Trucking Industry Helps Fund Visa and MasterCard’s Rewards Programs

Now that an average 18-wheeler gas fill-up costs about $1,200, next time you see a truck take notice that they are helping to fund Visa, MasterCard and its member banks cardholder reward schemes.  As trucking industry drivers use plastic to pay for topping off their tanks, about $25.00 merchant interchange fees are immediately funneled to the card associations and their member banks.  When you review technological advancementsand the laws of efficiency, just how much of that $25.00 help support the electronic payment network?  According to published reports, the cost to process an electronic transaction is about 13 percent – That means that the cost is about $3.25 from the standard 18-wheeler truck fill-up, while $21.75 (87%) helps explain why the merchant interchange fees are broken and unfair.

“House to Hold Hearings on Credit Card Interchange Fees” (via ConsumerAffairs.com)

Click here to read the May 14th ConsumerAffairs.com article by Martin Bosworth.  Reprinted below.

Retailers, bankers gear up for discussion of ‘Fair Fee Act’

By Martin Bosworth, May 14, ConsumerAffairs.com

The House Judiciary Committee has scheduled hearings on legislation that would rein in credit card interchange fees tomorrow. The hearing will be preceded by a frenzy of lobbying as retailers square off against the financial industry over the hidden fees that retailers pay to process credit card transactions.

The hearing will discuss the “Credit Card Fair Fee Act of 2008,”introduced in March by Judiciary Committee chairman John Conyers (D-MI). The proposed legislation would require lenders and credit card companies to negotiate with retailers on terms for interchange fees, and for the Federal Trade Commission and the Justice Department to step in and arbitrate if an agreement could not be reached.

Currently, interchange fees are set by credit card companies such as Visa and Mastercard, and the payments are often high enough to wipe out a store’s profit on any sold item, forcing them to raise prices for all customers just to recoup their losses. A coalition of retailers banded together to sue both companies and many major banks for what they claim was collusion in setting interchange fee profits

Photo store [and ScanMyPhotos.com co-]owner Mitch Goldstone, one of the lead advocates of eliminating interchange fees, said that “We are ready to explain why interchange fees are obsolete, illegal and anti-competitive.” In a posting on his blog, WayTooHigh.Com, Goldstone said that “After years of toil, merchants and consumers are at the cusp of forcing the demise of these unbridled and unnecessary interchange fees on American’s and our neighbors around the world.”

Strange bedfellows

Both the retailer litigation and threats of proposed new regulations have conspired to bring together credit unions and national banks–traditionally old foes–to oppose the legislation. The Hill reported that both sides plan to bombard Capitol Hill with advertising urging Congress to oppose legislation restricting interchange fees.

Retailers and interchange fee opponents hope to take advantage of the zeitgeist surrounding credit card, as several members of both the House and Senate have introduced new legislation that would curb the most abusive practices of the industry, and have held multiple hearings decrying the more unscrupulous tactics of the financial industry against its customers.

Even with continuing healthy profits for both credit card companies and highly successful IPOs, both Visa and Mastercard are rumored to fear a “perfect storm” combining the elimination of the interchange fees, lower card usage and higher delinquencies due to the economic climate, and restriction of many of the fees levied on consumers.

Industry analysts have observed that one of the principal motives for both Visa and Mastercard to go public was to build up “war chests” for funds to recover losses if the interchange fee litigation should go against them–and to shift the bulk of the risk to shareholders and investors.

At $50 Billion, Is MasterCard and Visa’s Member Banks’ Cartel Nearing its End?

The total annual merchant interchange fees continue to soar and reflect a growing discontinuity with the nation’s recession and realities that technology and efficiencies should be lowering fees. Instead, according to Robin Sidel’s May 14th WSJ article [“Consumers May Pay For Credit-Card Bill“], merchant interchange fees “generated roughly $50 billion last year.”  Robin explained on the phone this afternoon that this rate was based on information from The Nelson Report,

Just how monstrously tainted are these anticompetitive charge-card fees that violate federal antitrust laws?

Look at it this way:  Visa and MasterCard’s member banks’ interchange fees last year were much greater than three-times Microsoft’s entire net income of $14.8 billion dollars last year. The total interchange fees charged to merchants and paid by consumers last year were greater than the combined net earnings of Chevron ($17.5 billion), Hewlett-Packard ($7.2), Intel ($6.2), Walt Disney ($4.6), Apple ($3.4), Lockheed Martin ($3.0) McDonald’s ($2.3), Federal Express ($2.0) and Walgreen ($2.0). [source: Forbes 400].

 

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

 

 

 

 

 

 

“Just like the British in 1773, Visa and MasterCard Won’t Negotiate. Enough is Enough (Via UnfairCreditCardFees.com)

• Just like the British in 1773, Visa and MasterCard won’t negotiate. Enough is enough.  View “Tea Party Ad” print advertisement
• Credit card companies trap merchants and consumers with high fees. Don’t take the bait!  View “Card Trap Ad” print advertisement
• Americans pay 3 times as much in credit card interchange fees as Europeans.  View “Screw Ad” print advertisement
• Ever wonder who pays for all that credit card junk mail? You do. It comes from your credit card interchange fees.  View “Junk Mail Ad” print advertisement
• It’s the credit card sucker punch consumers never see coming.   View “Boxer Ad” print advertisement

 

[source: Unfair Credit Card Fees.com]

“Old Foes Unite to Keep Charging Credit Card Fees to Merchants” (via The Hill)

WayTooHigh.com – The Credit Card Interchange Report Comments:

Even financial interpreter Jim Cramer is in for a grueling week as Visa and MasterCard readies for what both companies warn might lead to their “insolvency” [according to their SEC filing statements].For an update on Thursday’s planned Capital Hill combat against the giant credit card associations and its member banks, click here to read Jessica Holzer’s May 12^th The Hill column.   

You know there are splinters in Visa and MasterCard’s haywired argument when lobbyists for the banks and the credit unions join forces; while they are gasping, we are ready to further illuminate the issues. It has been more than three-years since launching the class-action complaint to arrest this $40 billion annual hidden tax on merchants and consumers.

Let us not forgot that interchange fees were designed decades ago to cover the cost of a four-party electronic payment network – back when we used manual credit card imprinters and mailed in thick bundles of carbon copy credit card receipts to clear the payments. Back then, it took days to transfer funds, today it is instant and efficient.

Today’s efficiencies have done away with the antiquated payment process, yet the fees are higher than ever. Why the disparity as interchange rates abroad are a fraction of the nearly 2.0% tax charged in the U.S.?

 

 

This is the “perfect storm.” 

We are ready to explain why interchange fees are obsolete, illegal and anti-competitive. Even the banking industry’s shareholders are in for another bombshell so audible and eclipsing that the impact from their executive’s round of previously misfortunate decisions and billions in prior writeoffs may be petite in comparison. A trial by jury allows fort trebled damages.

When was the last time you heard the U.S. Federal Reserve explain that interchange fees “dampen innovation” for check writing? Never: there are no interchange fees to clear checks. Likewise, why hasn’t the Fed explained that merchants “derive huge benefits” from accepting paper checks for payment? Again, there are no fees to clear a check and if it is so significant a cost, why hasn’t the banking industry demanded interchange fees for that payment form?

The banking lobbyists are ready and so are we, but our story is being told by regular shop owners to personalize the issue. After years of toil, merchants and consumers are at the cusp of forcing the demise of these unbridled and unnecessary interchange fees on American’s and our neighbors around the world. The American public is fed up with the banking industry’s mismanagement and audacity; the days of cartel-like price-fixing will vanish, just as did those bulky manual credit card imprinters also disappear.

“Visa’s IPOIs Worth a Close Reading” (via WSJ)

Understanding the Word “Insolvency” Is Crystal Clear

Visa Inc. Files 10-K Annual Report, Amends S-1 Registration

  

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: Credit Card Fair Fee Act of 2008 Hearing

The House Antitrust and Competition Policy Task Force holds a hearing on the Credit Card Fair Fee Act of 2008 to ensure competitive market-based rates and terms for merchants’ access to electronic payment systems.  Thursday 05/15/2008 – 11:00 AM; 2141 Rayburn House Office Building, Judiciary Committee Antitrust Task Force.

Visa and MasterCard: How to Profit Off a Devistating Natural Disaster

Visa and MasterCard profiting from a devastating natural disaster?

This is another image crisis for the two leading credit card associations and their thousands of member banks.  When the public understands that with each electronic payment donation to help the people affected by the Asian cyclone, Visa and Mastercard are doing more than clearing the charges.  They are reaping profits from a global tragedy.  There should be additional pressure placed on their continued profiteering – this time at the expense of vital aid needed for that region of the world, ratherthan to help fund the banks’ other fiscal missteps.

If you thought that Visa, MasterCard and thousands of banks were heartless by reaping windfall profits during our economic energy crisis and record fuel prices, just wait. Even more dismaying than forcing credit and debit card holders to pay upwards of $2.50 for merchant interchange fees when they pay at the pump, is the current Asian disaster.

The United Nations estimates 1.5 million people have been “severely affected” by the May 2nd cyclone that swept through Myanmar. The death toll in that Cyclone-ravaged region could hit hundreds of thousands of people. What are Visa and MasterCard doing? As far as we know, every time an electronic payment donation is sent to The American Red Cross and other relief efforts, the two leading credit card associations and their thousands of member banks make a profit. The interchange fee, which could be upwards of 2.0% from each donation is being delivered to financial institutions, rather than in direct aid to the people in need.

Even with this horrendously inappropriate level of profiteering, your help is needed. Our ScanMyPhotos.com blog: Tales from the World of Photo Scanning has more info on how you can help.

Even worse is that the American Red Cross is in violation of their credit card merchant agreement and is risking disqualification from Visa and MasterCard because nation’s premier emergency response organization demands a minimum electronic payment of $5.00.  Click here to read how they explain the merchant interchange fee issue.

Will Visa and MasterCard waive its interchange fees for American Red Cross and other related transactions? 

As the pressure grows for Citigroup Inc’s new CEO, Vikram Pandit to address the troubled bank’s missteps, I wonder whether he has the influence to make the call to Visa and MasterCard on behalf of all the card associations’ member banks? 

Are Visa and MasterCard Merchants Violating Their Rules?

“Tragedy of Dead and Survivors in Myanmar Grows Worse” (via Aung Hla Tun reporting for Reuters) 

Visa Inc. Makes Operating Regulations Available to the Public

Before reprinting today’s Visa Inc. press release, these thoughts:

Our merchant interchange antitrust litigation is based on many years of alleged illegal activities.  Just as if a convicted bank robber apologizes and cleans up their act, they are still in violation of the law.  So too are Visa and MasterCard.  Because most of the same banks that control a large percentage of Visa’s newly public shares are also owners of MasterCard, we expect that the same decision will be forthcoming by the other credit card association. 

Moving forward, this is a smart decision and one more confirming action that Visa recognizes that they were in error and are quickly trying to fix their business model; from creating an independent board, to less ownership by the banks, to posting interchange rates online (although mostly as an attempt to respond to merchant concerns) and now this.  

The Visa Inc. May 9th press release is reprinted below.

——————————–

Visa Inc. Makes Operating Regulations Available to the Public

Move Seeks to Increase Company’s Transparency

SAN FRANCISCO, CA, May 8, 2008
Visa Inc. announced today that it will for the first time make its Visa International and Regional Operating Regulations available publicly, effective May 15, 2008.

The Operating Regulations, which will be available on Visa’s corporate website at www.corporate.visa.com, are the set of rules which govern the participation of issuing and acquiring financial institutions in the Visa system.

 

“As Visa continues to evolve to meet the needs of customers, we are committed to providing our partners and interested parties with greater insight into Visa’s operations,” says Joseph W. Saunders, Chairman and CEO, Visa Inc.  “Greater transparency is one of the ways we hope to strengthen our working relationships in the marketplace.”

 

Previously, Visa Inc. made its Visa USA Operating Regulations available to merchants and third party agents under a non-disclosure agreement.  On May 15, Visa’s rules will be publicly available to interested parties, including all Visa rules related to merchants’ participation in the system.  However, to protect cardholder and merchant safety and the Visa system, Visa has omitted proprietary and competitive information, as well as certain details from the rules relating to the security of the network.  For example, in the merchant rules, Visa has omitted authorization limits by country and processing codes which could aid fraudsters.

 

“Today’s announcement builds on our commitment to making Visa transparent in an increasingly competitive environment,” adds Saunders.  “While our operating regulations only govern our client financial institutions, we believe that merchants and others will benefit from access to the rules, which provide a greater understanding of the complexities of electronic payments.”

 

Stop Unfair Credit Card Fees – Merchants Payments Coalition

Tell Your Elected Representatives to Support HR 5546, The Credit Card Fair Fee Act

Credit card fees known as interchange are hidden in the cost of nearly everything consumers buy. In 2006 alone, American consumers paid over $36 billion in credit card interchange fees. Even consumers who don’t use plastic pay more through higher prices. Visa issuers collectively set credit card interchange fees in secret and MasterCard issuers separately do the same. The fees can’t be negotiated and are not adequately disclosed to merchants or consumers.

Tell your elected representatives to support HR 5546, The Credit Card Fair Fee Act which stops the price-fixing by the credit card industry and provides an open and transparent process to negotiate credit card interchange fees.

Send your message now.  Click here.

[Source: UnfairCreditCardFees.com]

 

CNBC Interview with Mallory Duncan, Chairman of the Merchants Payments Coalition and Rhonda Bentz, Vice President, Visa USA

Click hBentz, ere to view the CNBC News segment.

Merchants do not have a “wonderful relationship” with Visa and MasterCard. Fact is we are suing them for what could amount to hundreds of billions of dollars in antitrust violations.

There is no transparency for inter interchange fees. Ask any merchant what any single electronic payment transaction was. If Visa and MasterCard want transparency, post the exact charge on every credit card receipt.  Posting upwards of one-hundred pages on their website with encrypted interchange fee codes is not transparent.

Consumers do not know that they are being charged nearly 2% in interchange fees.

Interchange fees are illegally set by Visa, MasterCard and its member banks.  This is illegal and identical to what the railroads did in the 1800s which forced the creation of the Sherman Antitrust act.

There is no  competition.  Visa and MasterCard control 80% of the entire electronic payment network.  The fees are not competitive, any more than OPEC is competitive with its similar cartel-like pricing.

“Congress Takes on Gasoline Prices” (via CNNMoney)

• “The hearing was held by the House Judiciary Committee’s Task Force on Competition Policy and Antitrust Laws. It was delayed more than an hour due to prolonged votes on the House floor, according to a Judiciary Committee spokesman.”
• “Bill Douglass, chief executive of gas retailer distributor Douglass Distributing Co. also noted that credit card companies collect 9 cents per gallon of gas sold, leaving many retailers with no profit from the gas they sell.”

  Click here to read the CNNMoney May 7th article 

More Bank Profiteering from Record Crude-Oil

Where are the U.S. presidential candidates on the issue of Visa and MasterCard’s merchant interchange fees? 

Their silence is almost as concerning as are their lack of initiatives to boost support for the U.S. currency.  With today’s news that crude-oil futures reached a record of $121.49 a barrel, more attention must be directed to Visa and MasterCard’s cartel scheme to force service stations, all merchants and consumers to hand over more than $40 billion each year in questionable merchant interchange fees. 

If the presidential candidates really wanted to draw attention to unfair gas hikes, they should look beyond temporary tax fixes and instead demand that Visa, MasterCard and its member banks address this issue and how it impacts our nation’s economic energy crisis.  Each motorist fill-up means that Visa and MasterCard’s member banks reap upwards of $2.50 when credit cards are used.  Think of the trucking industry and the cost for diesel fuel and how much more money is being syphoned off and into the pockets of Visa and MasterCard and its member banks.

This interchange fee system is long broken, antiquated and must be fixed.  The national media attention’s spotlight on the presidential candidates would be an ideal forum to supplement what WayTooHigh.com – The Credit Card Interchange Report has been championing for more than three years.