NACS/CSNews CIO Roundtable Talks Trends & Technology Issues | iBlogAuto

Archives of Convenience Store News,

State convenience store association will hold convention in September.

State beer/wine permits still available.

Oil companies funded the drive to put initiative on the November election ballot.

NACS/CSNews CIO Roundtable Talks Trends Technology Issues

NEW ORLEANS — Complying with Payment Card Industry (PCI) standards and figuring out how to make the best use of online social networks like Facebook and Twitter were two hot button topics at this year’s NACS/Convenience Store News CIO Roundtable, held in May on the opening day of NACStech in New Orleans.

This year’s roundtable drew its largest lineup of retailer participants, and marked the debut of the retailer educational session as a co-branded event between NACS and CSNews. Fifteen retailers from 14 different convenience store companies also discussed self-checkout, loyalty programs , mobile marketing and other technology issues. The 2010 NACS/CSNews CIO Roundtable was sponsored by Gilbarco Veeder-Root, KSS, NCR and Pinnacle Corp.

READ ARTICLE via NACS/CSNews CIO Roundtable Talks Trends & Technology Issues | iBlogAuto.

Denver Daily – Congress takes swipe at #SwipeFees

Peter Marcus, DDN Staff Writer

Local retailers are rejoicing over lawmakers including a provision in the final version of financial-overhaul legislation expected to see a vote this week by Congress that would slash so-called debit card “swipe fees.”

READ ARTICLE via Denver Daily – Congress takes swipe at ‘swipe fees’.

Jill Schlesinger on Financial Reform Winners & Losers – EconWatch – CBS News

The Credit Card Industry: The bill’s ban on interchange (or “swipe”) fees, which account for 1-3% of credit or debit card purchases. Once the rule goes into effect, credit and debit card companies are going to lose a chunk of money

READ ARTICLE via Jill Schlesinger on Financial Reform Winners & Losers – EconWatch – CBS News.

Rule May Drop #SwipeFees Price on Debit Cards

By Richard Craver

JOURNAL REPORTER

Published: June 27, 2010

Consumers could see a pricing break at the gas pump or retail counter when the latest attempt at financial reform goes into effect.

READ ARTICLE via Rule may drop price.

Are credit card companies telling the truth about fees? – Haaretz Daily Newspaper | Israel News

Antitrust Commissioner Ronit Kan has been fighting the credit card companies for years over the interchange fees, and in 2006 she struck a deal with them to reduce the fees from 1.25% – the rate at the time – to 0.875% by 2012. The rates are scheduled to drop next month from their current level of 1.1% to 0.975%.

READ ARTICLE via Are credit card companies telling the truth about fees? – Haaretz Daily Newspaper | Israel News.

Are credit card companies telling the truth about fees? – Haaretz Daily Newspaper | Israel News

Antitrust Commissioner Ronit Kan has been fighting the credit card companies for years over the interchange fees, and in 2006 she struck a deal with them to reduce the fees from 1.25% – the rate at the time – to 0.875% by 2012. The rates are scheduled to drop next month from their current level of 1.1% to 0.975%.

READ ARTICLE via Are credit card companies telling the truth about fees? – Haaretz Daily Newspaper | Israel News.

Swipe fees are hurting small businesses in North Carolina – CharlotteObserver.com

From Fran Preston, president of the North Carolina Retail Merchants Association: Formed in 1902, the North Carolina Retail Merchants Association represents 25,000 retail store members, from the largest national chain to the smallest independent store operation. We represent brick and mortar as well as on-line operations, and retailers of every type and every size are alarmed as MasterCard and Visa continue to increase the fees imposed on retailers who process consumer debit cards.

READ ARTICLE via Swipe fees are hurting small businesses in North Carolina – CharlotteObserver.com.

House-Senate Conference OKs Financial Bill With Card Fee Provisions | Vending Features | Vending Times Inc.

WASHINGTON — The massive Restoring American Financial Stability Act of 2010, championed by President Obama, has been approved by House and Senate conferees.

READ ARTICLE via House-Senate Conference OKs Financial Bill With Card Fee Provisions | Articles | Vending Features | Vending Times Inc..

How debit cards nickel and dime you | charge, debit, pay – Gaston Gazette

Purchasing with plastic is the most convenient and painless way to pay, but for every charge on your debit card there is another charge — “swipe” fees.

Every time you swipe your card at a restaurant, supermarket, gas station or retail store, the merchant pays an interchange fee to a company that processes the payment. As fewer and fewer people pay with cash, merchants have paid more and more for processing, which ultimately results in higher prices, they say.

READ ARTICLE via How debit cards nickel and dime you | charge, debit, pay – Local News – Gaston Gazette.

Financial reform: Consumers to benefit from new agency – chicagotribune.com

As legislators on Capitol Hill trumpet a final agreement on sweeping financial reform, consumers might wonder, “Whats in it for me?”Consumers will benefit in a big-picture way from many of the provisions in the bill, likely to be passed by Congress next week. It is meant to provide a more stable financial system, avoid government bailouts of banks and protect investors.

READ ARTICLE via Financial reform: Consumers to benefit from new agency – chicagotribune.com.

Consumer Complaints about Chase Credit Cards

Vicki of Scottsdale, AZ June 18, 2010

We used two credit cards on a recent trip to France. Chase charged us a hefty fee for the exchange and Capitol One did not. Travelors need to be aware. I called Chase and they said it was an industry norm to charge these fees. I had called them prior to the trip and they had not advised me they would charge such fees. Amounted to probably 70 worth of fees.

READ ARICLE  via Consumer Complaints about Chase Credit Cards.

Retailers Go to Washington over #SwipeFees | CSP Daily News / Magazine | CSP Information Group

WASHINGTON — In an effort to ensure swipe fee reform passes Congress and is signed into law, more than 100 small-business owners from across the country descended upon Washington late last week where participants joined Representative Peter Welch (VT-AL) for a press conference outside the U.S. Capitol to urge members of Congress to support the Durbin-Welch amendment, then marched to Capitol Hill to conduct face-to-face meetings. A bipartisan majority in the Senate passed an amendment last month, offered by Senator Richard Durbin (D-Ill.), to rein in excessive debit-card fees. Now the measure needs final Congressional approval.

Mike Foster, who owns a 7-Eleven in St. Louis, was among those who went to Washington, added a St. Louis Post-Dispatch report.

“If a customer comes in and buys a Post-Dispatch on a debit card, I’m better off letting him or her just steal it,” Foster quipped to the newspaper, because the charges of up to 20 cents he pays on a debit-card purchase can exceed his profit on smaller items. He added that last year, debit-card fees cost him about $18,000, money that could have been profit or investment in his store.

Foster said he hopes Durbin’s amendment survives the “sausage process” of lawmaking. “I like the safety, security and convenience of plastic. We’d just like to see some fairer, reasonable rates,” he added.

“Small business owners…are suffering from out-of-control swipe fees charged by big banks and credit-card companies,” Welch said. “Congress must stand up to the special interests swarming the Hill this week to kill the Durbin amendment. We must do the right thing by fighting for small businesses and the American consumer.”

Swipe fees are the average 2% of the total transaction cost that credit-card companies and their member banks collect from U.S. retailers, local governments, charities, universities and more, every time they accept a credit or debit card as a form of payment. The U.S. currently pays the highest swipe fees in the world—with rates that have tripled in less than a decade. Reform would help small businesses to grow, offer better pay to their employees, and pass savings on to their customers.

READ ARICLE via Retailers Go to Washington | CSP Daily News / Magazine | CSP Information Group, Inc..

Credit card debt anguish antidote | SILive.com

The provisions, which take effect Aug. 22, augment new credit-card rules which became effective on Feb. 22 under the Credit Card Accountability Responsibility and Disclosure Act. President Obama signed the act into law last year.

READ ARTICLE via Credit card debt anguish antidote | SILive.com.

Retailers, banks battle for billions – CharlotteObserver.com

WASHINGTON Swipe your debit card at the supermarket and you’ve placed yourself at the heart of a contentious congressional debate.

READ ARTICLE via Retailers, banks battle for billions – CharlotteObserver.com.

Debit card – Wikipedia, the free encyclopedia

A debit card (also known as a bank card or check card) is a plastic card that provides an alternative payment method to cash when making purchases. Functionally, it can be called an electronic cheque, as the funds are withdrawn directly from either the bank account, or from the remaining balance on the card. In some cases, the cards are designed exclusively for use on the Internet, and so there is no physical card.

READ ARTICLE via Debit card – Wikipedia, the free encyclopedia.

The Credit and Debit Card Industry, Take 2 | Mother Jones

The problem here is twofold: (a) the fees themselves are non-transparent to consumers and (b) they’re administered by an effective monopoly. There are lots of banks and credit unions that issue credit and debit cards, but two companies — Visa and MasterCard — control the vast bulk of the payment network and set the interchange fees. Even the most ardent free marketers usually concede that a combination of monopoly power and opaque pricing is a problem, and that’s what we have here.

READ ARTICLE via The Credit and Debit Card Industry, Take 2 | Mother Jones.

Debit Card Interchange Reform Said To Be In Final Bill | IDC Insights Community

For those not familiar with it, the Durbin Amendment, which was added to the Senate version of the financial reform bill in a last-minute vote that caught the card issuers completely by surprise, does three major things: first, it gives the Federal Reserve authority to set debit card interchange fees so they are based on actual processing cost to the issuer; second, it allows merchants to offer discounts for particular brands or types of debit cards; and third, it allows merchants to set minimum amounts for debit card purchases. There’s more, but for our purposes I’ll just focus on the first two provisions.

READ ARTICLE via Debit Card Interchange Reform Said To Be In Final… . Posts . Consumer FinTech Focus . Blogs . IDC Insights Community.

MasterCard Europe’s Public Relations Spin Machine is Gearing up to Assail its Core Customer Base – Merchants

[repost]

In our photo imaging business, the last thing we would want to lash out at are picture-takers.  As our industry transitioned from film to digital, we didn’t fight the trend, but adjusted to what is today a nearly 100% Ecommerce and digital imaging retail business.  No more film and interchange fees are just as antiquated too.

From what we are reading, rather than adjusting to the realities of today’s marketplace – where technological efficiencies and in vogue business practices preclude illegal price-fixing – the credit card giants are, instead, sniping at its customers.

Then again, when you study the lack of management at many financial institutions, which are facing billions in antitrust liabilities and billions more in subprime mortgage failures, it is more crystallized than ever that leadership and academic sophistication have taken a back seat to unbridled greed – that’s what happens when you operate an illegal cartel.

According to The FINANCIAL [click here], MasterCard Europe is cautioning consumers that rates won’t drop. RIGHT THEY ARE!, if MasterCard and Visa have anything to do with it.  Just study the results of the earlier litigation. But, from a merchant’s prospective it will because that is how a fair market economy operates when there is competition and no price controls. Unlike with Visa and MasterCard, merchants have competition and must adjust their fees to not a cartel pricing structure, but to the marketplace. Either way, until our antitrust litigation is resolved, Visa and MasterCard will be free to continue their corkscrewing interchange fee scheme which generates abouty $48 billion each year for the banks. Last time there was this type of resolve, Visa and MasterCard simply raised other rates to adjust for their penalties, thus more than paying for their fines.The EU decision is indeed a wondrous holiday gift for all consumers and merchants, but one that will not be fully enjoyed for many months. It is another rejection of the justifications offered by MasterCard and Visa for fixing of interchange fees paid by merchants.   The Australian RBA, the UK OFT, and the earlier EU decision on Visa all have rejected the networks’ excuses. This decision, and the others, will certainly get the attention of U.S. courts, regulators, and Congress. It has piqued interest by U.S. merchants. It is long past time for the networks to reduce or eliminate interchange fees in the U.S. and worldwide rather than face crippling liability in U.S. courts.  There are nearly 100 separate merchant interchange fees in the U.S. and the domestic rates are more than double the interchange fees in many European nations.

The card associations hint they maneuver in a “free market,” but their multi-million dollar ad campaigns training consumers not to use cash and insist that debit cards be processed at the much higher signature credit card rates are more about market dominance and market power, where prices are illegally fixed by agreement. Of course consumers and retailers will benefit from the removal and decline of a $40 billion annual hidden tax that few understand.When was the last time a $40 billion annual fee did not hurt consumers?

MasterCard is reporting that “interchange fees benefit consumers by fairly sharing the cost of an electronic payment system among the two key beneficiaries of that system – cardholders and merchants.”  This is wrong and we are suing Visa, MasterCard and its leading member banks over these illegal fees which are anticompetitive and we assert is in violation of the law.

Way back when the credit card network functioned with antiquated, analog manual imprinters (and provided mountains of carbon copy receipts which had to be mailed away for processing) the interchange fees were cost based and had some justification.  Today, the electronic network is so efficient and its costs are a fraction (about 13%) of the total fees charged.

Just look at your local Costco and follow the plunge in flat-screen TV prices. If there was a giant monopoly controlling those electronic items, you wouldn’t have seen the prices fall from $15,000 for a plasma TV to just a few hundred dollars today for a much more efficient and superior flat-screen model. This is the business model Visa and MasterCard should be watching.

As a well-known retailer and Ecommerce business owner, ScanMyPhotos.com is always eager to take on the credit card cartel and explain the real facts, as we have been doing for several years and with more than ~1300 previous WayTooHigh.com news and commentary updates. We don’t invest in controlled market studies, but rather interact with real customers and business owners every day.

In this case, MasterCard even has its holidays wrong. From their prospective, it is not Christmas, but April Fools Day which is upon us; they proclaim that “merchants receive enormous benefits.” They should be explaining more about the $48 billion in fees that are attached to this holiday gift.

According to The FINANCIAL, “Merchants say that MasterCard prohibits them from disclosing to customers how much they pay for accepting payment cards. They know this is untrue. Merchants are free to disclose merchant discount fees, interchange fees, or any other costs they incur. But they choose not to disclose these costs to consumers just as they choose not to disclose any other cost of doing business, or how much they “mark up” their merchandise.”

At best, they are playing verbal shell games a la “Visa and MasterCard don’t collect interchange.” True as a factual statement, but inaccurate.  We merchants don’t directly pay Visa and MasterCard the interchange fees, but to a third-party. In or case, it is Chase Paymentech, which is owned by JPMorgan Chase, a named defendant in our merchant interchange litigation and most recently co-owner of both Visa and MasterCard [small word!]. Visa and MasterCard make it impossible for merchants to disclose the exact interchange fees for each transaction.

1) In their operating rules (not in the merchant rules on the website but the hidden rules) they set certain fields that can be on credit card receipts and they do not allow a field for interchange (or merchant discounts or other costs), so we cannot put it on the receipt and comply with the rules;

2) Given both the complexity of the interchange fee schedules (MasterCard’s is100 pages) and the lack of comprehensible identifiers on individual cards (either physical or electronic identifiers), merchants do not know how much they will be charged on an individual transaction;

3) Visa and MasterCard could make it possible for merchants to identify and determine interchange on the front end but they do not.  As a merchant, we can better guess what the winning lottery numbers are than what the exact interchange fee charged per transaction was. There are nearly 100 separate fees and all are bundled into categories on our monthly statement.  Visa and MasterCard have pages and pages of confusing fee schedules on its website, which we challenge any merchant to fully understand, down to the penny;

4) A respectable solution, until our litigation is resolved, is for MasterCard and Visa to post the exact interchange fee charged on every debit and credit card receipt. This is the definition of “transparency.” MasterCard’s posted Merchant Rules are so weighty, but not fully followed, even by them. We regularly notice retailers posting minimum purchase requirements, but are unfamiliar whether MasterCard and Visa fully engages each violation. We even pointed out that the American Red Cross had a $5.00 minimum charge on its website. How many restriction signs do you regularly see near the register warning that payment cards are only accepted if above a certain amount? Competition not cartels should control prices, and any smart business will prudently pass on the reduced interchange fee savings to consumers.

[repost Dec 21, 2007]

Anatomy of a Gift Card

Next time you are at the supermarket, reach into your pocket and grab a few coins, or bring along an entire jar of saved change, because quickly counting your money is now easy and super convenient. Even if it is only one-dollar, use a Coinstar coin counting kiosk.

There is a 9% transaction fee [8.9-cents for each dollar]. But, if you choose to order an instant gift card from retailers such as Starbucks, there is no fee or interchange charge. A minute later, your Starbucks-branded gift card is ready for use.

I noticed several consumers charge their lattes on a credit card. What must the added interchange fees be, especially on such a tiny transaction? But, if you use the Starbucks-branded gift card, the interchange fee is zero. Even if you just use it to buy a newspaper. Nonetheless when you choose a bank electronic payment card, where the bank issuer and acquirer could often be the same entity, they are effectively, double billing the merchant, because the fee is the same even if just one bank is handing the entire transaction.

Tools to Fight MasterCard and VISA Credit Card #SwipeFees

What are swipe fees?
A swipe fee is a fee collected from retailers by the credit card companies and their member banks every time a credit or debit card is used to pay for a purchase. This fee is also known as “interchange.” This fee varies with type of card, size of merchant and other factors, but as much as $2 of every $100 you spend on plastic goes to card issuers. Credit and debit card interchange collected by Visa and MasterCard banks totaled about $48 billion in 2008, triple what it was in 2001. These fees raise prices for consumers. In 2008, the average American family paid about $427 in interchange fees.

How much do hidden swipe fees cost consumers?
Swipe fees add to the price of everything we buy, even if we choose not to use a credit or debit card. Americans paid about $48 billion in credit card swipe fees in 2008 alone, more than all other credit card fees combined.

How are swipe rates determined?
Visa and MasterCard each separately work with their member banks to set swipe fees. The agreement between these banks, which should compete for business, is illegal price fixing and it hurts consumers and merchants.

How fast are swipe fees increasing?
Visa and MasterCard collected about $48 billion in swipe fees in 2008, triple what was collected in 2001. In 2008, the average American family paid about $427 in swipe fees. Swipe fees are rising the fastest on gasoline purchases; payouts to the credit card industry have more than doubled since 2004. Credit card companies and their member banks have increased the amount of swipe fees collected by both increasing rates and encouraging more people to pay by plastic instead of cash.

Don’t these fees just cover the cost of processing the transactions?
Even though advances in technology continue to bring down the cost of transaction processing, swipe fees keep going up. A recent study concluded that only 13 percent of the swipe fees that the big credit card companies collect actually goes for transaction processing. Most of the money goes toward profits for the banks, rewards programs that benefit mostly affluent cardholders and direct mail marketing campaigns that clog mailboxes with nine billion unsolicited credit card offers every year. Many of those unsolicited mailings include so-called “convenience checks”that can be stolen and cashed by someone other than the authorized card holder. Yet the card companies and their banks spend only four percent of the swipe fees they collect on measures to protect consumers from this and other forms of credit card fraud.

How do swipe fee rates in the U.S. compare to fees in other countries?
U.S. swipe fees average close to two percent, while in other industrialized countries like Australia the rate is one-half of one percent and in Europe the rate for cross border transactions is less than one-third of one percent.

Why are swipe fees so high in the U.S.?
Visa and MasterCard each separately work with their member banks collectively to set the price of swipe fees. This is illegal price fixing and hurts Americans. Credit card swipe fees have tripled since 2001 and there’s no end in sight, even though the actual cost of transaction processing continues to go down.

Do consumers who pay with cash also pay hidden swipe fees?
American consumers pay the hidden credit card swipe fee on virtually every purchase they make, whether they use a credit card or not because the credit card companies require merchants to spread the cost of these fees to all of their customers. The system is structured so that credit card companies make more money on each transaction when the price of retail goods increases. For example, even though the cost of processing a $1 transaction is virtually the same as processing a $100 transaction, the swipe fee paid on that $100 sale is higher because the swipe fee is calculated as a percentage of the total sale. The higher the sale, the higher the fee.

What is being done about it
What are merchants doing to change unfair swipe fees?
A group of retailers, supermarkets, drug stores, convenience stores, fuel stations, and other businesses are fighting against unfair credit card fees. They want a more competitive and transparent card system that works better for consumers and merchants alike and have formed the Merchants Payments Coalition and launched the website unfaircreditcardfees.com. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees. Convenience stores across the nation, who are among the hardest hit by unfair swipe fees because of the fees assessed to gasoline sales, have taken action to alert their customers about these fees and are collecting millions of signatures urging Congress to reform the system. In addition, this website you are visiting (fightswipefees.com) makes it easy for consumers to sign an online petition to Congress or even send a letter directly to their representatives urging action to reform unfair swipe fees.

What are consumers doing to change unfair swipe fees?
Individual consumers are beginning to take action to urge Congress to reform unfair swipe fees. In the summer of 2009, nearly 1.7 million consumers signed petitions at 7-Eleven stores urging such action. This winter, millions more are signing similar petitions in convenience stores across the country or via this website (fightswipefees.com).

In addition, several national consumer organizations are urging Congress to take action. These include:
U.S. PIRG (Public Interest Research Group). In testimony before the House Financial Services Committee, Edmund Mierzwinski (PDF), PIRG’s consumer program director, supported legislation to reform unfair swipe fees and said:

Interchange fees are hidden charges paid by all Americans, regardless of whether they use credit, debit, checks or cash. These fees impose the greatest hardship on the most vulnerable consumers – the millions of American consumers without credit cards or banking relationships. These consumers basically subsidize credit and debit card usage by paying inflated prices – prices inflated by the billions of dollars of anticompetitive interchange fees. And unfortunately, those interchange fees continue to accelerate, because there is nothing to restrain Visa and MasterCard from charging consumers and merchants more.

Americans for Financial Reform. This is a coalition of 200 national, state and local consumer, labor, retiree, investor, community, and civil rights organizations who have come together to spearhead a campaign for real reform in our banking and financial system. In an official policy paper endorsing swipe fee reform, the group said:

Markets don’t work when there are hidden fees and rules – and no one hides fees and rules better than the credit card companies. Credit card markets lack the information necessary for both consumers and merchants to make informed choices. For merchants, the markets lack adequate information because the associations prevent merchants from accurately informing consumers of the costs of credit card acceptance or attempting to direct them to more efficient and lower priced payment mechanisms. In fact, merchants have no alternative but to accept the card associations’ cards even when the associations significantly increase prices.

More info and source: http://www.fightswipefees.com/about.asp

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According to Canada NewsWire, MasterCard provided the following key points regarding interchange and debit and WayTooHigh.com replied below.

[repost April 22, 2009]

MASTERCARD CANADA: Canada has a well-functioning payments system that provides significant convenience and security to consumers and merchants. It has continued to operate effectively and drive commerce despite a global credit crisis. More than $240 billion in Canadian commerce is expedited on credit card systems annually.

WAYTOOHIGH: Nobody denies that payment cards are convenient and relatively secure. However, these benefits have nothing to do with interchange fees and do not confer upon issuing banks a blank check to extort supracompetitive profits from merchants and consumers through a hidden tax. Price-fixing is illegal!
—

MASTERCARD CANADA: A merchant that processes a credit card transaction enjoys guaranteed payment even at a time of increasing consumer default rates.

WAYTOOHIGH: Merchants are not permitted by the Visa and MasterCard rules to separately negotiate for payment guarantee services. This should be a negotiable service subject to competitive forces. Merchants should have the choice of whether to purchase these services from the card networks, from a third party, or not at all. The card networks and issuing banks already include the risk of default in the interest rates they charge to consumers. There is no justification for forcing merchants to cover this cost.
—

MASTERCARD CANADA: Merchants benefit from increased sales, improved payment efficiency, reduced cash handling, customer convenience and satisfaction, e-commerce facilitation, international purchase handling, automatic currency conversion and settlement, among other benefits.

WAYTOOHIGH: There are no studies supporting the assertion that card usage increases sales, reduces checkout time, or increases consumer satisfaction. These are simple advertising puffery. To the extent that some of these claims are accurate, they are neither an excuse to price-fix supracompetitive interchange fees nor a justifiable expense to force upon merchants without negotiation. Just look at the tricks MasterCard and Visa (both were controlled by thousands of the same member banks) They offer sweepstakes, but the less expensive PIN-based debit cards are ineligible. They charge merchants for the high-costing affinity (frequent flier reward) signature cards, but many consumers never cash in those rewards. And now, the credit card companies are taking back the accrued rewards if a cardholder defaults by a single day, some unscrupulous companies are even paying cardholders to close their accounts, thus also losing those rewards.
—

MASTERCARD CANADA: Interchange is a fee that passes between acquirers (who handle card processing for merchants) and card issuers. Issuers receive interchange to compensate them for significant costs and risks borne in offering credit cards including interest-free periods, account management, credit losses, fraud protection and processing.

WAYTOOHIGH: Regarding the assertion that merchants don’t pay interchange, the rebuttal is that the merchant discount rate automatically includes the interchange fee. The rest is mere semantics. Also, why would they talk about benefits to merchants from interchange fees if merchants weren’t paying those fees? Remember: interchange fees were designed forty-years ago, when retailers used antiquated manual credit card imprinters (ScanMyPhotos.com used these way back in the early 1990′s.  The fee was cost-based; remember those stacks of carbon-copy receipts? Write a check, which passes through the Federal Reserve network and the there is no clearing (interchange) charge. Use a Starbucks gift card, and there is no interchange fee. Use a shopping mall card, good at multiple merchant locations, and there is no interchange charge. Buy a gift card for any retailer at a supermarket and even though there is a network of payment mechanisms in place, there is no interchange fee. Use a PIN-based Debit card in Canada and there is no interchange fee. Use a credit card in Iceland and… you get the idea. As to the “issuer compensation” argument, many of those expenses should be borne by the consumer, not the merchant (e.g. free funding period). Furthermore, the merchant should not be forced to purchase these alleged services as a price-fixed bundle. These should be available separately and negotiably.
—

MASTERCARD CANADA: MasterCard’s Canadian interchange rates remain well below those of other developed markets including the United States and below similar fees for American Express in Canada. A sampling of other countries with higher blended interchange rates than Canada include Argentina, Brazil, Germany, Greece, Indonesia, Japan, Philippines, Poland, Portugal, Switzerland, Turkey and Uruguay.

WAYTOOHIGH: The relevant comparison is not Canada v. Uruguay, it’s competitive v. anticompetitive. The fact that MasterCard’s supracompetitive interchange rates are not quite as inflated in other countries as they are in North America doesn’t render them legal. MasterCard and Visa boast 80% market power and are two giant cartels with, until recently, the same representatives on their board of directors. Collusion, greed, illegal price-fixing and hundreds of billions of dollars paid by consumers and merchants over the years is why this battle may be the largest antitrust case in U.S. history, and why the banks are engaged in a death-spiral battle against its two core customers – consumers and merchants.
—

MASTERCARD CANADA: MasterCard receives no revenue from interchange.

WAYTOOHIGH: MasterCard remains a puppet of the issuing banks, who receive enormous amounts of revenue from interchange. How does MasterCard explain the term “Merchant Discount Rate?” So, where do their revenues come from, then?
—

MASTERCARD CANADA: Consumers do not pay interchange fees nor merchant fees.

WAYTOOHIGH: As with the argument that merchants don’t pay interchange, MasterCard exalts form over substance. As a practical matter, merchants must build in their overhead costs into the costs of their products. Increasing interchange fees effectively increases the cost of goods just as would increasing the cost of the merchant’s rent or electricity.  The nearly $60 billion dollars in merchant interchange fees in the U.S. last year came from somewhere!  It is a hidden tax that ultimately, the consumers pay.
—

MASTERCARD CANADA: Merchants who choose to accept credit cards pay to participate in exchange for the benefits received. The fee accounts for the multiple benefits received.

WAYTOOHIGH: The idea that merchants “choose” to accept credit cards is a myth. In reality, merchants must accept payment cards in order to stay in business. Furthermore, interchange is not cost-based. If it were, it would be far, far lower. Look at the European Union, where cross-border interchange is mandated to be cost based by law. For Ecommerce businesses, like ScanMyPhotos.com and millions of other online companies we are forced to accept Visa and MasterCard – they have an 80% market power over the industry. Their millions of dollars invested in TV commercials training consumers not to pay with cash is all the more reason why MasterCard and Visa are like drug dealers, they get consumers trained and then force them to use their products. Yes, force, and we can explain why.
—

MASTERCARD CANADA: Merchants pay a merchant fee established by their acquirer, not MasterCard. Interchange forms a portion, but not all, of that merchant fee.

WAYTOOHIGH: Interchange accounts for the vast majority of the merchant discount fee and is non-negotiable. The merchant discount fee is always higher than the interchange fee, meaning that merchants effectively pay interchange. If the truth were otherwise, we’d have acquirer lawsuits against the networks and the issuers. Get real, it’s all about MasterCard. Until recently, MasterCard and Visa were just brands (trade associations) fully owned by the banks. Whether the fees go to the banks or the two giant credit card association, the same pockets were being enriched.
—

MASTERCARD CANADA: MasterCard’s 2008 adjustment to interchange rates was the first in seven years. Some rates were reduced.

WAYTOOHIGH: Whether or not that’s true, it doesn’t change the fact that the rates are much higher than they would be in a competitive environment (assuming they’d exist at all). Some rates were 300% higher than in 1999. Without warning, millions of merchants receive a twice yearly letter explaining the new rates, just days prior to it taking effect.
—

MASTERCARD CANADA: A merchant can obtain his MasterCard interchange rates via http://www.mastercard.ca. This information has been available for more than two years. [There is a now similar website in the U.S. with more than one-hundred pages of rate schedules].

WAYTOOHIGH: Only two years? Why was MasterCard so secretive before that? Regardless, the merchant has no way of knowing what the interchange rate will be at the time of sale and therefore cannot make an educated decision about whether to accept the card. There is no transparency, and those website rate schedules are unclear and confusing. If MasterCard was honest, they would easily post the exact interchange fee as part of every charge card receipt (right under the sales tax breakdown).
—

MASTERCARD CANADA: When interchange was regulated in Australia, it led to reduced card benefits to consumers and there is no evidence that retailers passed on savings in reduced prices.

WAYTOOHIGH: To allege that a reduction in overhead costs for an entire country’s merchants would not result in lower prices is to allege a price-fixing conspiracy among all merchants. If so-called “cardholder benefits” were only available because of a price-fixing conspiracy between issuing banks, we should not lose sleep over the disappearance of those benefits when the conspiracy is busted up. The rule of law is what matters, not cardholder benefits.
—

MASTERCARD CANADA: MasterCard Worldwide has a PIN-based debit payment solution – Maestro(R) – used by more than 652 million cardholders in over 100 countries.

WAYTOOHIGH: Perhaps, but that doesn’t justify the price-fixing conspiracy and it doesn’t justify forcing merchants to pay supracompetitive interchange fees. MasterCard and its issuers don’t get a blank check just because they provide some benefits. Banks would need to provide debit cards even if they didn’t get interchange fees. Otherwise, it would be like banks providing a checking account but no checks.
—

MASTERCARD CANADA: MasterCard Canada is preparing to expand its global debit processing system in Canada where it would deliver compelling benefits to Canadian consumers and merchants.

WAYTOOHIGH: MasterCard is only increasing its market power so that it can continue to force supracompetitive interchange fees on merchants.
—

MASTERCARD CANADA: Using Maestro, Canadian consumers could use debit all over the world.

WAYTOOHIGH: See previous two arguments.
—

MASTERCARD CANADA: Accepting Maestro means Canadian merchants could accept international travelers’ debit cards.

WAYTOOHIGH: See above.
—

MASTERCARD CANADA: MasterCard will provide technological advancements including greater security and fraud protections, innovations

WAYTOOHIGH: See above.
—

MASTERCARD CANADA: MasterCard operates a global debit infrastructure with centralized operations that run 24/7. The system delivers significantly greater scale than Canada’s incumbent debit network. It has had zero downtime in more than seven years.

WAYTOOHIGH: See above.
—

MASTERCARD CANADA: MasterCard will create competition in the Canadian debit market where it has never existed.

WAYTOOHIGH: MasterCard is not talking about competition for merchant acceptance, only “competition” for issuing banks, which has the effect of increasing interchange rates at the expense of merchants. Payment cards are a two-sided market (issuance and acceptance) and when MasterCard, Visa and the member banks talk about so-called “competition,” they’re never talking about the merchant side of the market.

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Visa and MasterCard Branded Gift Cards Force Unjust Penalty on Consumers

[repost]

Recently, I bought a new AT&T cell phone and the plan included a $50 rebate. Rather than providing a check or instant credit to my account, the new undaunted device to pocket even more money at the expense of consumers are electronic payment gift cards.

Here is how the scheme works.

A few weeks after the purchase, you receive an official looking VISA or MasterCard branded debit card. The problem is when you try using it. It is confusing and many retailers have a hard time processing it. The worst part – there are just micro-balances remaining. Retailers are unable to process te transaction, which means that those few remaining dollar balances vent away in the barrenness of never-to-be-claimed currency.

Try for yourself.

I still have a balance on the AT&T “promotional card” but cannot find anyone who can process it. Think of the millions of other micro-balances that remain unused. And, if you are successful in locating a merchant who can accept it, there is the dreaded interchange fee which force’s retailers to pay an excess amount each time the card is used.

NRF Radio Ads Ask Congress to Keep Swipe Fee Amendment in Financial Reform Bill

WASHINGTON–(BUSINESS WIRE)–The National Retail Federation today launched a radio campaign urging the House and Senate to keep an amendment seeking reasonable swipe fees for debit card transactions in financial services reform legislation expected to be finalized next week.

“A swipe fee for using my bank debit card? I thought it was like using a check or cash.”

“With big banks and the credit card industry pushing hard to strip this important consumer protection out of the financial services reform bill, we want to make sure that members of Congress realize how angry small businesses and their customers are about these fees,” NRF Senior Vice President for Government Relations Steve Pfister said. “These fees are driving up costs for consumers at a time when our economy is still recovering. Taxpayers have already paid for one bailout of the banking industry. Consumers shouldn’t be asked to bail out the banks and the card industry again, but that’s what would happen if this amendment is killed.”

The 60-second spots are running in the home districts of key members of the House-Senate conference committee currently negotiating a final version of the Restoring American Financial Stability Act. The panel is expected to complete its work next week, followed by final votes in the House and Senate the following week in order to get the bill on President Obama’s desk by July 4.

The ads open with a husband and wife reading a newspaper article about another bailout of the banking industry, noting that swipe fees cost consumers more than $400 a year.

Husband: “A swipe fee for using my bank debit card? I thought it was like using a check or cash.” Wife: “Using a debit card costs 43 times more than using a check.” Husband: “They’re taking billions. And nobody is doing a thing about it.”

“Congress is trying to do something about unfair hidden swipe fees,” an announcer says. “But big banks and credit card CEOs are doing everything they can to keep collecting their swipe fees.”

The commercial urges listeners to contact their members of Congress and urge them to “fix the debit card swipe fee” and “stop the bailout.”

Swipe fees – officially known as interchange fees – are a percentage of the transaction charged by card company banks each time a card is swiped to pay for a transaction. The fees average between 1 and 2 percent for debit cards and 2 percent or more for credit cards. Overall swipe fees charged to retailers and other business by Visa and MasterCard banks totaled $48 billion in 2008 and resulted in higher prices estimated at $427 for the average household. Debit swipe fees alone amount to about $20 billion of the annual total.

The Senate version of the financial services reform bill includes an amendment sponsored by Majority Whip Richard Durbin, D-Ill., that would require the Federal Reserve to set regulations that would result in “reasonable and proportional” swipe fees for debit cards that take into account banks’ actual costs for processing the transactions and the fact that paper checks drawn on the came accounts are paid at face value. The amendment would also make it easier for merchants to offer discounts or other benefits for customers who don’t use credit cards, and to set minimum purchase amounts for credit cards.

As the world’s largest retail trade association and the voice of retail worldwide, NRF’s global membership includes retailers of all sizes, formats and channels of distribution as well as chain restaurants and industry partners from the United States and more than 45 countries abroad. In the United States, NRF represents the breadth and diversity of an industry with more than 1.6 million American companies that employ nearly 25 million workers and generated 2009 sales of $2.3 trillion. www.nrf.com

Click here to listen to sample radio ad

Press Release Via: www.nrf.com/swipefees

» Banks, merchants wage war over credit card #swipefees

Often at odds, Louisiana banks and credit unions have struck a rare alliance against a measure that retailers insist would save them major costs. The battle is over interchange fees, which credit card and processing companies charge merchants for every transaction that involves the swipe of a plastic card. “You’d be shocked if you see my credit …

READ ARTICLE (subscription) via » Banks, merchants wage war over credit card fees .

BY: David Muller, Staff Writer

TAGS: Anne Cochran, Bob Taylor, credit care fees, Dick Durbin, Ed Mierzwinski, Federal Reserve, Louisiana Bankers Association, Louisiana Credit Union League, Mel Grodsky, Porter Stevens Men’s Wear, Rick Landry, Zuppardo’s Family Supermarket

Tell Congress to Reform #SwipeFees!

From: NACSTV | June 17, 2010

Congress is negotiating swipe fees now and banks are pushing to kill reform. Call Congress at (202) 224-3121 now and ask for your legislators by name. Tell them: Keep the Durbin Amendment in the Financial Services Reform Bill without change and sign the Welch-Shuster-Carney letter supporting swipe fee reforms. Learn more at http://www.fightswipefees.com

The New Poor – Peddling Relief, Firms Put Debtors in Deeper Hole – NYTimes.com

The Arrangement

The industry casts itself as a victim of a smear campaign orchestrated by the giant banks that dominate the credit card trade and aim to hang on to the spoils: interest rates of 20 percent or more and exorbitant late fees.

“We’re the little guys in this,” said John Ansbach, the chief lobbyist for the United States Organizations for Bankruptcy Alternatives, better known as Usoba (pronounced you-SO-buh). “We exist to advocate for consumers. Two and a half billion dollars of unsecured debt has been settled by this industry, so how can you take the position that it has no value?”

READ ARTICLE via The New Poor – Peddling Relief, Firms Put Debtors in Deeper Hole – NYTimes.com.

Small Business Owners Push for #SwipeFeesReform

June 17, 2010 – WASHINGTON, D.C. — Small-business owners from across the U.S. and the Reform Swipe Fees Now! coalition joined here yesterday to hold a press conference urging Congress to pass interchange fee reform.

Last month, the Senate passed an amendment by Sen. Richard Durbin (D-Ill.) to the financial reform bill that would rein in debit card fees. As the House and Senate work on a final version of the bill that will go to President Barack Obama’s desk, the organization is asking lawmakers to ensure the Durbin amendment is part of the final bill.

READ Article via Small Business Owners Push for Swipe Fee Reform.

GMU rejects credit cards because of high interchange; more interchange; net redistribution upwards. | FavStocks

Heh. Great catch by credit slips. George Mason University, whose Mercatus Center hosted the recent panel about interchange I was on as well as the research of Todd Zywicki about interchange, research that found that “Merchants’ efforts to cabin these [interchange] fees would harm not only consumers but also the merchants themselves”, is no longer accepting Visa cards for tuition because the interchange is too high.

To repeat, George Mason University is no longer accepting Visa cards for tuition because the interchange is too high.

READ ARTICLE via GMU rejects credit cards because of high interchange; more interchange; net redistribution upwards. | FavStocks.

Our view on financial reform: #SwipeFees boost your costs at the register – USATODAY.com

The U.S. government prints money, distributes it, replaces it when it gets old and guards against counterfeiters. No matter how many times a dollar changes hands, the government never charges a transaction fee.

via Our view on financial reform: ‘Swipe fees’ boost your costs at the register – USATODAY.com.

Adam Levitin: #SwipeFees Reform Benefits Consumers and Businesses Large and Small

The Durbin swipe fee amendment to the financial regulatory reform bill is a major step towards making the payments market fair, competitive, and efficient by exposing swipe fees to market pressure. The amendment benefits consumers, small businesses, and retailers, and it is critical that the amendment remain intact as part of the final reconciled financial regulatory reform bill.

via Adam Levitin: Swipe Fee Reform Benefits Consumers and Businesses Large and Small.

Making debit cards cheaper – latimes.com

Now, Congress is debating whether to put those “interchange” fees under Washingtons control. During last months debate over a financial regulatory reform bill S 3217, the Senate voted 64 to 33 in favor of an amendment by Sen. Richard Durbin D-Ill. to have the Federal Reserve regulate interchange fees for debit and stored-value cards e.g., prepaid Visa cards. Specifically, the bill said the fees would have to be “reasonable and proportional to the actual cost incurred by the issuer or payment card network with respect to the transaction.”

READ ARTICLE via Making debit cards cheaper – latimes.com.

Visa Inc. Funds Escrow Account (repost, 12/08)

[repost Dec 22, 2008]

Visa Inc Corporate Press Release

SAN FRANCISCO, Dec. 22 /PRNewswire-FirstCall/ — Visa Inc.  today reported that it has deposited $1.1 billion into the litigation escrow account previously established under the company’s retrospective responsibility plan (the “Plan”).

Under terms of the Plan, when Visa funds the litigation escrow its U.S. financial institutions, the sole holders of Class B shares, bear the expense via a reduction in their as-converted share count.

“This transaction not only adds the necessary funds to our litigation escrow, but effectively acts as a $1.1 billion Class B share repurchase program,” said Joseph Saunders, Visa’s chairman and chief executive officer. “It has always been our stated intent to return excess cash to our shareholders in the form of dividends and share repurchases. We are obviously pleased that our strong financial position and excess cash flow allows us to do this.”

The Plan was established at the time of Visa’s initial public offering. It provides coverage and a payment mechanism for judgments or settlements in specific U.S. legal cases, protecting Visa and its Class A and Class C shareholders from any direct losses.

The deposit of the funds into the escrow account reduces the conversion ratio applicable to Visa’s Class B common stock outstanding from 0.7143 per Class A share to 0.6296 per Class A share. On a converted basis, the 245,513,385 Class B shares currently outstanding are equal to 154,566,658 Class A shares of common stock.

The deposit of loss funds has the effect of a repurchase of 20,800,824 Class A common share equivalents from the Company’s Class B shareholders. The amount paid per share represents the volume weighted average price (VWAP) of the Company’s Class A common shares for the 15-day trading period December 1, 2008 to December 19, 2008.

About Visa: Visa operates the world’s largest retail electronic payments network providing processing services and payment product platforms. This includes consumer credit, debit, prepaid and commercial payments, which are offered under the Visa, Visa Electron, Interlink and PLUS brands. Visa enjoys unsurpassed acceptance around the world and Visa/PLUS is one of the world’s largest global ATM networks, offering cash access in local currency in more than 170 countries. For more information, visit www.corporate.visa.com

    Contacts:
    Jack Carsky or Victoria Hyde-Dunn, Investor Relations
    Visa Inc.
    Tel: +1 415 932 2213
    E-mail: ir@visa.com

    Paul Cohen or Sandra Chu, Media Relations
    Visa Inc.
    Tel: +1 415 932 2564
    E-mail: globalmedia@visa.com

Adam Levitin: Swipe Fee Reform Benefits Consumers and Businesses Large and Small

The Durbin swipe fee amendment to the financial regulatory reform bill is a major step towards making the payments market fair, competitive, and efficient by exposing swipe fees to market pressure. The amendment benefits consumers, small businesses, and retailers, and it is critical that the amendment remain intact as part of the final reconciled financial regulatory reform bill.

READ ARTICLE via Adam Levitin: Swipe Fee Reform Benefits Consumers and Businesses Large and Small.

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Interchange Debit Card Fees Are Anything But ‘Price-less’ (WayTooHigh.com)

Have the bank-owned credit card associations gotten into the cartoon business?

The popular “Where’s Waldo” books are a search-and-find photo scavenger hunt designed as a thinking game for educators to develop exercises for children to learn. In each case, Waldo is hidden in the background and the challenge is to identify where he is.

The same activity occurs when a consumer presents a Debit, ATM or Check Card to merchants. In what is becoming a more frequent exercise, retailers are finding it more challenging than ever to identify, not Waldo, but the “debit” or other PIN identification to differentiate the various cards. Why is this so important? Visa and MasterCard’s revenues are enhanced when retailers are tricked into accepting the cards which instantly deduct funds from a bank account and forced to pay higher interchange fees.

When a non-credit card is transacted, the rates are significantly lower. Most merchants we have talked with are unaware of the differences in fees and their sales clerks are too busy to play the banks version of the “Where’s Waldo” game. Often, the word “debit” is hidden within the hologram or colored to match the background. An examination of the card requires more than a glance, but the result for running the payment at the much higher credit card rate is a costly oversight.

Entrepreneur.com Daily Dose – Warning Higher Credit Card Swipe Fees Ahead

Just what small businesses need right now: higher fees for accepting credit cards. Apparently, a settlement with the European Union to cap fees at a lower rate may see banks making up their losses by hiking rates here in the States, a retail trade group is forecasting.

The organization of major retailers, the Retail Industry Leaders Association, notes U.S. fees have tripled since 2001 to $48 billion, putting a damper on hiring. Last month alone, American swipe or “interchange” fees rose 30 percent. Now, charge-card issuers such as Visa and MasterCard need to make up their losses abroad somewhere…and the RILA fears that means in your merchant banking bill.

READ ARTICLE via Entrepreneur.com Daily Dose – Warning Higher Credit Card Swipe Fees Ahead.

National Retail Federation on #SwipeFees

With nearly $20 billion at stake for the retail industry and a deadline for action approaching next week, NRF is rallying merchants to make sure an amendment requiring the Federal Reserve to determine “reasonable” swipe fees for debit card purchases remains in the final version of financial services reform legislation being negotiated in Congress.

READ ARTICLE via National Retail Federation.

Entrepreneur.com Daily Dose – Want Swipe Fee Relief Nows The Time To Make It Happen

If you’re a merchant tired of high debit- and credit-card fees, now’s your chance to make a difference. The financial-reform bill slowly wending its way through Congress is coming into the home stretch, and swipe-fee reform has made it through to the version now being reconciled by a joint Senate-House committee. The National Retail Federation is trying to put on a full-court press of lobbying by small business owners to keep the provision — known as the Durbin amendment — in the bill and try to eliminate an estimated $20 billion in merchant fees annually. So if you care about this issue, call your legislator immediately — the commitee intends to have the bill ready for a final vote June 24.

READ ARTICLE via Entrepreneur.com Daily Dose – Want Swipe Fee Relief Nows The Time To Make It Happen.

How Many Congressional Leaders Have Financial Ties to Banks and VISA, MasterCard?

Much of the Pelosi family wealth is listed to her husband, including a commercial property in San Francisco worth $5 million to $25 million; common stock in Apple Inc. and Visa Inc. worth $1 million to $5 million each

READ ARTICLE via Financial disclosures for congressional leaders – Yahoo! Finance.

Follow Along, Since 2005, WayTooHigh.com Provided News & Commentary on #SwipeFees

Since February, 2005, WayTooHigh.com has been providing news and commentaries on merchant interchange credit card electronic payment issues from the prospective from a single retailer and e-commerce business owner, who is also a lead plaintiff in the antitrust class-action against MasterCard, Visa and its major banks.

Click here to view the consolidated complaint.

Month-by-month index of articles and postings:

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Credit Card and Debit Card Swipe Fees: The Debate in Congress Heats Up – DailyFinance

The proposal would also have a dramatic impact on merchants like Dave Carpenter, the CEO of J.D. Carpenter, a chain of six gas station convenience stores in Urbandale, Iowa. Carpenter says his credit card and debit card processing fees have risen from $50,000 a year in 2000 to $900,000 a year today.

“We’re paying for all the reward points and all the air miles — everybody thinks they free, but they’re not,” Carpenter says. “It would be okay to pay some fair amount for a reasonable processing fee, but there is no negotiating with Visa and MasterCard.”

READ ARTICLE via Credit Card and Debit Card Swipe Fees: The Debate in Congress Heats Up – DailyFinance.

Office of Congressional Ethics focuses on auto amendment offered by Rep. Watt – TheHill.com

A House ethics office investigation involving a bipartisan group of lawmakers is focusing on an amendment to the financial regulatory reform bill that passed late last year.

READ ARTICLE via Office of Congressional Ethics focuses on auto amendment offered by Rep. Watt – TheHill.com.

Retailers push for cap on credit card #swipefees | Gazette.net

Maryland retailers and others are working to drum up support for a federal measure to rein in swipe fees for debit and credit cards.”Americans pay the highest swipe fee rates in the world, adding up to more than $48 billion in interchange fees in 2008 alone,” Thomas S. Saquella, former longtime president of the Maryland Retailers Association in Annapolis, wrote to The Gazette last week.

READ ARTICLE via Retailers push for cap on credit card swipe fees.

Our view on financial reform: ‘Swipe fees’ boost your costs at the register – USATODAY.com

Unless you’re a bank, the benefits of moving away from convoluted and confiscatory transaction costs are many. Congressional negotiators shouldn’t let financial lobbyists swipe victory from the jaws of defeat.

READ ARTICLE via Our view on financial reform: ‘Swipe fees’ boost your costs at the register – USATODAY.com.

Our view on financial reform: #SwipeFees boost your costs at the register – USATODAY.com

That means consumers pay more. More perniciously, it means that they generally have no way to avoid these costs. Banks make it all but impossible for merchants to give discounts to people who pay in cash. So even if people do pay with cash, or with a debit card that has lower transaction costs than a credit card, they pay the same inflated merchandise costs.

Thankfully, that might be about to change. The Senate’s version of financial reform would allow merchants to give discounts to people who pay with cash, checks or low-fee debit cards. It would also stipulate that debit card transaction fees have to be “reasonable and proportional” to their underlying costs.

READ ARTICLE via Our view on financial reform: ‘Swipe fees’ boost your costs at the register – USATODAY.com.

National Retail Federation – Credit Card Interchange #SwipeFees

Credit card interchange is a fee averaging close to 2 percent that Visa and MasterCard banks charge merchants each time one of their cards is swiped to make a purchase. These “swipe” fees are imposed on merchants on a take-it-or-leave it basis, and have have soared dramatically in recent years. In 2008, U.S. retailers and consumers paid an estimated $48 billion for interchange, or triple the $16 billion charged when NRF began tracking the fee in 2001. The fees drive up the price of merchandise, costing the average American household $427 in 2008, up from $159 in 2001.

LEARN MORE via National Retail Federation – Credit Card Interchange Fees.

Citybizlist New York – MasterCard Foundation Sells $10.8M Worth of Company Shares – cbl

The MasterCard Foundation is an independent, private foundation with over $3 billion in assets, established through a gift of shares when MasterCard Worldwide went public in 2006. Its mandate is to increase access to microfinance and youth education for people in developing countries. The Foundation operates independently of MasterCard Worldwide.

READ ARTICLE via Citybizlist New York – MasterCard Foundation Sells $10.8M Worth of Company Shares – cbl.

St. Louis 7-Eleven owner in DC fighting ’swipe fees’ | STLtoday

If a customer comes in and buys a Post-Dispatch on a debit card, I’m better off letting him or her just steal it,” Foster said, only partly in jest.

READ ARTICLE via St. Louis 7-Eleven owner in DC fighting ’swipe fees’ | Political Fix | STLtoday.

7-Eleven Merchants Descend On Hill To Battle Wall Street | HuffPost

The small businessmen have flown in to urge Wall Street reform conferees to support the Durbin-Welch amendment, which aims to rein in excessive debit and credit card fees. It passed with broad bipartisan support in the Senate and has solid support among House conferees, despite fierce bank opposition. The small businesses are aligned with big businesses such as Walmart, which pays out millions in fees. Big governments get cleaned out, too. A U.S. Treasury report earlier this week showed that the federal government loses more than $116 million a year in swipe fees for credit and debit card purchases. State and local governments spend millions more for nothing. Advocates of reform say that Wall Street has persuaded the smaller banks and credit unions to do their bidding on this issue, knowing that their reputation is toxic; the small banks say they’re working for their own benefit.

READ ARTICLE via 7-Eleven Merchants Descend On Hill To Battle Wall Street.

Credit card firms say consumers side with them on merchant fees – latimes.com

Today let’s look at credit cards, which can cost retailers more than three times as much as debit cards to process and which are increasingly falling under a host of new federal regulations as officials crack down on what they call the banking industry’s most abusive practices.

READ ARTICLE via Credit card firms say consumers side with them on merchant fees – latimes.com.

Durbin on Interchange Fees | CSP Daily News / Magazine | CSP Information Group, Inc.

WASHINGTON — Assistant Senate Majority Leader and chairman of the Senate Appropriations Subcommittee o

n Financial Services & General Government Dick Durbin D-Ill. chaired an oversight hearing yesterday on the federal governments payment of interchange fees.The hearing follows the release of a Treasury Department report that concluded that the federal government could save nearly $40 million a year of taxpayer dollars if Treasury were allowed to negotiate interchange rates with Visa and MasterCard—something it is currently unable to do.

READ ARTICLE via Durbin on Interchange Fees | CSP Daily News / Magazine | CSP Information Group, Inc..

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Brazil’s cenbank backs changes in credit card rules | Reuters

June 17 (Reuters) – Brazil’s central bank chief Henrique Meirelles said on Thursday he supported changes in rules regulating Brazil’s credit card market that would boost competition and improving transparency.

READ ARTICLE: via Brazil’s cenbank backs changes in credit card rules | Reuters.

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Durbin Cedes Ground on Debit-Card #SwipeFees Limits as Support Erodes – BusinessWeek

During an April 28 hearing on a separate interchange bill, Waters said the fees are boosting profits for the biggest lenders while hurting merchants. “The banks are doing everything they can to reap fees from debit-card purchases,” she said. The competition between Visa and MasterCard “has become more about pleasing the banks that actually issue the cards rather than the consumers who use them.”

READ ARTICLE via Durbin Cedes Ground on Debit-Card Fee Limits as Support Erodes – BusinessWeek.

Top WayTooHigh.com Posts (the past week)

Durbin Corrects Banking Lobby’s Arguments on Interchange… Again

Interchange Amendment: Durbin’s Floor Statement on Debit Card Interchange

MasterCard’s Banga Says Card Proposals May Survive – BusinessWeek

NRF Urges Senate to Pass Amendment to Credit Card Reform Bill Making Cash Discounts Easier

Lexology – Financial regulatory reform: conference committee update

Despite Banking Lobby, Swipe Fees Amendment on Track For FinReg | FDL News Desk

VISA Funds Self-Serving “Survey” About Debit Card #SwipeFees Reform

Sen. Blanche Lincoln Offers to Modify Derivatives Bill – WSJ.com

End Is Seen to Free Checking (WSJ)

Banks typically didn’t charge for checking in the 1970s, but began imposing fees in the early 1980s to offset higher interest rates they were paying on savings accounts. That changed in 1986 when TCF began promoting a free checking account. By the late 1990s, most banks had followed suit.

READ ARTICLE Via ROBIN SIDEL And DAN FITZPATRICK

Durbin on Interchange #SwipeFees | CSP Daily News / Magazine

Interchange fees are supposedly charged by Visa and MasterCard in order to cover the cost of processing a credit or debit card transaction. These fees continue to rise even though processing costs have decreased. Nearly $50 billion in interchange fees were charged by credit and debit card networks in 2008 — coming out of the bottom lines of small businesses, charities and government balance sheets. Of these fees, 80 percent of these fees went to just ten large banks.

READ ARTICLE via Durbin on Interchange Fees | CSP Daily News / Magazine | CSP Information Group, Inc..

Five Sneaky Bank Fees – Spending – Deals – SmartMoney.com

YOU MAY HAVE FREE checking with your bank, but that doesn’t mean you aren’t paying fees elsewhere.

Where fees were once used as a deterrent from, say, repeatedly bouncing checks or other poor behaviors, they’re now big money makers for banks, accounting for 56% of bank income, according to the Federal Deposit Insurance Corp. Banks earned an estimated $80 billion on fees in 2006. Ten years ago, fees accounted for just 3% of bank income.

READ MORE via Five Sneaky Bank Fees – Spending – Deals – SmartMoney.com.

U.S. banks may end free checking accounts: report | Reuters

The move is expected to hurt retail clients who could be asked to pay new monthly maintenance fees on the most basic accounts that do not generate a lot of activity, the paper said.

READ ARTICLE via U.S. banks may end free checking accounts: report | Reuters.

Debit-card fee debate could cost consumers Jennifer Waters’s Consumer Confidential – MarketWatch

CHICAGO (MarketWatch) — Most shoppers don’t realize they are in the middle of a heated debate over the fees merchants pay to banks on debit-card transactions, but the outcome may bring steeper costs and fewer rewards for consumers.

READ ARTICLE via Debit-card fee debate could cost consumers Jennifer Waters’s Consumer Confidential – MarketWatch.

Area merchants join call for Congress to reduce card #swipefees | Business – The Times-Tribune

Local retailers rallied Wednesday against a credit card fee consumers never see, but merchants pay every time someone swipes plastic.  At a press conference at the Mall at Steamtown, several merchants complained that the mounting “swipe fee” limits their ability to hire employees, eats away at their margin and increases their costs.

READ ARTICLE | via Area merchants join call for Congress to reduce card “swipe fees” – Business – The Times-Tribune.

Durbin Seeks to Exempt Benefits Cards in Debit Curbs | BusinessWeek

Durbin’s plan would allow the Federal Reserve to limit debit-card interchange rates set by Visa and MasterCard, the world’s biggest payment networks, which pass that money along to card-issuing banks including JPMorgan Chase & Co. and Citigroup Inc.

READ ARTICLE via Durbin Seeks to Exempt Benefits Cards in Debit Curbs (Update1) – BusinessWeek.

The Blonde’s Guide to the Durbin Amendment | The Daily Caller

The Durbin Amendment, part of the Financial Reform Bill, will go to conference this week. The bill passed in the Senate 64-33 last month, and President Obama expects to sign it into law by Independence Day.

READ ARTICLE: via The Blonde’s Guide to the Durbin Amendment | The Daily Caller – Breaking News, Opinion, Research, and Entertainment.

Lexology – Financial regulatory reform: conference committee update

Overview

It has been two weeks since the U.S. Senate passed its financial services regulatory reform legislation, the Restoring American Financial Stability Act of 20101 (Senate Bill). Since that time, Congress has begun preparing for the conference committee, which will be charged with reconciling the differences between the Senate Bill and the House-passed Wall Street Reform and Consumer Protection Act of 20092 (House Bill).

With the end of the Memorial Day recess, the conference committee will begin to move quickly to produce a consensus legislative proposal. Financial Services Committee Chairman Barney Frank (D-MA), who will chair the conference, has indicated his desire to complete the conference committee’s work before the Fourth of July. The White House has indicated its desire for an agreement in place before President Obama attends the Group of 20 meetings in Toronto on June 26. As we previously noted, there remain several significant differences between the Senate Bill and the House Bill which will need to be reconciled before Congress sends the legislation to the President for signature. While we believe that a concerted effort will be made to complete the conference committee by the July 4th goal, if that date slips, we do expect the final legislation to be completed no later than the congressional recess which begins the first week in August.

This memorandum provides additional information related to the conference committee process, including new details related to the timing of the conference committee’s work and the likely members of the conference committee.

For more details or if you have any questions, please contact any member of the Patton Boggs Financial Services Policy Group.

Conference Timing

Staffers spent the Memorial Day recess preparing for the conference by completing a “side-by-side” comparison of the House Bill and the Senate Bill. The Senate has already formally appointed its conferees, and we expect the House to formally make its appointments on Wednesday, June 9th. Once the committee members are known, they will move quickly to complete their work.

Chairman Frank and Senate Banking Committee Chairman Christopher Dodd (D-CT) have set forth the following as a proposed aggressive timeline:

• June 9: House to Appoint Conferees
• June 10: Opening Meeting of the Conference Committee
• June 15 – June 17: Conference Meets on Substantive Issues
• June 22 – June 23: Conference Meets on Substantive Issues
• June 24: Conference Concludes
• June 28: Rules Committee Meets to Grant Rule
• June 29: House Passes Conference Report
• July 2: Senate Passes Conference Report

Conference Members

The Senate has formally appointed seven Democrats and five Republicans to the conference committee. Democratic appointees from the Senate Banking Committee include Chairman Dodd, Tim Johnson (D-SD), Jack Reed (D-RI) and Chuck Schumer (D-NY). They are joined by their Republican counterparts Ranking Member Richard Shelby (R-AL), Mike Crapo (R-ID), Bob Corker (R-TN) and Judd Gregg (R-NH). Senate Agriculture Committee appointees include Chairwoman Blanche Lincoln (D-AR), Tom Harkin (D-IA), Patrick Leahy (D-VT) and the Ranking Member of the Senate Agriculture Committee, Saxby Chambliss (R-GA).

While the House appointees will not be formally announced until June 9th, Chairman Frank sent a letter to Speaker of the House Nancy Pelosi (D-CA) recommending seven other Democrats to sit on the committee with him. They include Carolyn Maloney (D-NY), Paul Kanjorski (D-PA), Luis Gutierrez (D-IL), Maxine Waters (D-CA), Melvin Watt (D-NC), Gregory Meeks (D-NY) and Dennis Moore (D-KS). With the exception of Congresswoman Maloney, each chairs a subcommittee of the House Financial Services Committee. Congresswoman Maloney serves as Chairwoman of the Joint Economic Committee. It is likely that Speaker Pelosi will accept Chairman Frank’s recommendations and include these nominees among the formal appointments made this week.

Republican members to be appointed to the conference committee from the House Financial Services Committee have not yet been identified by minority leader John Boehner (R-OH). Most likely to be included are Financial Services Committee Ranking Member Spencer Bachus (R-AL), as well as Jeb Hensarling (R-TX) and Scott Garrett (R-NJ), as speculated by media sources.

House conferees from the House Agriculture Committee have not been identified from either the Democratic or Republican side of the aisle.

Republican Procedural Demands; Key Issues

Republican Senate conferees sent a letter on May 27, 2010 to Chairman Frank and Chairman Dodd with procedural demands for conference committee proceedings. Noting that “this conference is too important for the major issues to be decided behind closed doors,” Republican conferees requested public votes on all major issues, accountability for proposals (ensuring that the public is aware of the source of any additional language included in the conference report), and a fair and open process.

As the conference committee begins its review of the Senate Bill and the House Bill, it is now expected that the Senate Bill will be the underlying model used to formulate the final piece of legislation. The regulations in the Senate Bill are stronger than the House Bill in many of the major regulation areas, and the Senate Bill includes various issues not included in the House Bill. By using the Senate Bill as the underlying model, negotiations will focus on whether the Senate’s additional regulations should be removed, rather than negotiating to include these regulations into the underlying model of the House Bill. Committee members must work carefully to ensure that the resulting legislation can still attract the necessary 60 votes to clear the Senate.

The most challenging issue facing the conference committee is the regulation of over-the-counter derivatives markets. The Senate Bill and the House Bill contain several inconsistencies, and the Senate Bill includes several provisions which were not considered for the House Bill. It remains to be seen whether the Volcker Rule, which prevents proprietary trading, will be included in the final legislation. With respect to Chairman Lincoln’s proposal to require banks to spin off their derivatives trading desks, several conferees, including Chairman Frank and Senator Reed, have voiced their concerns with such an approach. Chairman Lincoln and Senator Harkin have declared their intent to advocate for this provision’s inclusion in the conference committee’s final report.

There remain several other controversial provisions likely to face increased attention before being included in the final version of the legislation. For example, the interchange fee provision, which would require debit card interchange fees to be “reasonable and proportional” to the issuer’s costs, will be highly debated during negotiations. This provision was included in the Senate Bill and championed by Senator Dick Durbin (D-IL), but was not included in the House Bill. Senator Durbin will not be a member of the conference committee, decreasing the possibility that the provision will survive the conference committee process. In addition, there is increased scrutiny over a provision in the Senate Bill that was added on the Senate floor in an amendment by Senator Susan Collins (R-ME). This piece of the legislation would change the capital rules for banks by restricting the use of trust preferred securities as Tier 1 capital. The amendment was passed by unanimous consent and has been the subject of significant attention because of its impact on financial services companies and regulators with respect to compliance with capital requirements.

Via: Lexology – Financial regulatory reform: conference committee update.

Credit card rate hikes reviewed, penalty fees crimped – Jun. 15, 2010

WASHINGTON (CNNMoney.com) — Most credit card penalties will be limited to $25, and fees for customers who don’t use their cards will be eliminated under rules released Tuesday by the Federal Reserve

via Credit card rate hikes reviewed, penalty fees crimped – Jun. 15, 2010.

Unpacking the Debit Card Amendment |The Washington Independent

As the conference committee reconciles the House and Senate versions of the financial regulatory reform bills, Sen. Richard Durbin’s (D-Ill.) amendment regulating the type and scope of fees that Visa, Mastercard and other companies can charge businesses for debit card transactions has proven one of the hottest flashpoints. But the amendment is confusing, and the topic wonky. To unpack it, I spoke with Mike Konczal, a fellow at the Roosevelt Institute and financial blogger.

READ ARTICLE via Unpacking the Debit Card Amendment « The Washington Independent.

GOV’T MUST STOP BANKS OVERCHARGING SHOPS & CUSTOMERS | British Retail Consortium

British Retail Consortium Press Release:

As part of its promised clampdown on irresponsible banking behaviour, the new Government should intervene to cut the excessive charges banks levy on retailers for accepting plastic, said the British Retail Consortium (BRC).

The combination of unjustifiably high card charges and growth of non-cash payment methods promises big windfalls for banks and a financial blow for shops and customers.

New figures from the BRC, published today (Tuesday) show accepting a payment by debit card costs a retailer four times more than when a customer uses cash.

The BRC’s annual Cost of Collection Survey includes results from over seven billion transactions in 21,500 shops of all types. It examines year-to-year changes in the methods of payment customers are using and the costs imposed on retailers by banks and card schemes for processing those payments.

Banks’ charges for handling debit card payments were higher than a year ago. They have almost doubled in five years.

An average cash transaction costs retailers 2.1 pence; a debit card payment costs 8.5 pence, but they are charged a massive 34 pence when a customer uses a credit card.

Retailers are seriously concerned that banks plan to make the higher debit card charging regime the norm for the emerging contactless and mobile phone payment methods. If that happens, retailers would face huge increases in their costs as these new ways of paying replace cash – particularly for low value purchases. Inevitably, those extra costs would have to be passed on to customers through higher prices.

Retailers are also unhappy that banks are deliberately creating new card products – with much higher charges for retailers – and moving customers across to them. HSBC (among others) is to rollout new ‘premium’ or ‘World cards’. They attract additional interchange fees of between 0.7 per cent and 0.9 per cent on top of the average 0.75 per cent of the transaction value that the retailer previously paid.

If charges for every payment method were as low as they are for cash, over 480 million in cost savings would be passed on to customers through lower shop prices.

British Retail Consortium Director General Stephen Robertson said: “There is no justification for such big differences in charges between cards and cash. With payment technology and efficiency developing, card charges should be going down not up. ‘contactless’ systems can bring benefits but banks are currently levying charges on card payments well beyond what it actually costs them to process those transactions. They can’t expect to maintain those excessive charges as numbers of non-cash payments grow.

In the end it’s customers who meet these unfair costs in the prices they pay. Banks must reduce their charges to reflect more honestly the costs they actually incur in processing transactions.”

The latest BRC survey shows cash holding its own as the favourite way of paying but in slight decline compared with recent years. Cash was used for 58 per cent of all transactions. That is up on 56 per cent in 2008 but down on 61 per cent in 2007. In terms of money spent, 32 per cent of all retail spending was done with cash in 2009. That was virtually unchanged from 33 per cent in 2008 and slightly less than 34 per cent in 2007.

British Retail Consortium Director General Stephen Robertson said: “Cash is still the most popular way of paying and the cheapest for retailers. Cash use had a boost in the recession. Many people find managing their spending easier with cash – you can’t spend what you haven’t got . But the longer term trend suggests cash use will slip gradually.”

LINK TO PRESS RELEASE via British Retail Consortium – News.

Defending His Amendment, Sen. Durbin Fires Back at Small Banks | Digital Transactions

(June 15, 2010) U.S. Sen. Richard Durbin is chastising small banks and credit unions for not liking his debit card interchange regulation proposal, and Visa Inc. claims consumers strongly oppose legislation that would raise their costs or reduce their cards’ utility.

READ ARTICLE via Digital Transactions

NRA Asks Congress for Some #SwipeFees Help – Restaurant News – QSR Magazine

[2010-06-15] The National Restaurant Association and 30 state restaurant associations recently joined more than 200 other merchant organizations in asking members of the U.S. House of Representatives to give restaurants and other merchants a break on some payment card-processing fees. In a letter to House members, the National Restaurant Association urged members to include an amendment, sponsored by Sen. Dick Durbin (D-Ill.) and previously passed in the Senate, in the final financial reform bill.

READ ARTICLE via NRA Asks Congress for Some Fee Help – Restaurant News – QSR Magazine.

The Rise of Consumer Credit | MintLife Blog | The Mint.com

We frequently hear complaints about the unstoppable deluge of unsolicited credit card offers flooding our mailboxes. Even more frequently, we hear complaints about unexpected credit-card fees piling up on top of snowballing credit-card balances, even as the industry now operates under new, consumer-friendlier rules thanks to the CARD Act of 2009.

READ ARTICLE via The Rise of Consumer Credit | MintLife Blog | Personal Finance News & Advice.

Economy Watch – Fed orders caps on credit card late fees | WashPost

The Federal Reserve on Tuesday ordered credit card issuers to cap penalty fees at $25 for a single violation within a six-month period and $35 for multiple transgressions

READ ARTICLE via Economy Watch – Fed orders caps on credit card late fees.

Courthouse News Service | American Express Faces Antitrust Complaint

MANHATTAN (CN) – In an antitrust class action against American Express, the National Supermarkets Association claims its members have to raise prices across the board because of a surcharge that AmEx imposes on retailers, according to a federal class action. The group of 400 independent grocers claims AmEx’s surcharge is illegal

via Courthouse News Service.

Defending His Amendment, Sen. Durbin Fires Back at Small Banks (Via Digital Transactions)

(June 15, 2010) U.S. Sen. Richard Durbin is chastising small banks and credit unions for not liking his debit card interchange regulation proposal, and Visa Inc. claims consumers strongly oppose legislation that would raise their costs or reduce their cards’ utility.

READ ARTICLE via News.

Small banks fight card fee limits despite exemption | Reuters #swipefees

Lawmakers and merchants say that Visa and MasterCard unfairly exploit their duopoly. Interchange fees in the United States are among the highest in the world, in part because many other countries have regulated those fees.

READ ARTICLE via INSIGHT-Small banks fight card fee limits despite exemption | Reuters.

Is Your Representative An Enemy of #SwipeFees Reform? (NACSOnline)

See who is leading the charge against reform and call your legislators today!

ALEXANDRIA, VA – The banking industry has launched a massive grassroots push to kill swipe fee reforms. They have been on Capitol Hill, mobilized their employees and are sending thousands of calls and letters urging Congress to reject the swipe fee reforms adopted by the Senate last month. Every retailer must act now to preserve these reforms and bring critical relief to merchants and consumers.

On Friday we learned that 85 U.S. representatives signed on to a letter opposing swipe fee reform. Here is the letter they signed. Call these representatives now and tell them to stand up to the big banks — don’t be fooled by their lies and support small retailers and consumers. Read the misrepresentations that banking industry allies are distributing to members of Congress on Capitol Hill.
It is critical you act now. The House and Senate are negotiating their respective versions of Financial Services Reform legislation. The Senate version contains a provision known as the Durbin Amendment that is named after the senator who drafted the language to reform swipe fees. The banking industry is pushing the House of Representative to reject these provisions, arguing that the amendment would “would significantly harm thousands of community banks and credit unions that offer debit and credit cards to their customers and members.”

Please follow these four steps:

1. Have your entire company call the Capitol Switchboard at (202) 224-3121 and ask for their legislators by name.
2. Tell your legislators to: Keep the Durbin Swipe Fee amendment — unchanged— in the final version of the Financial Services Reform bill.
3. Ask your legislators to: Please sign the Welch-Shuster-Carney letter in support of swipe fee reforms.
4. Have your entire company visit nacsonline.com/grassroots and send an e-mail to their legislators in support of swipe fee reform.

Make your voice heard — stop the banks from killing swipe fee reform. Call today