NACS to distribute pumptoppers to communicate grievance over credit card fees (via Energy Business Review)

The National Association of Convenience Stores has announced that it will make pumptoppers available free of charge to US retailers, to help them communicate their aggravation over escalating credit card fees to consumers and the Congress…. Read more.

Credit Card Fees at the Pump are a ‘Hidden Tax’ on Consumers (via ConsumerAffairs.com)

Rising oil prices a gusher for card companies

 

By Martin H. Bosworth
(reposted in its entirety from ConsumerAffairs.Com)

June 29, 2008

Consumers are feeling pain at the pump from gas prices topping $4 a gallon but it’s not just gas they’re paying for. They’re dishing out “invisible” extra fees for using a credit or debit card when they gas up.

Interchange fees, the payments credit card companies and banks charge retailers for processing transactions made with plastic, constitute “a $50 billion fee on consumers,” said retailer Mitch Goldstone, owner of the 30 Minute Photos [Etc. retail and ScanMyPhotos.com Ecommerce business.]

“It’s a hidden tax that enables the credit card companies to directly exploit the energy crisis,” Goldstone said.

The interchange fees are set by Visa and MasterCard, the two largest issuers of credit cards, and supported by partner banks. Though the fee percentages themselves are fixed, the actual fee rises as the price of goods or services rises, meaning the fee for a credit card transaction can wipe out any profits the retailer may make for the transaction itself.

The fee structure hits convenience stores that sell gas particularly hard, due to the low margins and high costs of running the business.

“In 2007, credit card fees cost convenience stores $7.6 billion, more than double the convenience store industry’s profits of $3.4 billion,” said the National Association of Convenience Stores (NACS). “It has been much worse in 2008 as credit card fees have topped 10 cents per gallon, while the markup on a gallon of gas has averaged only 11 cents for the year so far.”

“After factoring in all operating expenses, retailers lose money on every gallon of gas they sell when a consumer uses a credit card,” NACS said. The retail association began a campaign of providing “pumptopper” advertisements to stores and merchants detailing the fees and how much they cost consumers.

Retailers have traditionally been forced to raise prices on all their goods in order to cope with the increased costs borne by interchange fees, and many gas station owners have recently been rebelling by only accepting cash for gas transactions and banning credit cards.

Goldstone, a lead plaintiff in the ongoing lawsuits brought against the credit card companies over the interchange fees, is planning a rally against the fees in his home city of Irvine, California for July 3. “I want to link this to Independence Day,” Goldstone said, adding that he has received support from a broad coalition, including members of the Irvine police department.

“Many of them have said ‘Good for you,'” Goldstone said, noting that many public employees live far outside the city of Irvine itself and pay enormous gas costs just to commute to and from work.

Shell Game

Although both Visa and MasterCard have enjoyed record profits since making initial public offerings for their companies, increasing public pressure over the interchange fees has pushed them to make changes in order to placate criticism, and possibly forestall the possibility of an unfavorable decision in the lawsuits.

Visa announced on June 26 that it would cap interchange fees at 95 cents for transactions made with debit cards at the pump. The fee structure change would take place on July 18, and would precede a full-scale revamp of credit and debit transactions in October.

Opponents of the interchange fees, such as Senator Dick Durbin (D-IL), applauded the measure but said more needed to be done.

“The setting of non-negotiable rates by companies with overwhelming market power not only represents a failure of the market, it pinches the pocketbook of every American,” Durbin said. “Congress needs to pass meaningful and comprehensive reform of interchange fees.”

Durbin sponsored the Senate’s version of legislation introduced earlier this year in the House of Representatives that would enable merchants to negotiate interchange fees with credit card companies and banks, referring to the Justice Department and the Federal Trade Commission (FTC) to settle the matter if an agreement could not be reached.

Others were less impressed with Visa’s move. “Unfortunately, we may not know the impact for months because Visa has said this will only affect debit card transactions on gasoline in mid-July and won’t affect credit card transactions until October,” Goldstone said, “long after the end of the summer driving season, and the opportunity for Congressional action.”

“When the tsunami hit Indonesia in 2005, Visa immediately stopped charging interchange fees on donations made to the Red Cross,” Goldstone told ConsumerAffairs.com. “If they have the power to rework their payment system so quickly, I wonder why they haven’t done it before now.”

[source: ConsumerAffairs.com]

MEDIA ADVISORY: Rally to Stop Skyrocketing Credit Card Fees on Gasoline

MEDIA ADVISORY                                                     

Contact: Mitch Goldstone
Ph: 949-474-7654 Email: Goldstone (at) ScanMyPhotos.com
 

Rally to Stop Skyrocketing Credit Card Fees on Gasoline
Ask Congress to support the Credit Card Fair Fee Act

Irvine, CA — June 29, 2008  – In honor of July 4th consumers and gas station owners alike will demand independence from Visa and MasterCard’s hidden credit card fees that add another 8-10 cents a gallon on top of already skyrocketing gasoline prices.

Service stations owners and consumers are paying record credit card fees as Visa, MasterCard, and their member banks reap the windfall from the 100% increase in the price of gasoline since 2007.

About two dollars of every $100 the consumer spends in stores or buying gasoline goes directly to the credit card industry in the form of the interchange fee, the biggest credit card fee you’ve never heard of. Interchange started as a fee to pay for credit card processing; it has skyrocketed in recent years. American businesses and consumers paid $42 billion in total fees just in 2007. 

With $4-plus gasoline, the credit card industry typically makes 8-10 cents per gallon in interchange fees, far more than the service station owner if he or she is making any money at all. (Many owners are currently losing money on every gallon they sell.) Americans shell out as much as or up to $2 per fill up to the credit card industry every time they fill up. Except for OPEC, nobody makes more money from skyrocketing gasoline prices than Visa and MasterCard. The cost of a cashless society is way too high if you let the credit card industry set the price.

Interchange fees are set in secret by the credit card industry. The Credit Card Fair Fee Act is a solution that would create a competitive market outcome and bring transparency to the broken credit card market by allowing merchants a seat at the negotiating table.

WHO:   WayTooHigh.com – The Credit Card Interchange Report

WHAT:  Consumers and merchants rally to stop unfair credit card fees on gasoline

WHEN:  Thursday, July 3, 7.30 to 9.00 AM

WHERE:  Chevron station at Corporate Park Plaza –––– corner of Jamboree and 

Barranca Parkway in Irvine (near John Wayne Airport)
CONTACT:  Mitch Goldstone, editor, WayTooHigh.com – The Credit Card Interchange Report and president & CEO, ScanMyPhotos.com

WayTooHigh.com – The Credit Card Interchange Report
92 Corporate Park Plaza, Suite B, Irvine, CA 92606
949-474-7654, Goldstone (at) ScanMyPhotos.com

 

 

 

An International Prospective: 2007/08 REVIEW OF THE AUSTRALIAN CARD PAYMENTS REFORMS (Via Peter Mair)

When most were expecting the [Reserve Bank of Australia] RBA to step further forward and again confront a banking industry notorious for disregarding national competition policy in setting credit card transaction fees, the RBA is, apparently unable to pursue the issues – and the cardsharps – any further:

……………the Board……..is prepared to step back from the regulation of these fees on the condition that industry takes further steps to improve the competitive environment[1].

The Australian community is painfully well aware of banks’ preferences when it comes to managing the competitive environment: banks couple noisy complaints — four pillars bad, two pillars good – with predatory pricing practices while otherwise waiting for misfortune, such as the sub prime crisis, to set the scene for forced consolidation of retail intermediation.

For the pillars, 2007/08 was a vintage year as first mortgage brokers and then the next biggest bank were taken out of the game and some retail insurers were on the ropes, before the RBA conceded defeat on the regulation of card payment systems operating as a de-facto cartel. A well established pattern of events, similarly favouring banks, has long been aided and abetted by the RBA as a compliant regulator seemingly unable to understand how the game works: other regulators charged to protect the public interest also seem to have been gelded when it comes to dealing with the retail financial sector.

One explanation along these lines stresses regulatory failure: a decade of the RBA dilly dallying with interminable studies and inquiries – and pulled punches — allowing the cardsharps to restructure beyond its reach.

Perhaps the RBA has discreetly withheld the full story along the way, whistling for credibility as its card game was collapsing about its ears.

It was unsettling to see the unrelieved insouciance of the cardsharps over recent years when interchange fees were supposedly under threat in many countries. On reflection, the cardsharps had an ace up their sleeve, presumably as far back as 2002 when the RBA first reneged on a promise to reduce interchange fees close to zero and no explanation was given for the retreat.

A global sense of ‘was my face red’ regulators being mocked and put on the back foot will probably become clearer as a similar standoff develops in other countries where other regulators also substituted bluff and bluster for effective action.

Looming embarrassments include Europe where MasterCard is now unable to levy interchange fees on cross-border transactions while Visa still may. In the UK the OFT seems to have gone quietly to ground after a decade of threatening to outlaw interchange fees for credit card  and on-line debit card transactions.

In the US, where strong regulatory intervention is most needed, there is no sign at all of a responsible regulator: a private members’ bill before Congress that would require the cardsharps to negotiate lower card transaction fees will meet strong resistance from a banking lobby wanting to underwrite the status quo as part of a rescue strategy for a floundering industry.

We can only guess what has stayed the hand of putative regulators of retail payments systems for the past decade – it now seems that the cardsharps warned regulators that they would restructure their business, substituting ‘scheme fees’ levied directly on retailers for the interchange fees under threat of regulation. That guess may explain both the insouciance and the surrender: I am open to other explanations.

Back on the home front we will wait to see the detail of banks’ promised improvements in the competitive environment to be put to an RBA unable to regulate interchange-fees and apparently grasping for anything that imitates regulatory credibility. Presumably the banks will play the RBA’s game and promise ‘improvements’ but, with interchange fees no longer pivotal, they will not be inclined to offer anything of substance. 

The form guide for bank promises is littered with disappointments.

The banking industry has grown used to doing as it likes with casual disregard for the public interest: any suggestion that local banks will now rollover and restore an appropriately competitive environment to the card transaction arena seems fancifully disturbing in its naivety.

Moreover, banks offering concessions in Australia may prejudice the cardsharps’ profitability internationally, derogating their newly acquired responsibilities to shareholders that are not member financial institutions.

 

…… and a layer of fairy dust

Allowing the RBA to review its own previous reform initiatives risked a loss of objectivity and, predictably, the RBA has put an unwarranted gloss on the success claimed for the outcome of its policies.

……………the reforms have met their main objectives — improving price signals; increasing transparency; improving access and creating a more soundly based competitive environment………..improved competition and efficiency in the payments system……..and substantial welfare gains to the community[2].

Words like ‘improving’ have very limited content without hard numbers that measure the extent of any claimed improvement. The persuasive hard numbers are about the relative importance of ‘credit card’ and ‘debit card’ transactions. The RBA collects and publishes these very numbers and, assessed against that critical benchmark, there has been no progress of real consequence over the past decade.

From the community perspective it is appropriate, frankly, to regard the continuing prominence of credit card transactions as evidence of the capacity and determination of the card cartel to exploit the community. As noted in a current CFO story[3]: 

 

Ideally, card payments would be plain debits to customer transaction accounts. The transactions would be processed using an electronic network linking all banks, all retailers and all customers — locally and internationally, and over the counter, phone and internet. Within that ideal framework, retailers and customers would pay appropriate fees for transactions. Eligible customers could access a line of credit, paying interest on any net debt.

 

The RBA’s reform initiatives were superficially consistent with fostering this ideal – an ideal, incidentally, characteristic of card payment arrangements prevailing in some European countries where credit cards have a very minor role at best.

On the face of it, Australian retailers were given defensive options  — scope to surcharge to recover excessive fees paid to banks for credit card transactions and to elect to accept only some cards (rather than ‘honour all cards’). The practical reality, however, is that most local retailers, already captive to the cardsharps, have little capacity to use these discretions: the use of credit cards is now so entrenched as to be ‘coin of the realm’ and for many transactions credit cards are contrived to be the only ‘legal tender’.  At best the impact of the reforms on credit card activity has so far been very marginal (and it is always a flight of imagination in Australia to suggest ‘more competition’ or ‘new entrants’ in the retail payments system).

The only sensible public reaction to this preliminary report is renewed calls for an independent review: the likely upshot of any independent review would see the primary responsibility for regulating the retail payments system (and the structure of the retail banking industry more generally) reallocated to a specially constituted financial services regulator, perhaps a separate division of the ACCC as competition regulator.

One would like the RBA itself to clearly acknowledge this: after some two ‘lost’ decades as the regulator, but having made little if any effective progress to reform the retail payments system, it is well beyond time for a different policy regime.

 

……….an emerging sense of failure

It has been fairly evident for some time, and in a few countries, that one possible basis of the ideal — a dominant local EFTPOS debit-card system – has been lost. Late calls by the RBA in Australia, and its counterparts in Europe and elsewhere, to save or newly develop linked national EFTPOS schemes seem destined to fail.

Frankly, if the schemes now operated globally by the terrible twins were pulled into line with domestic (and international) criteria of fair play, there would be no need to ‘rescue’ local, domestic systems: the come-lately realization that it would be a good idea to have (linked) national EFTPOS operations competing with the terrible twins is itself an abject admission of prior regulatory failure now beyond redemption.

Equally relevant, with the same banks being the key participants in all card schemes operating nationally, it could be expected that the pricing policies of all schemes would be coordinated in due course to achieve much the same mirror-image outcome evident with the twins’ international schemes now.

Why would local banks, participating in the rort of the community as associates of the terrible twins, now repent and agree to favour a fairer local system that was less profitable to themselves – please, give us a break? 

The demise of Bankcard is a relevant precedent for Australia’s EFTPOS system: the banks will do whatever is most profitable for themselves.

Apart from the redundant bilateral architecture and the contrary fee structure of EFTPOS – features intended to advantage the four pillars over small banks and others – this system seems set for terminal decline with local EFTPOS cards supplanted by scheme debit cards issued by the internationals.

 

More importantly, if regulators have lost control of card fees for all cards, it will not be long before different fee structures (scheme fees and interchange fees) emerge for transactions on international cards, credit and scheme-debit, which will make redundant any required limits on interchange fees alone.

The report has a pervasive sense of the RBA, as the regulator, having lost the battle after being outpointed and outgunned by the cardsharps.

Tell tale signs in a dissembling report include: …..participants will inevitably find ways around the regulations (page 12); …the Bank does not see interchange fees as… compensating for specific costs (page 7); surcharging is not yet sufficiently widespread…to be effective (page 12) and, ultimately, scheme fees could be used (like) interchange fees to raise revenue from retailers to pay card issuers and cardholders (page 14).

Implicit in this line of thinking is the long sensible conclusion that the only difference between credit cards and debit cards is the way in which the credit card product is contrived to be essential and then (over)priced by a cartel to exploit the community: so called free-credit and reward schemes were always and remain marketing tricks akin to a smoke-and-mirrors illusion.

As the card game newly embraces ‘scheme fees’ substituting for interchange fees, it is predictable that costs imposed on retailers and cardholders will increase while the  advertised benefits to cardholders – free credit and fly-by points — will be eroded with little reaction from a cardholder base already knowing they were practically worthless.

 

— a hollow threat is not a strategy

It is almost beyond comprehension that the RBA is now reduced to making a hollow-threat in appearing to protect the public interest in retail payments policy.

 Against the backdrop of its apparent surrender, the RBA says it wants ‘the EFTPOS system ‘to be saved’ (and all that that implies); remnants of the ‘honour all cards’ rule removed and greater transparency around scheme fees and average interchange fees’: where is the credible operational content in that request?

The RBA goes onto say:

……………if these steps are not made, or ‘promised’ to be made, ‘interchange regulation would continue with a required narrowing in the spread of interchange fees, between credit cards and debit cards, from some 60 cents to 25 cents’: again, where is the substance in such a threat when the dominant schemes care little anymore about interchange fees per se (or credit cards per se) as they shift the emphasis to scheme fees (and scheme-debit cards) which are essentially the same thing? Never forget that reduced to its essentials a credit card is just a debit card with an overdraft line of credit – any remaining practical differences are wholly contrived to exploit the pricing power of the card-scheme cartel.

In the racing industry such a challenge is known as ‘a walk through hurdle’: just wait for the banks’ Swiss-cheese plan to save the local EFTPOS system.

Does anyone at the RBA – or anywhere else – truly believe that banks will voluntarily ‘improve the competitive environment’?  Does anyone at the RBA – or anywhere else — truly doubt that the banks won’t spin and weave a persuasive smoke-and-mirrors story enabling the RBA to save face as it steps back from a humiliating defeat in a protracted regulatory battle fought without any sense of conviction or heart?

The only one-word conclusion to this charade is ‘             ’.

 

PART B: A WAY FORWARD

Ben Franklin probably said ‘a job not done remains to be done’ – or something similar.

Australia is ever more oppressed by banks become a law unto themselves, ever more powerful and ever more disdainful of a community left unprotected by its banking and competition regulators.

Day after day the community is regaled with politicians and regulators promising to outlaw abuses of market power associated with ‘cartels’; ‘predatory pricing’ and ‘tax lurks’.

Many consider the Australian banks to be past masters in perpetrating such offences with the many, nonetheless, not properly comprehending why such misconduct is not only allowed but actually aided and abetted by the very regulators – primarily the RBA – which the community believes was appointed to proscribe such malpractices and protect the public interest.

It was, accordingly, beyond the bounds of reasonable credibility to hear the new Treasurer vocally promoting the ideal of a competitive banking system while seemingly oblivious to the oxymoronic character of any expectation of such a practical outcome in Australia without a regulatory revolution.

Over recent years I have set out – including in submissions to the RBA – what I see as the mechanics of fundamental flaws in public policy settings conducive to abuses of market power by the banks.

I won’t labour the points again but again ask the RBA to reconsider their possible relevance to its loss of regulatory authority for the retail payments system — and the converse, initiatives to restore regulatory authority.

— two key points

Two key points, in summary, are:

The RBA should negotiate with the Australian Tax Office (ATO) to require banks to account for, and distribute to account holders as taxable income, the ‘deemed’ income inherent in banks bartering ‘free transactions for interest free deposits’ and giving ‘interest-free credit and flyer-point rewards’ on credit card purchases. It is beyond comprehension that any regulatory authority would expect the retail banking and payments system to function effectively while ever the four pillars are effectively subsidized extensively but unfairly – $ billions per annum — from the public purse. These hidden subsidies encourage banks to exploit their conduct of the retail banking and payments system in ways totally inimical to the public interest in its efficiency and fairness. The pressing need for reform on this front is a ‘no brainer’: banks will only start to pay attention to an appropriately ‘competitive’ alignment of costs and prices once their opportunity to exploit these tax-avoiding deals is curtailed.

The RBA, meantime, should cooperate with the ACCC to promote amendments to the Trade Practices Act to ensure the de-facto cartel arrangements underpinning joint-venture payment networks are tested against criteria of ‘maximum benefit’ to the community, not ‘net benefit’. A recommendation to this effect was made in 2002 in the Dawson Report reviewing the trade practices law. As things stand it is entirely inappropriate to allow the four pillars to operate cartels — credit cards, debit cards, EFTPOS and BPay — in ways which the RBA itself considers contrary to the public interest. The RBA (and ACCC) should similarly seek to join with counterpart trade practice authorities internationally to ensure network payment schemes operate in the public interest – the sense of this reform is underscored as the ‘terrible twins’ prepare to supplant conventional cash globally (and misappropriate seigniorage revenue) using conventional transaction cards ahead of introducing more sophisticated electronic-money alternatives.

---

[1]2007/08 Review,  summary of the main conclusions (page 39)

[2] summary and conclusions (page 38)

[3] House of cards :June 2008 issue of CFO magazine

[SOURCE: SUBMISSION TO THE RESERVE BANK OF AUSTRALIA [RBA]

:  PETER MAIR / PAYMENTS SYSTEM REFORM]

Merchants Say That Visa Fee Cut is Less Than Meets the Eye

WASHINGTON, June 27 MPC-Visa-fee-cuts Credit Card Fees on Gasoline Might Actually Be Higher, Not Lower, Under New Visa Program

 

WASHINGTON, June 27 /PRNewswire-USNewswire/ — Visa’s announcement yesterday regarding new interchange policies on gasoline sales shows that interchange fees raise gas prices, but it’s not clear what else the announcement means. If Visa is willing to admit that interchange fees are causing added pain at the pump, why won’t it admit its role in rising food and other consumer prices? Interchange fees cost Americans $42 billion last year – more than all other credit card fees combined. It inflates the cost of nearly everything consumers purchase whether they pay with plastic or cash.”While the devil is always in the details and we haven’t seen any details yet, it looks like the new structure for credit cards combines a higher fixed fee with a lower percentage fee,” said Hank Armour, President and CEO of the National Association of Convenience Stores. “The net result of this combination may actually be higher fees for those transactions under $60 for those customers using regular Visa credit cards without a rewards program.”

On debit card transactions, the cap on interchange may only apply to gasoline purchases of more than $97.50. That is a small number of transactions – especially because Visa banks reserve the right not to give gasoline retailers anything more than $75 on a sale.

Unfortunately, we may not know the impact for months because Visa has said this will only affect debit card transactions on gasoline in mid-July and won’t affect credit card transactions until October – long after the end of the summer driving season (and the opportunity for Congressional action).

While we welcome ANY recognition by Visa of the interchange fee pain, the confusion and potential negative effects of these changes might have been avoided if this were the result of a negotiation between merchants and Visa. H.R. 5546 and S. 3086, the Credit Card Fair Fee Act, would allow that to happen and ensure a market process for interchange fees with benefits to consumers throughout the country. Visa and MasterCard have a collective 80-plus percent market share and that gives them a stranglehold on retailers. The legislation would counteract that problem. Currently, rates are set in secret and the process is hidden making it practically impossible for retailers and consumers to know how much they are really paying in credit card fees, or why.

The Merchants Payments Coalition (MPC), UnfairCreditCardFees.com, is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees. For further information, please visit

 

http://www.unfaircreditcardfees.com

.[source: Merchants Payments Coalition]

 

 

 

 

Pumptopper Program Introduced to Battle Outrageous Credit Card Fees

ALEXANDRIA, VA – The nation’s 115,000-plus convenience stores will communicate their outrage over devastating credit card fees via pumptoppers that will educate consumers and Congress about the problem.

 

The National Association of Convenience Stores (NACS) announced that it will make pumptoppers available free of charge to retailers. Pumptoppers typically contain promotional messages about the store but these will communicate the industry’s fight against sky-high interchange rates.

 

NACS is urging retailers to put these pumptoppers in their promotional signage plans from August 1 to September 6, when Congress is in recess and members will be in their home districts.

 

Convenience stores sell an estimated 80 percent of the country’s gasoline, and the majority of stores (56 percent) are owned by one-store operators, as opposed to the less than 2 percent that are owned and operated by major oil companies. These stores are increasingly squeezed by low margins and escalating credit card fees; most are losing money when customers pay by credit card.

 

In 2007, credit card fees cost convenience stores $7.6 billion, more than double the convenience store industry’s profits of $3.4 billion. It has been much worse in 2008 as credit card fees have topped 10 cents per gallon, while the markup on a gallon of gas has averaged only 11 cents for the year so far. After factoring in all operating expenses, retailers lose money on every gallon of gas they sell when a consumer uses a credit card.

 

Both the House (H.R. 5546) and Senate (S. 3086) have introduced bipartisan legislation, the Credit Card Fair Fee Act, to examine credit card fees, specifically the interchange rate, which is the largest component of the credit card fees that retailers pay every time they accept plastic.

 

Credit card interchange fees are a fixed fee and a percentage of each transaction that Visa and MasterCard and their member banks collect from retailers every time a credit or debit card is used. These fees average 1.8 percent in the United States, which has the highest interchange rate of any industrialized country. The U.S. interchange rate is approximately three times the rate in Europe and four times the rate in Australia.

 

“The credit card fees that retailers pay are outrageous,” said NACS President and CEO Hank Armour. “Congress needs to see the pain that credit card fees are causing in their home districts,” said Armour. “In Washington, the credit card companies have used their outrageous profits at the pump to fund a massive lobbying effort to prevent fixing the broken system. It is impossible to match their virtually unlimited resources, so we need to take the message straight to where this pain is occurring – at the gas pump,” said Armour.

 

The pumptoppers that NACS has developed have two messages: “Tell Congress you want to know how much this fill-up cost you in credit card fees” and “That pain you are experiencing in part is caused by secret credit card fees.” Both ads encourage motorists to go to the Web site www.unfaircreditcardfees.com to send a message to their elected leaders. The artwork is available in a variety of sizes and can be downloaded at www.nacsonline.com/pumptoppers. For retailers who are unable to print the pumptoppers themselves, NACS has arranged a significant discount for retailers who want to order them from signage company GSP at www.popmanager.com/ccfees.html.

 

“The Credit Card Fair Fee Act, a bipartisan effort, would provide an opportunity for merchants to negotiate reasonable terms with the credit card companies and their member banks,” said Armour. “Right now there is no market for interchange fees. The fees are fixed by the banks, hidden from the public and forced on merchants in a take-it-or-leave-it offer. The Credit Card Fair Fee Act would create a market for interchange fees by allowing merchants and the card associations to negotiate on equal footing.”

 

“It is essential that Congress takes action on this legislation. Without Congressional action, they will increasingly see second- and third-generation family businesses in their districts that will have to close their doors as their livelihood gets siphoned off by the credit card companies,” stressed Armour.

 

-###-

 

Founded in 1961 as the National Association of Convenience Stores, NACS is the international association for convenience and petroleum retailing, representing more than 2,200 retail and 1,800 supplier member companies. The U.S. convenience store industry, with over 146,000 stores across the country, posted $577 billion in total sales in 2007, with $408 billion in motor fuels sales.

 

[source: NACS]

UPDATE: Protest Against Soaring Gas and Credit Card Fees at Service Stations Planned Prior to July 4th Holiday

Detailed information will be available on Monday. Media inquiries, contact Goldstone@ScanMyPhotos.com

DURBIN STATEMENT ON VISA ANNOUNCEMENT REGARDING INTERCHANGE FEES

[WASHINGTON, D.C.] – United States Senator Dick Durbin (D-IL) released the following statement today after credit card giant Visa announced it would voluntarily ease the interchange fees charged to gas stations in the face of record high gas prices.

“Visa’s announcement is a positive step and an acknowledgment that high interchange fees are hurting merchants and consumers.”

“Businesses and consumers are getting nickled and dimed by the big banks, who end up making billions from these hidden fees. The setting of non-negotiable rates by companies with overwhelming market power not only represents a failure of the market, it pinches the pocketbook of every American.”

“Congress needs to pass meaningful and comprehensive reform of interchange fees. These fees need to be fairly and transparently negotiated so American consumers and businesses can get a fair shake from the credit card companies.”

Earlier this month, Durbin introduced legislation to allow large and small businesses to negotiate directly with credit card companies and banks to reduce the interchange fees that are charged on every credit card transaction. 

Durbin’s Credit Card Fair Fee Act of 2008 would safeguard consumers and retailers by preventing credit card companies from using their market power to charge unfair fees through an unfair process.  Recognizing that certain widely-used electronic payment systems have become nearly as important to our consumer economy as cash, the bill would ensure that retailers have access to these electronic payment systems at fair rates and terms.

Visa Inc. Gas Interchange Fees Good Attempt, But Still Weak Gimmick

During the past many years, we have been drawing attention to windfall profiteering at the gas pumps by Visa and MasterCard. In advance of our major rally planned for July 3rd to call attention to their fees, Visa today announced a cap on certain charges.  Read more, click here.

However, it still raises several questions and comments:

• If Visa’s multibillion merchant interchange fee structure can implement a limit at service stations, then why not everywhere? 
• The limit of 95-cents for debit card transactions is near what it is now.  Many merchants already pay a flat fee for debit card transactions, so this sounds like a non event. 
• Don’t forget the mega-million dollar ad campaigns taunting consumers to always use their debit cards at the much higher credit card rates, which fully invalidates this as a gimmick.
• This action might be helpful moving forward, but it does not resolve the years of anti-competitive and illegal price fixing by the two card card associations.
• Oil prices have jumped nearly 100% in the past year and all along Visa and MasterCard have been reaping windfall profits.  The limit for debit cards begins in mid-July, and a new Visa credit card interchange restructuring into a single, lower rate across all consumer credit card transactions won’t be applied for four months.
• How many millions or billions in added profiteering will their member banks realize until then, and what about the many years of prior over charges?  
• From my perspective, the only thing Visa Inc. fixed are prices.

Why Technology Has Not Trimmed Merchant Interchange Fees

Visa and MasterCard can do all the back peddling they want – from creating an independent board of directors, to posting a hundred-pages of confusing non-transparent interchange fee schedules on its website, but the fact remains, technology has not trimmed interchange fees. 

Look at most any other industry.  Over the years you will notice that innovations and technology play a key role in reducing costs.  For our company, ScanMyPhotos.com, we have a great story.  For example, the high-speed photo scanning service that we pioneered created an entirely new business model.  Today, thanks to Kodak technology, our efficiencies have helped to cut prices by about 90 percent.  But, when you study Visa and MasterCard’s electronic payment network, they are using their unbridled cartel-like market power to artificially keep their rates super high – way too high.

Gas Prices Are a Mess; Visa and MasterCard Are Not Helping

Because Visa and MasterCard, along with their thousands of member banks are playing a key role in our nation’s economic energy crisis, we will demonstrate in advance of the July 4th  Independence Day holiday exactly why Visa and MasterCard are no friends to American motorists, and people around the world.  Their credit card fees are a nightmarishly wild scheme and forcing service stations to close.  These anti-American, windfall profits are unpublicized and poisoning the economy.  Interchange fees are unpatriotic.  During the July 4th Independence Day holiday we are gearing up to explain why.  

For background, click here and visit this site for more updates.

Noise from the American Bankers Association

“ABA SAYS JUSTICE DEPARTMENT AND FTC LETTERS MAKE STRONG CASE AGAINST INTERCHANGE LEGISLATION.”

The American Bankers Association does it again. What a surprise that they issue a press release regarding a recent comment regarding the Credit Card Fair Fee Act.  What is purely stunning is that the bank trade association could even suggest that the consumer friendly legislation is “plainly anti-competitive and would violate fundamental antitrust principles.”  Have they no shame?

Visa and MasterCard with its 80% mammoth market power and well documented anti-competitive practices [See prior ~1200 posts below] is the reason millions of merchants are involved with our class-action litigation. 

Shortly, when you do an online dictionary search under the term “antitrust,” Visa and MasterCard will be used as the model for why the named worldwide defendants conspired to illegally fix prices and force merchants to pay supra-competitive Interchange fees.  Their actions are the reason we have the protections of the Sherman Antitrust Act.

While the Banks’ trade association’s president, Edward Yingling, said “this legislation will hurt competition and harm consumers, plain and simple,” he is wrong.  Competition is non-existent and millions of retailers and consumers worldwide are harmed every day due to the card associations unbridled greed.  

Did MasterCard and Visa just give American Express about $4.0 billion dollars to settle the prior antitrust suit [read more] because they are nice guys, or because they violated the law?  I look forward to an apology and recognition from the ABA that they were wrong.

Arguments and press releases like theirs is silly.  Ex: “The fact is the card payment system brings considerable benefits to all parties to a transaction,” said Yingling.  This might have been the same argument the railroads used in the 1800s when they forced farmers to either transport their goods via trains or let it rot.  That is also the reason the Sherman Antitrust Act was enacted.  Merchants like us [ScanMyPhotos.com] are forced to accept Visa and MasterCard or we will be out of business, just as the farmers were when they were forced to use the railroad network, as merchants are today forced to use the electronic payment network.  Differing networks, same violations.

If the ABA was representing consumers and retailers, rather than financial institutions, they would understand the facts, rather than parrot the replies from high-powered legal teams.

Great American Protest: Rally Against Visa and MasterCard’s Profiteering From Record Gas Prices Planned at Start of July 4th Holiday

Are you overwhelmed by the record gas prices? Did you know that Visa, MasterCard and thousands of its member banks are making windfall profits every time you fill up and pay with a charge card. As gas prices tripled, so too have many of their fees.  These soaring interchange fees are also leading to service station entrepreneurs closing down; they are loosing their businesses due partly to these fees which are among their largest expenses.

Why haven’t there been any major protests against profiteering from record gas prices?

Answer: because it hasn’t been organized, until now.

Take a stand and please join us in Orange County for The All American Rally against Visa and MasterCard to call attention to their hidden credit card tax on the country. We are organizing a rally to protest the hidden credit card fees from skyrocketing gas prices just prior to the July 4th Independence Day holiday.

 

 

 

 

 

  

 

 

  

 

 

  

Amex, MasterCard Reach $1.8 Billion Settlement in Antitrust Suit

American Express Co. reached a $1.8 billion settlement with MasterCard Inc. over the card issuer’s lawsuit with the payment processor.  This related to allegations that MasterCard, Visa Inc. and its member banks prohibited financial firms from issuing credit cards through American Express.

“We are pleased to have reached a settlement with terms that will enable us to keep our strong balance sheet intact,” said MasterCard President and Chief Executive Robert W. Selander. He added that “eliminating the uncertainty” of a prolonged court case is in the best interest of shareholders.

American Express had already received a $2.1 billion settlement against Visa. Inc. several months ago.  Because Visa is significantly larger than MasterCard, why were the two settlements so close in monetary size?

And, if a “prolonged court case” worries MasterCard, what is their explanation for extending our more than three-year merchant battle against them and Visa and its member banks for illegal price fixing of interchange fees?

Click here for more info.

All About the Visa and MasterCard Promotional Gift Card Scheme

I recently bought a new AT&T wireless cell phone and received a $50 rebate, but not so fast. The refund was not a standard check, but rather as an electronic payment AT&T branded Visa Promotional Card. The challenge was to find merchants which accepted the card. I tried at the gas pump, I tried at an Albertsons Supermarket. It seemed I had better luck at Starbucks.

If you thought the merchant interchange fees to Visa and MasterCard and its member banks were high and not transparent, these electronic “gift” cards are unfair and spawn another blemish on the credit card payment network. Unlike with cashing a check, each time the card is used, merchants are forced to pay interchange fees on each transaction.

The costs are staggering (about $50 billion each year) and then there is another hidden cost. The card I received was for $50.00, but as the value was used up, I now have a balance of about $1.60. What can I buy for exactly $1.60. These micro balances are then difficult to redeem, yielding the two giant card associations, its member banks and companies promoting them with extra, hidden windfall profits at the expense of consumers.

Because these are not “credit cards” how it is processed and accepted differs from merchant to merchant. In the case of the AT&T Visa Promotional Card, it clearly is branded as a “debit” card, yet the detailed accompanying instructions included this important information:

• “When shopping, simply tell the cashier to process your card as a ‘credit’ transaction, not a ‘debit’ card.” [Editors note: this means that retailers are forced to pay a percent of each sale rather than a low flat-rate debit card rate].
• “To purchase gas, have the service station attendant process the transaction inside. Use your AT&T Promotional Card to make purchases anywhere Visa debit cards are accepted.” [Editors note, just do not use it as a “debit” card warns the informational page that was mailed with the card].
• Purchases can be made without usage fees or finance charges…… [Editors note: does that mean there are no merchant interchange fees for these transactions? From reading the instructions it explains there are no “usage fees”?]

OPEC, Visa and MasterCard Have Much in Common

Thomas W. Evans wrote a New York Times Op-Ed [“Sue OPEC,” June 19] calling for United States to sue the Organization of the Petroleum Exporting Countries (OPEC) due to the oil cartel’s illegally setting production quotas and maintaining “artificially high prices for crude oil” which is in violation of U.S. antitrust laws. 

 

 

According to Mr. Evans, an industry expert “estimated that the real production cost was $15 a barrel.”  Even a spokesperson for OPEC was reported to say that if market manipulation was omitted, the price for a barrel of oil could be $70.

 

While it is difficult to actually sue the oil cartel, there is another cartel that faces nearly identical collusive market power.   

 

 

Imagine if OPEC controlled 80% of the world’s oil reserves and illegally controlled and fixed prices?  Imagine if there was another similarly brutal cartel with such an impenetrable network that they could reap $50,000,000,000 in annual hidden, non-transparent fees that few even knew about?  While OPEC has a level of international immunity from U.S. federal antitrust laws, Visa, along with MasterCard and their thousands of member banks do not.  The parallels are mirror-like identical.  Yet, there is a difference – Visa and MasterCard’s merchant interchange fees are based in an electronic payment network that is antiquated and broken. 

 

 

Imagine if OPEC controlled 80% of the world’s oil reserves and illegally controlled and fixed prices?  Imagine if there was another similarly brutal cartel with such an impenetrable network that they could reap $50,000,000,000 in annual hidden, non-transparent fees that few even knew about?  While OPEC has a level of international immunity from U.S. federal antitrust laws, Visa, along with MasterCard and their thousands of member banks do not.  The parallels are mirror-like identical.  Yet, there is a difference – Visa and MasterCard’s merchant interchange fees are based in an electronic payment network that is antiquated and broken. 

 

Imagine if OPEC controlled 80% of the world’s oil reserves and illegally controlled and fixed prices?  Imagine if there was another similarly brutal cartel with such an impenetrable network that they could reap $50,000,000,000 in annual hidden, non-transparent fees that few even knew about?  While OPEC has a level of international immunity from U.S. federal antitrust laws, Visa, along with MasterCard and their thousands of member banks do not.  The parallels are mirror-like identical.  Yet, there is a difference – Visa and MasterCard’s merchant interchange fees are based in an electronic payment network that is antiquated and broken. 

 

According to published reports, the actual cost to transact a credit card payment is about 13% of the total fees collected.  Similar to OPEC, they are a mighty cartel that illegally fixes prices and manipulates the electronic payments market.  The difference is that while OPEC is not currently being sued, Visa, MasterCard and its major member banks are being sued, by us and millions of merchants in what could be the largest antitrust class-action in our nation’s history.  

MasterCard Admits to $50 Interchange Limit at Gas Stations, According to AP

As best I know, this is the first time MasterCard admitted to placing a defined limit of $50 for each service station gas fill up.  But there this is part of a larger scheme, which often requires cardholders to use multiple cards to complete the transaction.  Click here for more info.

 

How to Stop Credit Card Profiteering at the Pumps

With record-setting gas prices, service stations, motorists, consumers and the entire nation and world have become the latest pawns for Visa, MasterCard and its thousands of member banks to score billions, and few are noticing.

We came across this Tom Breen Associated Press article that helps explain why this is such a heated issue.  Finally, according to MasterCard spokesperson, Sharon Gamsin, the second largest electronic payment company has indeed placed a merchant interchange fee cap of $50 for all fill-ups.  When was it implemented and why not just charge for the actual cost to transact the electronic payment?  Think of the goodwill that Visa and MasterCard’s new shareholders can share with pride, in knowing that their company is helping to lower and soften the impact of these unfair credit card fees.

USA Today’s Chris Woodyard wrote an article on limits at the pumps in this May 30th article.  The credit card company tricks persist.  Even with the MasterCard cap at the pumps, many are forced to now use multiple cards because the card associations and member banks are imposing $75 limited, which means that the interchange fees are much more, especially when debit cards are used and flat fees apply.

The MasterCard cap at the pumps was first mentioned in 2006, and I was unsure whether MasterCard actually implemented this program.  Now that they have (according to Comcast.net News) here are more questions:

Because of the collusive nature of the giant 80% market power that MasterCard and Visa wield, I was surprised that Visa did not follow along.  So, it is only MasterCard that has the cap at the pumps?  Why did Visa withhold from also limiting interchange fees at the pumps? 

Did you know that it can cost more than $1,200 to full up an eighteen-wheeler truck; that is about $25 in interchange fees for something that might cost pennies in real costs to transact over the monopolistic payment networks.  

If merchant interchange fees are equally limited to $50 for a Prius and a double-haul big rig, why are not all merchant interchange fees for every other transaction also limited too?  The answer is that when you operate a giant cartel – reaping nearly $50 billion dollars in hidden fees – you can do whatever you want… until now.

Credit card fees: Some gas stations say ‘no more’ [Tom Breen, AP]

• When gas station manager Roger Randolph realized it was costing him money each time someone filled up with $4-a-gallon gas, he hung a sign on his pumps: “No more credit cards.” 

• He may be the first in West Virginia to ban plastic, but gas station operators nationwide are reporting similar woes as higher prices translate into higher credit card fees the managers must pay, squeezing profits at the pump.

[source: [AP]

NBC Nightly News: ScanMyPhotos.com Profile Tonight

Mitch Goldstone and Carl Berman, co-founders of ScanMyPhotos.com (30 Minute Photos Etc.) will be profiled on the NBC Evening News with Brian Williams tonight (June 17th). 

Click here to view schedule in your area.  Goldstone and Berman are also the lead plaintiffs and class representatives in the multi-billion dollar merchant antitrust interchange litigation against Visa, MasterCard and major banks.

 

Watch us on The Today Show – Click here

Watch us on The Nightly News with Brian Williams – Click here

In memoriam – dedicated to the remembrance of NBC’s Tim Russert (1950-2008)

MasterCard: Greed or Fraud?

By bailing out the member banks, I wonder if the new MasterCard shareholders understand just how disingenuous the second largest electronic payment network is?  From my prospective, Mastercard cares not about businesses or consumers. They care about protecting the last drop of interchange fees.  And, it is a $50 billion dollar boondoggle.  

Here is more proof: Review the news about MasterCard and Maestro cards.

Faced withthreats of massive fines by the E.U., the slippery credit card company waited until nearly the last moments to suspend its cross-boarder transaction fees in Europe.  Based on their prior years of disdain for its customers, I am surprised the company did not suspend their fees on June 20th?  A mischievous youth might play that game with their parents – awaiting the last second before they face punishment to atone for their transgressions.  But, in this case, MasterCard played (in my opinion) a sinister and unethical game of stalling while recouping months of interchange fees.  They literally were running the clock out and showing just how brazen their management team can be. 

The E.U. granted MasterCard six months to change its fee structure.  Today is June 13th and the deadline was June 21st. This action demonstrates why our antitrust litigation is so important.  MasterCard is toying with nation’s, businesses and consumers.  Their contempt for governments, businesses and consumers is another priceless example of why our more than three year battle is just heating up.

 

MasterCard to drop ‘illegal’ fees

MasterCard Inc., the giant credit card company based in Purchase, said this week it will drop 40-year-old transaction fees that European regulators have declared illegal.

The European Commission said last December the company had to devise an alternative to its interchange fees that doesn’t harm consumers. The commission said MasterCard would face a daily penalty of up to 3.5 percent of sales if it did not revise the interchange fees.

The interchange fees are paid from bank to bank on each cross-border payment transaction. The fees cost consumers as much as 13.5 billion euros (about $21 billion) a year, according to the European Retail Round Table, a lobby group for 14 retailers.

MasterCard said it would drop the fees as of June 21, but will continue discussions with the commission about a better way to structure the fees.

The company is also appealing the commission’s decision to the European Court of First Instance.