and the world’s next mega-superstar.

Congratulations David!

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

What Do Visa and AT&T Have in Common?

While financial writers are explaining that the planned Visa Inc. IPO will be nearly double that previously all-time high public offering by AT&T.  There is also something much more ominous that the two have in common and should not be overlooked.  Our antitrust litigation against Visa, MasterCard and major banks is also the largest antitrust case since the AT&T breakup; not very good company to keep.

Some talk by the financial media suggests that the thousands of banks which co-own Visa might be hoping for a multi-billion dollar settlement [they are planning to hold $3 billion in reserves].  But, the much larger payout is the $40 billion in annual merchant interchange fees that consumers and merchants are forced to pay.  We think any settlement will include either the termination of or significant reduction in these obsolete electronic payment fees, and thus even more billions in revenues that would no longer be sent to the banks, but rather retained by American consumers.

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

“[B]anks Also Stand to Shed Some Liability” (The Charlotte Observer)

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According to Christina Rexrode’s Feb 27 The Charlotte Observer article, the thousands of banks that own Visa will adjust their valuation once the adjusted post-IPO market value takes effect.  This means giant windfalls for the banks. 

Abstract of Key Points From the Article

• If the public offering goes through, the banks also stand to shed some liability.
• The banks hope that taking Visa public will get it off the hook in those lawsuits, according to some analysts.
• Gwenn Bezard, research director at Boston’s Aite Group said: “[the banks] are offloading the risk to someone else — investors.”
• Visa will set aside about $3 billion of the money it raises in a stock offering for litigation costs, according to [their filing statements].
• When MasterCard went public in 2006, the lifting of legal liability from the issuing banks was the deal’s main driver, said Eric Grover of Intrepid Ventures. …”Absent the legal liability, I don’t believe MasterCard would have gone public.”   “It’s a bit of a Russian roulette here…”  “If it were to go to trial, there’s a nonzero chance of a catastrophic event.”

[Click here for recent recommendation against MasterCard’s IPO]

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

A Look into Visa’s Trojan Horse IPO Scheme

Today, a reporter suggested we should be happy that Visa Inc. is setting aside a $3 billion reserve for our litigation. No, not really.

The credit card giant is playing an unfriendly game in its pursuit of detachment from their legal liability for illegal price-fixing by agreement.  If you step back and read several of our preceding comments, you will notice that when first announced, many hinted that Visa Inc. could anticipate raising $5 billion, then it was $10 billion. Now, it is nearly $19 billion. 

Was this caused by unearthly market conditions, inflation or because they were simply padding the amount of money they hope to raise to cover their legal liabilities?The worry is that they could simply use investor proceeds to fund settlement of our litigation and then continue raising merchant interchange rates to more than cover the lost revenues. To us, that is as unfair as are their interchange fees.A review of the earlier credit card litigation identifies that for merchants and consumers, the fair market economy is still broken and there still is no real electronic payment competition. Visa and MasterCard’s cartel-like pricing structure still precludes a real resolution to interchange fees. From the preceding resolution, Visa and MasterCard simply raised other rates to adjust for their penalties, thus more than paying for their fines.

  

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

Visa, MasterCard and the Banks Windfall Profiteering at the Pumps

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$101.11 

It’s a record price at the pumps, which again raises the question: why are the banks allowed to reap windfall profits during our nation’s economic energy crisis? 

As more motorists are forced to pay with plastic – due to the record costs to fill up their tanks, Visa, MasterCard and its thousands of member banks are earning windfall profits.  They demand a percent of each sale for each credit card transaction, even though the interchange fee cost is nearly zero (it is estimated that the actual fees to process electronic payments are about 13% of the total interchange fees collected).   

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

Visa Says Don’t Use Cash

See commercial and read the comments – click here

See more Visa commercials here, including the most offensive one on many levels, “When the Saints Come Marching In”

“Visa’s Lucrative House of Cards” (SF Chronicle)

Click here to read the Carolyn Said, Feb 26th San Francisco Chronicle article about Visa’s planned IPO.

From the article, this is one of the reasons the annual $40 billion hidden tax on retailers and consumers should be close to zero.  Today, most electronic payments are instant, cost-effective and high-tech, no more carbon-copy paper receipts that need to be manually cleared. Then again, think of check writing and even those processing fees are without interchange fees too.  The banks will explain that limiting interchange fees in today’s modern world would be price-fixing, and they should be very familiar with that term, because that is what they are doing. 

• When Visa was established, the card association was without sophisticated, cost-effective computers.  “card transactions were all processed on paper receipts from hand-swiped machines”.
• “At one stage, there were literally gymnasiums full of unrecognized receipts people had to sort through, [i]t was an absolute nightmare.”
• “Focusing on ‘digital money’ was the key to revolutionizing the card. But turning that into reality involved major negotiations.”

  

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

“Visa: Bailing Out The Banks” (NY Times)

Click here to read Floyd Norris, chief financial correspondent for The New York Times’ comments on the Visa IPO and where the use of proceeds would be going. [Read the Visa prospectus]

As entrepreneurs, if we were to seek funding, our investors would require that the proceeds be used to invest in the future expansion of ScanMyPhotos.com, not pay off debt and cover legal bills.  They will also dilute the banks’ ownership if the legal liability is greater than $3 billion; this suggests that Visa is understanding that our liability will be greater than $3 billion.   

If you thought the banks were mismanaged before, due to their mortgage meltdown, the Visa IPO is a study in supra-competitive greed – which is exactly what their interchange fees are all about. 

As with MasterCard, a proportionally large amount of capital will be placed in escrow to cover their legal liability to us.  And, just as with MasterCard, the proceeds will also be used to contribute fresh cash to the banks.   Mr. Norris covered many of the strange maneuvers that Visa Inc is preparing and hoping the public overlooks, due to their intoxication with the MasterCard valuations.  Perhaps the most significant concern is their SEC-filed Risk Factors, and identifying that if our litigation is successful, the giant credit card association risks insolvency.  Insolvency!

We think the reason for the IPO is to demonstrate that Visa is not owned and controlled by the banks; that’s part of our assertion in the antitrust litigation.  So, just as with MasterCard, they paint the appearance that now shareholders are running the show.  Unlike regular publicly held corporations, see what happens if a business tries to acquire a majority of its stock.  See what happens if a company wanted to start from the top floor and buy their own electronic payment card network by acquiring Visa.  They cannot.

As identified in the New York Times article, this is a giant conflict of interest shell game.  JP Morgan Chase is a lead defendant and co-owner of Visa.  They also own Chase and Chase Paymentech Solutions – the credit card processing behemoth.  Yet, the bank is a lead underwriter and we guess already have their track shoes on to make this deal happen super-fast, while the red paint from their impending liabilities are still wet.  Other lead defendants are poised to also cash out in the hundreds of millions of dollars, just as they did (to a lesser level) with MasterCard.  But, not so fast, read this posting about the impending troubles facing MasterCard’s IPO.

“Significant Victory” Announced Against MasterCard by Class Plantiffs

  

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

The Battle Against Visa and MasterCard is Poised to Get Very Loud

According to American Banker reporter Stacy Kaper (Thurs, Feb 21) “Interchange Limits Heat Up on Hill; Conyers, Durbin draft bills giving retailers more sway over fees.”

Key points extracted from the American Banker article, include:

• House and Senate Judiciary committee leaders are drafting legislation that would limit interchange fees.
• The credit card industry is already under siege by lawmakers who want to rein in various practices, but a crackdown on interchange fees would be a first at the federal level and could threaten an estimated $36 billion in annual revenue for the industry.
• House Judiciary Committee Chairman John Conyers is expected to offer an interchange bill with Rep. Chris Cannon, R-Utah.
• According to a draft of the bill, it would create a three-member board of lawyers appointed by the Federal Trade Commission and the Justice Department to regulate interchange rates.
• Senate leaders are considering offering a similar measure
• The legislative push is the result of work by the Merchant Payment Coalition — a retailers’ lobbying group fighting to reduce the merchant discount fees from which interchange fees are derived.
• Because “there is no competition between the thousands of rival banks participating in a given electronic payment system regarding these fees and rules, merchants are denied access to the electronic payment system on rates and terms that would have been negotiated in a perfectly competitive marketplace,” the draft bill says.
• A sweeping credit card reform bill introduced this month by House Financial Services Committee leaders Barney Frank and Carolyn Maloney would require the Federal Reserve Board to make annual reports to Congress on how much banks earn from merchant fees.

 

 

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

Record Visits to WayTooHigh.com – The Credit Card Interchange Report

Beyond the Visa IPO news, today marked the largest number of unique visitors to WayTooHigh.com – The Credit Card Interchange Report.

Among the leading pages that were visited today included:

Stock Market Meltdown… Visa’s IPO Mess
Win One For MasterCard’s “Priceless.com”
Visa Inc. Files 10-K Annual Report,
Visa’s Inc.’s Planned IPO & MasterCard
Visa Inc. IPO Largest in US History;
Visa IPO – Blogs, Updates, Commentary
Credit Card Interchange Fees Article
The Credit Card Nightmare (via Wired)
“Interchange Regulation Coming to the US
Visa’s International Merchant Discount
Did Visa and MasterCard’s Greed Force…

  

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

Thousands of Banks Pin Hopes on Visa Inc. to Bail Them Out

Here we go again.  But, this time the ride is pitched at a much steeper angle than the previous MasterCard IPO.  The thousands of banks which partly cashed out when they unloaded about half of their MasterCard investment are now poised to go full throttle and launch what will be America’s largest IPO ever. 

The numbers are big, as is the potential liability.  According to Visa’s SEC flings, if our antitrust litigation against their collusive price-fixing practices gains momentum, Visa Inc could become insolvent. 

During the following weeks, we will be closely following and posting regular updates and commentaries on the IPO and call attention when hype gets in the way of facts.

Click here for latest Bloomberg update by Elizabeth Hester

Click here for an update on out complaint against MasterCard’s IPO.

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

Visa IPO – Blogs, Updates, Commentary and Breaking News on WordPress

Visa Ipo — Blogs, Pictures, and more on WordPress

 

 

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

 

Visa Inc. IPO Largest in US History; First it was 5, then 10 and Now $18.8 Billion – That’s Some Rich Valuation Appreciation

Click here to read the AP story on Visa’s planned ~$19 billion IPO.

click here to read Reuter’s story on the Visa Inc IPO

[WayTooHigh.com Editor’s note: Investor’s, drunken with jubilation over MasterCard’s valuation, would be wise to sober up and read the Risk Factors which Visa Inc explains could lead to insolvency of our merchant antitrust litigation prove successful.  Forget not what MasterCard did in an attempt to transfer its legal liabilities from the banks to shareholders.  The Visa IPO smacks of a giant shell game. The same banks which owned MasterCard, tested the waters with by selling off a chuck of the much smaller credit card association.  Now, the same thousands of banks – facing billions in losses from other management missteps are now seeking to cash out again, and at a much higher level.  Check back often for regular updates and commentaries on the planned Visa Inc. IPO].

Related WayTooHigh.com postings

“Significant Victory” Announced Against MasterCard by Class Plantiffs

 “Visa’s Initial Offering Expected to Fetch $5-Billion” (The Globe and Mail) [that’s some inflation…. From $5 billion to $19 billion?]

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

“Visa’s Pending IPO”

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

“Visa’s IPO Use of Proceeds Plan and Interchange Overview (commentary, WayTooHigh.com)

“Visa Reveals Plan to Restructure for IPO” (via AP)

  

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

Want to Know More About MasterCard?

From the MasterCard.com website

“How MasterCard Works” – click here 

“Rules for Accepting MasterCard” – click here

“MasterCard Interchange Rates” – click here

  

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

“RETAILERS READY TO BATTLE CREDIT CARD FEES ON THE HILL” (via Brandon Wright)

Click here to view Brandon Wright’s blog.

  

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

The Credit Card Nightmare (via Wired)

Click here to read the Wired Magazine explanation about credit cards.

  

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

“DEBIT-CARD PURCHASERS PENALIZED FOR PIN USE” (previously published in The Red Tape Chronicles; MSNBC.com)

Excerpt, originally posted: Friday, November 16 by Bob Sullivan in The Red Tape Chronicles

“Not long ago, I wrote a column explaining the difference between credit and debit, advising consumers to put the cash cards away and always use old-fashioned credit cards when shopping. Unexpected fees for PIN-based debit card transactions are just another reason to do that.   Less security, but more profit.  The answer is simple: easy money.   First, let me explain the terms. “Debit or credit” is a misleading question. While all the plastic in your wallet looks the same, most of us carry around three different ways to pay: a regular credit card, a bank/ATM/debit/cash card that can be used with a PIN code to buy things at retail stores (PIN-debit transactions) and a bank/ATM/debit/cash card that can be used with a signed slip to buy things (signature debit). It’s the last two we’re concerned with here.”

Click here to read The Red Tape Chronicles article and hundreds of reader comments. 

  

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

“Interchange Regulation Coming to the US” (via American Banker)

Click here to read article, subscription required

…drafting legislation that would limit interchange fees.The credit … practices, but a crackdown on interchange fees would be a first … is expected to offer an interchange bill with Rep. Chris Cannon…

“MasterCard Faces Probe, Details Auction-Rate Issues” (via Reuters)

Click here to read Reuters Feb 22nd article.

  

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

“MasterCard Cuts Interchange for Rent, Utilities, and Insurance” (via Digital Transactions)

[click here for related story on “House of Cards – consumers turn to credit cards amid the mortgage crisis]”

We’re not quite sure how to react to the news that MasterCard is lowering, that’s right, lowering certain interchange fees. 

Will Visa follow along?

Does this apply only to credit cards, or are flat fee debit and PIN-based cards be accepted, and thus cost a about 50-cents for the entire interchange fee transaction?

According to Digital Transactions Magazine (Feb 21), MasterCard is promoting a new rate category to promote their electronic payment service for certain real estate transactions, such as with property managers to encourage renters to pay with plastic and get cardholders to eventually pay their utility, insurance and other bills with MasterCard.Don’t get carried away, because there are still huge windfall profits to be made by the credit card association and its member banks.  The article indicated the new rate category would cost about 1.1 percent in interchange fees.Property managers should be on alert, because what once incurred no charge from cashing checks, now will come with an added interchange fee that will cost them – and thus the cardholders with a 1.1% fee.  It is not as if cardholders will be more incentivized to pay their bills; their rents are fixed – what is more likely is that consumers will go further into debt and end up paying usurious finance changes when they have new balances on their cards.This is a win-win, but not for everyone.  Consumers and those accepting the cards will pay more than before when no clearing fees were mandated. The winners: MasterCard and its thousands of member banks.So, what gimmick will Visa launch to top this indignation?

We have long questioned the genesis of how interchange fees are invented. Our litigation accuses MasterCard’s board of directors of illegal price-fixing to artificially set rates.  But this new rate structure raises another question: what is the genesis of those new rates?  How can MasterCard create another unique rate?  What are the actual costs for processing rent payments versus buying a high-end Rolex watch at Cartier?   Are there real differences?  Why does MasterCard need a 100 page fee structure for their interchange rates. And, another question: if MasterCard could “lower” a specific rate, why not all rates?  OK, and one more question: Are these rates really “lower,” when you survey the global picture, where some interchange rates are zero and others are a third of the rates mandated in the U.S.?  This is just a giant shell game and one which MasterCard and its co-defendant cartel partner, Visa, are up against a growing wall of descent.

The only “real estate incentive” could be the further bloated-size of the vaults at the banks and MasterCard as they prepare to open up a new revenue source for themselves.

  

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

“Mastercard Says Interchange Fees Probed in Hungary”

According to a MasterCard SEC filing, Hungary’s Competition Authority launched a probe and formal investigation of MasterCard Europe’s domestic interchange fees.  

  

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

Cal National Bank’s Most Distasteful Promotion yet?

One bank is touting that your house be used as their ATM card and use your nest egg as collateral for your every day spending needs.

According to the Cal National website, use “[a] Home Equity Card, for convenient access to your line of credit wherever Visa^® is welcomed. Or access your line by writing a check—it’s your choice.” 

What does this mean?

Forget for a moment the sub-prime mortgage meltdown and national housing market collapse, but instead, look at Cal National and its latest gimmick.  They want you to use your Visa card to access your home equity line of credit.  Risk everything and then a portion of the charges will be diverted back to Visa and Cal National from interchange fee payments.

As if the housing crisis isn’t bad enough, now banks are promoting that homeowners access their available line of credit by using a Visa card. 

We’d like to see that commercial during the Summer Olympic Games.  “Max out the remaining valuation of your home by buying stuff on your Visa card.” 

Have they no shame?

Editors note: WayTooHigh.com is edited by the owners of ScanMyPhotos.com.  This site features the most comprehensive international breaking news, daily updates and commentaries on the history of merchant interchange fees. The goal in representing millions of merchants and cardholders is to reform an antiquated, costly and unfair payment system and explain why the nearly $40 billion annual merchant interchange fee is a hidden tax on consumers and retailers.  WayTooHigh.com, The Credit Card Interchange Report, is co-edited by Carl Berman and Mitch Goldstone, founders of California-based 30 Minute Photos Etc., the national online boutique photo service, 30minphotos.com and its newest division, ScanMyPhotos.com. Berman and Goldstone are also the lead plaintiffs and class representatives in the multi-billion dollar antitrust class-action litigation against Visa, MasterCard and member banks. This informational web site was created to provide news and commentary updates only. None of the information posted on WayTooHigh.com is intended to constitute legal arguments; it reflects only the opinions of its co-editors and not of any other plaintiffs or other parties involved in the merchant antitrust litigation. The information is not guaranteed to be correct, complete, or current. We make no warranty, express or implied, about the accuracy or reliability of the information posted by WayTooHigh.com or at any other Web site to which this site is linked.

  

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

Gold, Oil and WayTooHigh Hit Record Highs

With almost 1,000 posts since our battle against Visa and MasterCard began in 2005, we have a milestone to announce.

It is not just the multi-billion dollar interchange fees that are at record highs.  Even gold and oil’s record highs today are not in a field of their own.  WayTooHigh.com – The Credit Card Interchange Report also recorded its highest number of recent daily visits today.  And, to think, we are not even a cartel –  just entrepreneurs taking on the banks and Visa and MasterCard! 

While we are heartened that the credit card associations, banks, their legal teams, advocacy groups and major media outlets are also regular readers of WayTooHigh.com, it is much more reaffirming that we are also visited each day by America’s largest multi-national conglomerates and small mom-and-pop stores. 

Sunday’s Academy Awards telecast and MasterCard’s commercials will be a reminder that gimmicks and visibility do not trump the law and conviction of outrage by its cardholder and retailer customers.  This Sunday, it’s the Academy Awards MasterCard commercials, then this Summer, during the Olympics, it will be Visa’s turn to spin their story.

During the 60-second MasterCard spots on Sunday’s Academy Awards, think of the single mom walking into a corner convenience store in the inner-city, rather than the planned MasterCard sweepstakes contest they will instead be promoting.  Back to our profile: The mom walks in, buys a gallon of milk for cash and thus subsidizes the signature cardholder’s free trip to Europe from an identical purchase of milk because they paid with a premium signature MasterCard.  The merchandise cost the same, but the interchange expense is shared by the cash paying shopper.  Then, ask the question: why exactly is the person paying with cash subsidizing the frequent flier mileage gained from affinity cardholders?  It would take an Academy Award performance to explain how that is a fair transaction.

Our readers are part of the reason we want to incite millions of merchants and consumers to stand up and say enough to the nearly $40 billion in hidden fees forced upon us by Visa, MasterCard and its member banks.  There is no choice and there is no competition.

Leading Recent WayTooHigh.com Postings

Starbucks Coffee Chain To Close More Than 7000 stores
Stock Market Meltdown… Visa’s IPO Mess
Win One For MasterCard’s “Priceless.com”
Visa’s International Merchant Discount
WayTooHigh.com – The Credit Card Interchange Report
Chase Paymentech Chargeback Fees Are Unfair
Visa’s Inc.’s Planned IPO & MasterCard
“MasterCard Europe to Challenge European EU
“Merchants Want Lawmakers to Regulate Credit cards
Twilight Zone: The Movie, Visa and MasterCard

  

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and 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

Washington Mutual’s “Hidden Fees”

From today’s Los Angeles Times [C6] WaMu “No ATM cash withdrawal fees up our sleeves” advertisement, came this gem: “[h]idden fees just aren’t our thing.”

The ad is confusing and challenging to read as it’s in pink and the bottom super-tiny text is positively illegible; it’s printed with a font size that is so small, in white with a pink background.

While WaMu promotes free checking and explains they don’t like hidden fees, let’s take a look at another super large revenue source for the bank – interchange fees, which are anything but transparent and just as hidden as are the tiny restrictions clause at the bottom of the ad.

The advertisement also raises a question of if so many of their services are free, including writing checks, then why are interchange fees so costly?  Even clearing checks are without charge, as there are no interchange fees to process paper checks.

Starbucks Coffee Chain To Close More Than 7,000 Stores on Feb 26th*

As a headline, this is an eye opener, but no surprise to us. Years ago, Mitch Goldstone spent a full day with Starbucks founder, Howard Schultz during a University of Southern California Marshall School Entrepreneur event.  Mr. Schultz is one of our nation’s most admired and smartest entrepreneurs.

And, that is why this headline, that Starbucks is planning to regroup and *briefly close more than 7,000 coffeeshops at 5:30 pm on Feb 26 is smart management, and a brilliant media event.

The reason is to provide a refreshing training session to the 135,000 “store partners” [employees] across the U.S. to get the famed purveyors of much more than just selling coffee back on track. [click here for company press release].

OK, you must be asking, so what does this have to do with credit cards and interchange fees?  Unlike ScanMyPhotos.com, where our average Ecommerce order is more than $150.00, think about the Starbucks business model.  The average order must be just a few dollars.  My order is $1.85 and I pay in cash. 

Think of the interchange fees on credit and debit card transactions at Starbucks for micro-payments.  If a customer spends about $2.00 and uses a Visa or MasterCard-branded debit card, there is a minimum fee to Starbucks; in our case, it is about .55 cents.  Even credit card transactions are costly too.

A question is: why are Starbucks Cards free from interchange fees?  After all they are using an electronic payment network that costs money to print, promote and operate the card program.  In the case of Visa and MasterCard, may times the issuing and acquiring banks are the same, which means the four-party electronic payment network is on par with retailers’ internal gift card programs.  There must be a degree of fraud (people were recording the authorization codes on the back of the cards and wiping out the balance on cards that were later validated).  The banks plastic and Starbucks plastic are very similar, yet there are no interchange fees for gift and store cards.

Another question is: what would happen if Starbucks ceased accepting credit cards?  Mr. Schultz is on of the most dynamic entrepreneurs in the nation and if he did the math and reviewed the annual interchange fees, a similar conclusion could arise.  Sure, it is convenient to use plastic to pay for a cup of coffee, but most people (other than those watching the silly Visa commercials [click here]), would just as easily pay with cash to help Starbucks regain it entrepreneurial and storied edge.  For the larger purchases of cappuccino machines, cards could be used.

PAPER OR PLASTIC?

The banks along with Visa and MasterCard are spending millions to entice consumers to insist on plastic.  Starbucks and other merchants with many small individual transactions has fallen for this gimmick.  But, as Starbucks prepares to regroup, we wonder if they will also reevaluate the cost and benefit of those hefty merchant interchange fees?

But, this is not to suggest that there is competition from other sources.  In our case, if ScanMyPhotos.com were to terminate our credit card payment option, we would be out of business, as much of our revenues are derived from Ecommerce transactions and much higher per ticket in-store transactions which more require the use of charge cards.  The two giant credit card associations control nearly 80% of that market.

  

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

Federal Express “Round Up” Shipping Fees; LA Times Article by David Lazarus

We are huge fans of The Los Angeles Times‘ “Consumer Confidential” reporter, David Lazarus and regularly email him to extend our support for nearly every issue he addresses.  Mr. Lazarus previously reported for The San Jose Mercury News, but is now one of the Times’ best assets; his feature often addresses and resolves important consumer concerns.

This is one time, however, which we are in disagreement, sort of.  Today’s column [see link] asks why Federal Express and other courier services round up their shipping costs?  The answer: effectively, because they can.

Our nationwide and international photo scanning service [ScanMyPhotos.com] is now  comfortable with our partnership with FedEx and USPS’s pricing structures.  Yes, we would like them not to round up the charges, especially if a box of photos weights 25.1 pounds and we are charged to ship a 26 lb box.  But, as smart entrepreneurs, we take advantage of the added charge by adding extra treats to the order.  To take full advantage, we add boxes of treats, like chocolates and other word-of-mouth marketing pleasures to dazzle our customers; after all, we are already paying for the added shipping weight. 

The same is true with the U.S. Postal Service, and especially our co-branded U.S. Priority Flat-Rate boxes, which works in the other direction. Our orders can weight as much as 17 lbs and when sent to the furthest destination in the country could otherwise cost thirty-dollar and more, rather than our flat-rate cost of under nine-dollars [USPS rate increase is planned for May].

Mr. Lazarus is right and FedEx and the other carriers should study their rates and if enough consumers raise their voices, the more accurate pay-for-exact-measurement of each package might occur.  The technology is there to charge for the exact weight.  Even though, as Mr. Lazarus explains, “we live in an age of supercomputer-driven, lightning-fast digital technology that can determine the time of day down to a nanosecond,” other rates keep on rising.  Electronic payment processing credit card transaction fees are still rising – some merchant interchange rates have soared more then 10-fold since 1999.  Even though retailers like us no longer use the manual analog credit card imprinters, but rather the same super-fast telecommunication systems that is alluded to in today’s FedEx article.  

What makes FedEx, UPS, USPS and other courier services different than MasterCard and Visa is that there are choices and there is competition.

I can choose not to use FedEx, but like all merchants, we are forced to accept Visa and MasterCard’s anticomptitive and unfair merchant interchange fees – which are three times the rate in the U.S. as in many European countries and only about 13% of the fees are cost-based.  The interchange fee in Canada for PIN-based debit cards is zero and the interchange fee to process a manual handwritten check is also free, yet the nearly $40 billion in annual interchange fees forced on merchants and consumers is without regard to choice or competition.

  

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

“Merchants Want Lawmakers to Regulate Credit-card Fees” (Free Press)

Excerpt: “Merchants are upset over fees they must pay to credit-card companies on each transaction, known as interchange fees.  The fees average about 2 percent of the total transaction, but business credit cards and rewards cards — which give card holders frequent-flier miles or cash back — charge merchants more.”

Click here to read the Burlington Free Press article by Dan McLean (Feb 17)

[WayTooHigh.com editors note. Yes, MasterCard and Visa do make their interchange fees available on their websites. MasterCard’s is 100 pages.  Instead, we challenge any merchant to identify the exact cost for each electronic payment transaction.  Even though a schedule of fees is posted on a website, it doesn’t diminish from the reality that the fees are obscured and hidden.  Ask any consumer or merchant what the exact interchange fee was for each transaction was – at the time of purchase – and they will be hard-pressed to guess at the number.  Until we are successful in our litigation, the person from the lobbying group [Electronic Payments Coalition] can answer why the exact interchange fee is not posted as a separate item on each transaction, just like how other taxes are separated and displayed on its own line item on each receipt?   Then again, the welcome page to Electronic Payments Coalition explains they are “preserving competition” and “protecting choice,” – and it’s not even April Fool’s Day yet.  Competition?  Visa and MasterCard control about 80% of the entire electronic payment market.  Choice?  If ScanMyPhotos.com were to cease accepting Visa and MasterCard payments our retail and Ecommerce business, like most companies, would be closed in a day.  There is no choice and no competition when it comes to the unbridled cartel-like power wielded by the member banks and their two giant credit card associations.]

Win One For MasterCard’s “Priceless.com” Commercials at the Academy Awards

Unlike Visa’s TV ad campaigns, encouraging consumers to use their credit cards, adding to the billions in electronic payment fees, even on micro-transactions, MasterCard’s upcoming Academy Awards® commercials are a pleasant change.  

Rather than the prior sweepstakes campaigns, which were ineligible for debit and PIN-based cardholders, the new TV spots are a change in the right direction.  We are pleased that MasterCard is not just reading but reevaluating its marketing strategies based in part on our prior comments.

The prior sweepstakes’ schemes precluded debit card and PIN-based transactions from participating in the one-in-a-gazillion chance of winning a prize. That was a cheap attempt to coerce the much lower interchange rate debit card transactions to be entered at the much higher credit card rate.

This time, on Oscar® night, viewers will view a new MasterCard Worldwide promotion which is open to everyone – no purchase is necessary.  Now, if only the two leading credit card associations would open their eyes to the growing battle against their anticompetitive and collusive price-fixing charges. 

According to The New York Times reporter Stuart Elliott, the TV and print campaign, called “Studious Pupil” will reward customers with priceless experiences.  Each spot “ends by asking, ‘[a]re you searching for the priceless things in life?’”  

A better question is asking whether the millions of MasterCard cardholders understand that each electronic transaction they make is anything but “priceless?” 

There is a cost.  Merchant interchange fees account for nearly a $40 billion annual hidden tax on consumers and retailers.  Rather than taunting viewers at the Oscars with a one-in-a-gazillion chance of winning a painting or free meal, a more picture-perfect blockbuster would be to end their cartel over what we assert are illegal price-fixing tactics.

  

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

“MasterCard Spends $680,000 on Lobbying,” (AP)

According to a Feb 15th AP article, “MasterCard International Inc. paid Sidley Austin LLP $680,000 in 2007 to lobby on a variety of Internet-related issues.”

If Technology and Innovations Enable Free Photo Scanning, Why Not Also Free Access MasterCard and Visa’s Payment Network?

[Free Photo Scanning for Social Networking Sites]

Technology and innovations are generating nationwide buzz for our super-fast photo scanning and Ecommerce digital imaging services.  Now, it’s free.  ScanMyPhotos.com has pioneered super-fast and affordable photo scanning, and today it is free [see link for article]. 

We are scanning up to 1,000 4×6″ photos without charge (pay just for S&H – $19.95) for all members of Flickr, Facebook, MySpace and Blogger because Kodak technology is that efficient [see link to Kodak.com profile].

What does this have to do with out merchant interchange battle? Everything.  Unlike MasterCard and Visa and its thousands of member banks, we are taking advantage of technology to lower costs.  This model makes sense because ScanMyPhotos.com is asking members of these four leading social networking sites – representing the most cutting-edge and innovative group of consumers – to post reviews on their ScanMyPhotos.com experience.

If we can provide free and super-fast photo scanning, why can’t the two leading credit card associations also adjust  their fees to also reflect today’s shared technological efficiencies for super-fast electronic payments?

  

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

UnfairCreditCardFees.com Advertisements

From the UnfairCreditCardFees.com website.  Click below to view recent advertisements

Americans pay 3 times as much in credit card fees as Europeans

Ever wonder who pays for all that credit card junk mail? You do. It comes from your credit card interchange fees

© 2007–2008 Merchants Payments Coalition

MasterCard Insider Sells Shares

According to the Associated Press, “MasterCard’s President of Technology and Operations, Webster Dunbar, Sells 20,000 Shares.”

Click here to view Feb 13th article. 

“Significant Victory” Announced Against MasterCard by Class Plantiffs

A publicly filed Report and Recommendation on Feb 12 from Magistrate Judge James Orenstein is recommending to Judge Gleeson that the Court deny MasterCard’s motion to dismiss the Class Plaintiffs Supplemental Complaint that challenges MasterCard’s reorganization and IPO.  

[Click here to view the Report and Recommendation].

In our opinion, as Class Plaintiff, this is a significant victory as it undermines MasterCard’s legal and business strategy of attempting to avoid antitrust liability by transforming itself into a “single entity” immune from Section I of the Sherman Act. 

We have written in depth on this topic ever since MasterCard launched its plan to transfer liabilities through a questionable public offering.  While there are other remedies beyond overturning the MasterCard IPO, the situation is similar to those now faced by Visa Inc and its nearly identical planned IPO, which we now think could be modified to address these issues and even be deferred or rescheduled.  [See Risk Factors].  We expect that yesterday’s Report and Recommendation could minimally have a materially negative impact on Visa’s IPO pricing. 

Selected highlights from the Report and Recommendation 

• Background: In their First Consolidated Amended Class Action Complaint, filed on April 24, 2006, the merchants and trade associations that comprise the Class Plaintiffs alleged sixteen antitrust claims against a variety of networks and banks arising from those defendants’ use of fees and rules that enable the merchants to accept credit and debit cards as forms of payments for the goods and services their customers purchase. 
  
• [T]he plaintiffs allege that the IPO fundamentally altered MasterCard’s structure and operations, as well as the relationships between and among itself and the Banks, in ways that offend federal antitrust laws as well as New York State’s prohibition against fraudulent conveyances. 
  
• Before the IPO, the banks that made up the membership of the MasterCard consortium completely controlled the network: they owned all of its shares and populated its Board of Directors and other governance committees.
  
• The plaintiffs assert that it [the IPO] was to avoid such liability that MasterCard’s banks determined to transform the consortium into a public company that would qualify as a single entity; however, in doing so, the plaintiffs contend that the banks sought only to divest themselves of enough participation in MasterCard to avoid antitrust liability, without losing their ability to engage in anti-competitive conduct. Id. 74-75. In making that allegation, they note that MasterCard publicly described one expected advantage of the IPO as being insulated against “legal and regulatory challenges involving our ownership and governance.” 
  
• The Class Plaintiffs contend that the net effect of these changes is to create the appearance but not the reality of a single entity, and thereby improperly to insulate MasterCard from Section 1 liability for what amounts to a continuation of its member banks’ continued unreasonable horizontal restraints of commerce.
  
• I conclude that the IPO resulted in both MasterCard and the Banks making an acquisition that is properly subject to scrutiny under Section 7. First, the Banks Acquired stock in the new MasterCard entity, and that acquisition is not shielded from liability simply because it was paid for with arguably more valuable shares of the old entity. Second, MasterCard acquired assets from the Banks – namely, their shares of the old MasterCard entity and certain associated rights – and that acquisition is not shielded from liability simply because the assets can also accurately be described as MasterCard’s own stock rather than “the stock … of another person
  
• … [T]he plaintiffs assert that the rules governing transfers and ownership of the new classes of MasterCard shares will concentrate effective control of the new entity in the defendants’ hands. Those rules ensure that the banks that were members of the old MasterCard consortium will retain a substantial economic interest – 41 percent ownership – in the new entity. Combined with ten percent ownership share guaranteed to the new MasterCard Foundation, it is impossible for outsiders to obtain a majority stake in the company. In addition, the restrictions on governance rights – including the ownership qualifications and veto powers associated with Class M shares and the limitations on voting rights available to public investors – further ensure that no outsider can gain enough power to operate MasterCard in a way that might be more competitive but less profitable for the banks.
  
• … Given the plaintiffs’ plausible allegations about the characteristics of the relevant market and the effects of the acquisitions at issue, I conclude that the Complaint sufficiently pleads that the agreements leading to the IPO will probably result in a substantial lessening of competition. Combined with my earlier conclusion about the form of the acquisition, I further conclude that – with respect to both MasterCard’s alleged acquisition of assets from its member banks and the Banks’ acquisition of stock in MasterCard – the plaintiffs have identified, if not yet sufficiently pleaded, a viable claim under Section 7 of the Clayton Act.

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

Chase Paymentech Chargeback Fees Are Unfair

Happy to note that JPMorgan Chase is a named defendant in our multi-billion dollar merchant antitrust interchange fee litigation. [They own the credit card processing service we use (Chase Paymentech)].

Our company, founded in 1990 services customers across the country and internationally.  One thing we have nearly never experienced were chargebacks – when a cardholder disputes an electronic payment transaction.

In all the year’s we have had, maybe, a handful of chargeback requests and most are resolved in the same way.  For instance, on January 14th, we had a Visa chargeback for $103.50 due to what the customer claimed was a “duplicate processing fee.”  In actuality, the customer ordered photo scans and then a separate, nearly identical charge for online photo printing from their digital files.

On January 29th the issue was resolved in our favor and the reversal applied to our account, less a $10.00 fee.  Chase Paymentech explained that we are still responsible for paying this processing fee from the chargeback.

This is another example of the bank-controlled credit card associations nickle-and-diming its customers.  Shouldn’t these excessive fees be covered by the already “Way Too High” merchant interchange fees that millions of merchants like us pay, which accounts for nearly $40 billion in fees each year?

And to think: if our customers ever called us and questioned an unfair fee how we would handle it.  Then again, we are not part of a giant cartel which stands accused of anti-competitive, illegal price-fixing.

“Read This Before You Swipe! Debit Card Dangers” (MSNBC)

– 

“Fees: Banks prefer the credit option when you use your debit card, because they make more money in fees. For a $200 transaction, for example, a bank could make $1.99 if the customer chooses the “credit” option and signs his or her name. This is more than three times the 60 cents they usually make from customers who choose “debit” and enter a PIN number.”

Click here to view article by Sloan Barnett, MSNBC

Interchange Fees: Do the Math, but it Makes no Sense

During a recent review of our monthly merchant interchange fee statements, much of the info is beyond confusing, but one category we did notice was the charge for a standard debit card fees, which was about 55-cents, while a charge for a MasterCard business credit card was a variable fee of about 2.6% of the sale.  Do the math and you quickly recognize that Visa and MasterCard, along with the acquiring and issuing banks are major partners in nearly every business. 

Riddle: What do Newspapers, Photographic Film and Interchange Fees Have in Common?

If you are a regular reader of WayTooHigh.com, you already know the answer to what do newspapers, photographic film and interchange fees have in common? 

During last week’s International Photo Marketing Association convention, one speaker explained that mainstream media has been devastated by technological changes, where the Internet and social networking groups are quickly replacing the need for print editions of newspapers.  He explained that “newspapers don’t have the ability to adapt” and that “newspapers aren’t dying, it’s aging readership is.”  They explained that electronic storage is the greatest example of deflation; hardware that one costs in the millions is today just a few hundred or less dollars. 

 Technology has also impacted other industries, like the photographic film industry, which we personally know about.  Our volume of film developing has disappeared due to the advent of digital imaging. today, our entire business is digital.

 And, another segment that should have experienced similar changes is the electronic payment industry. Retailers once using manual credit card imprinters are mostly swiping cards super-fast and super-efficiently.  Today, the cost for an electronic transaction is a fractional amount from when the four-party payment system had to manually clear each charge. Yet, our interchange fees have experience a degree of inflation that can only be caused when a cartel is in charge of pricing.

  

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

What Does Cirque du Soleil’s “Love” Have to do with Interchange Fees?

Last week, we went back for the second time to see Cirque du Soleil’s “Love” at The Mirage in Las Vegas.   The performance is extraordinary, as are the ticket pices.  For second row, the tickets cost $150.00 each, plus a $15.00 “L.E.T” fee.  We think that stands for a “Live Entertainment Tax” which is an extra charge, much like a “convenience charge” that applies to Ticket Master-type costs.

This got us to thinking about our previous mentions [see link] to have the exact interchange fee posted on every debit and credit card transaction. 

If Las Vegas can post the exact “L.E.T” extra fee and print it on each ticket, why are Visa and MasterCard so protective of hiding their merchant interchange fees?      

Visa’s Inc.’s Planned IPO & MasterCard’s Earnings Recap

According to Robin Sidel’s Feb 1st WSJ article on MasterCard Inc’s increase in profits [click here], about 75% of the world’s second largest credit card association comes from electronic “payment processing fees that are paid by merchants and card issuers.”

Also noteworthy was the report that Visa Inc.’s planned IPO might occur within sixty days, although no price or date has yet been announced.

MasterCard’s profits during the 4th quarter rose to $304.2 million, or $2.26 a share, from $40.9 million, or 30 cents a share, a year earlier.

  

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