“Visa, MasterCard Plan Processing Fee Hikes” (via CSN)

March 30, 2009

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From Convenience Store News:

WASHINGTON — New transaction fee rate increases announced by credit card companies Visa and MasterCard are slightly under 2 cents per affected transaction, yet are expected to raise more than $600 million in revenues, according to a report by DigitalTransactions.com

MasterCard will increase its “Network Access and Brand Usage Fee” April 17, from 0.5 cents per transaction to 1.85 cents—a 270 percent increase—while Visa will increase its “Acquiring Processing Fee” from 0.5 cents to 1.95 cents—a 290 percent increase, with additional fees possible, according to NACS—the Association for Convenience and Petroleum Retailing, which opposed the proposed hikes.

“This begs the question: How can two ‘competitors’ announce price increase of nearly 300 percent at the same time in a recession?” NACS Senior Vice President of Government Relations Lyle Beckwith said in a statement. “From what we’ve seen with credit card interchange fees, the answer is obviously that two competitors with excessive and abusive market power can do what they want.”

Merchant-acquiring experts expect merchants to bear the cost of these fees because acquirers will simply pass them through to clients. “The ones we’ve talked to aren’t too excited about it,” an acquiring executive, who asked for anonymity, told the Web site. “It’s one of the bigger fee hikes.”

In a statement Visa told DigitalTransactions.com: “Visa Inc. regularly reviews its pricing, as any business would, and makes adjustments where appropriate depending on such factors as the value delivered to clients and the need to be competitive. Over the years, Visa has become a symbol of international acceptance, reliability and convenience, based on its commitment to provide superior value to clients. These clients, in turn, are able to offer competitive products and services to their customers. Financial institutions set their pricing to cardholders and merchants.”

In 2007, credit card fees cost convenience stores $7.6 billion, with the largest component being credit card interchange fees, which are a fixed fee and a percentage of each transaction, according to NACS. These fees average 1.8 percent in the U.S., which has the highest interchange rate of any industrialized country.

“The credit card fees that U.S. retailers pay are outrageous,” Beckwith said. “These newly announced fee increases are beyond outrageous. At a time when small businesses are feeling the economic pain of the recession, it is unconscionable that Visa and MasterCard can give themselves their own ‘bailout’ by slapping 300 percent increases on their fees.”

“Retailers ask Congress to lower credit-card fees” (via NJBiz)

March 30, 2009

A coalition of retailers today launched a campaign to lobby Congress to require credit card companies to negotiate with retailers in an effort to lower the “interchange” fee, averaging 2 percent, that retailers pay on each credit card transaction.

The Merchants Payments Coalition launched the campaign this morning during a telephone press conference with representatives of the National Retail Federation, the Food Marketing Institute, the National Grocers Association and the National Association of Convenience Stores.

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U.S. Senate to Review Credit Card Company Practices

March 27, 2009

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According to Reuters, next week the US Senate Banking Committee will meet to discuss new credit card legislation.

Areas of focus will be on prohibiting credit card solicitation to people under 21, and the current ability to change and terminate a cardholders account for any reason and at any time.
According to Reuters, “the Government Accountability Office, a congressional audit group, to study the effects of so-called interchange fees on consumers and merchants.  Interchange fees are the cost for transacting purchases using an electronic payment system operated by Visa Inc and MasterCard Inc. In the House, the Judiciary Committee has been examining the issue.”