Payments and Banking Blogs

April 30, 2008

From, they have assembled a link to several of the most recent and favorite payments and banking blogs. 

You Have to Hand it to MasterCard’s Spokesperson, Sharon Gamsin

April 11, 2008

Today’s Associated Press story, “Charges Fly Over Shops’ Credit-Card Fees:  Retailers, Credit Card Companies Battle Over ‘Biggest Credit Card Fee You’ve Never Heard Of,'” has a new twist.

Click here to read the article.

MasterCard’s spokesperson, Sharon Gamsin explained that “The company’s interchange rate has risen less than the rate of inflation…”  Nice point if you didn’t understand that the same technology, innovations and unparalleled growth of telecommunications services that make electronic payments more efficient.  These Moore’s Law advances that should bring down costs (every 18 months costs should be reduced in half) have led to international phone calls for just pennies a minute, a trilobite of memory for a few hundred dollars and so on. 

The point is that MasterCard and Visa’s credit card cartel and its interchange fee pricing structure should not be put in the same equation as the rate of inflation.  These are not eggs and milk; it’s an electronic payment network that relies to a grater degree on the logic of Moore’s Law.  If that were the case, then lap top computers, cell phones and other technology products would be rising, not declining.

As for the price of an international phone call, could you imagine what it would be pre-phone card and back when AT&T held its anticompetitive monopoly?


What Does Microsoft, Google and Yahoo Have in Common With Visa and MasterCard?

April 10, 2008

Read the rest of this entry »

Visa Inc: Olympic Torch Relay in SF

April 9, 2008

If today’s near debauchery in an American city over the Olympic torch relay is any indication of what’s to come, Visa Inc. and its Olympic sponsorship must also be in question. The International Olympic Committee and the world is watching, so too are the millions of merchants that accept Visa, along with the millions of Visa cardholders. The opposition to the Beijing Olympics is gaining attention and ferocity. The message over this summer’s Olympics is clear and if you thought Visa and MasterCard’s interchange battle was cemented in protest, just wait.

YouTube scenes from protesters in U.S. on April 9th






Visa 2008 Olympic Games National Promotion

Confusion along San Francisco Olympic torch route” (via Reuters)






“The Credit-Card Fee Market Isn’t Working” (via WSJ)

April 8, 2008

Click here to read the April 8th Wall Street Journal “Letter to the editor” from Rep. John Conyers (D., Mich.), Chairman House Judiciary Committee and Rep. Chris Cannon (R., Utah), Ranking Member House Judiciary Subcommittee on Commercial and Administrative Law.


In the Journal’s March 29 editorial, “Credit-Card Wars,” you note that, “as consumers we’d like to see interchange fees come down too, but through market innovation and competition, not Congressional fiat.” We agree. That’s why we introduced the bipartisan Credit Card Fair Fee Act: It facilitates direct negotiations between merchants and the credit card industry on interchange fees.

This approach is necessary because of concerns about coordinated price fixing among issuers leading to less competition and higher rates. For example, Visa has increased the average interchange rate 17% (26 basis points) in recent years despite dramatically improved processing technology and rapidly rising card volume. As the Journal notes, “Economies of scale should be driving [interchange] fees down, as in most other service-fee industries.”

In fact, Americans pay nearly three times as much on average as Europeans in credit-card interchange fees for the same set of services — nearly 2% of every retail purchase. This amounts to nearly $36 billion imposed on consumers through higher retail prices. And the interchange fee is the largest credit-card fee of all — dwarfing credit-card late fees, over-the-limit fees, balance transfer fees, annual fees, inactivity fees, penalty interest fees, and even ATM bank fees.

Yet the editorial says the market will ride to the rescue and bring down excessive credit-card interchange fees. That is unlikely unless there are negotiations and proceedings as set forth in our legislation. In an economy in which, as the Journal notes, credit transactions are now king and cash has been dethroned, how can the vast majority of merchants turn down plastic from the two major credit-card companies, who control approximately 80% of the market?

We introduced the Credit Card Fair Fee Act to create an open and transparent environment that doesn’t exist today, one that will not only spur the major credit-card companies to negotiate fairly on interchange but also to provide the opening for lower-cost interchange credit-card brands. Our bill would lead to competitive market-based interchange rates and terms.

Rep. John Conyers (D., Mich.)
House Judiciary Committee

Rep. Chris Cannon (R., Utah)
Ranking Member
House Judiciary Subcommittee on Commercial and Administrative Law

“Costs Are ‘Killing’ Gas-station Owners” (via Herald Ledger)

April 7, 2008

Click here to read the article reported by Jennifer Hewlett in the Herald Ledger on April 7.


Credit card interchange fees are “killing” convenience stores that sell gasoline, says Roth Bullock, who owns 16 such stores in Kentucky and Indiana.  Since 2000, 12 to 14 large companies operating convenience stores in Kentucky have gone bankrupt, and credit card fees are a big part of the reason, he said.

For every dollar spent on gasoline using a credit card, about 2 cents goes to the credit card company. Credit card interchange fees have risen dramatically in the past several years, and more and more people are using credit cards, as well as debit cards, which also carry fees, to pay for gas.

“It’s the second-largest expense we have besides payroll. It is double what utilities are,” said Bullock, owner of Bullock Oil Co., which operates Cowboy’s Food Stores in Kentucky and Indiana.

“Richard Maxedon, executive director of the Kentucky Petroleum Marketers Association, said that many small gasoline retailers in Kentucky are selling out to larger operators because they can’t afford to stay in business any longer, in part because of card fees.