Merchants, card issuers’ feud over swipe fees coming to a register near you – The Boston Globe

Visa and MasterCard can still require merchants that use their networks to accept all their branded cards. It’s just that retailers can now offer incentives for lower-cost cards.

via Merchants, card issuers’ feud over swipe fees coming to a register near you – The Boston Globe.

How the battle over #swipefees ensnares consumers: Associated Press Business News – MSN Money

The customer isnt always king. Sometimes hes just a pawn.The feud over the so-called swipe fees merchants pay banks when customers use plastic is reaching a crescendo and will likely hit registers in coming months.

via How the battle over swipe fees ensnares consumers: Associated Press Business News – MSN Money.

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TCF’s Suit Is ‘Nonsense,” Anti-Interchange Crusader Mitch Goldstone Says (Digital Transactions)

(October 14, 2010) TCF National Bank’s federal lawsuit against the controls on debit card interchange contained in the Dodd-Frank financial reform law draws scant sympathy from retailers who have been battling against card interchange, including a merchant and entrepreneur who has been leading a crusade against the pricing mechanism for years. “It’s nonsense,” says Mitch Goldstone, president and chief executive of ScanMyPhotos.com, Irvine, Calif. “It’s just another distraction.”

Goldstone argues the suit, which names the Federal Reserve as defendant and claims that the law’s provision for the Fed to control debit card interchange is unconstitutional, represents an effort by banks and the card networks to preserve status-quo interchange pricing for as long as possible. “It’s just a big game to them,” he says. “They’re just trying to run out the clock. Every day Visa and the banks get away without addressing interchange, they make another $120 million.” TCF filed its suit on Tuesday (Digital Transactions News, Oct. 12),

Goldstone’s estimate of the daily tab for interchange includes both credit and debit card fees, he says. Debit card interchange alone is estimated to represent about $15 billion in annual income for financial institutions. TCF, which is a prominent debit card issuer but has no credit card portfolio, estimates Dodd-Frank will cut its annual interchange income from $102 million to $20 million. While Visa and MasterCard set interchange rates, interchange income flows to card-issuing banks. It is paid by merchant acquirers, which then pass the cost on to merchants as part of the discount fee merchants pay on each transaction.

READ ARTICLE TCF’s Suit Is ‘Nonsense,” Anti-Interchange Crusader Says

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Former Visa president seeks new opportunities in financial services – The Term Sheet: Fortune’s deals blog

Hans Morris, former president of Visa Inc. (V), has joined private equity firm General Atlantic as a managing director and head of financial services investing. He previously had served as a special advisor to the firm.

via Former Visa president seeks new opportunities in financial services – The Term Sheet: Fortune’s deals blog.

Credit card swipe fees under attack | mndaily.com

Paying $2,000 a month on “swipe fees” to credit card companies, House of Hanson owner Laurel Bauer said it can be expensive for the Dinkytown grocery store to accept payments via credit and debit cards

via Credit card swipe fees under attack | mndaily.com – Serving the University of Minnesota Community Since 1900.

Card Probe Ends With a Whimper for MasterCard, Visa; Amex Vows a Fight

The Justice Department’s complaint is that American Express, Visa and MasterCard have put rules in place that prevent merchants from offering consumer discounts, rewards and information about card costs to induce them to choose another payment method. Visa and MasterCard have filed a proposed settlement to the charges that a court will have to approve. American Express had not yet filed a response to the charges, but a statement from the card brand indicated it intends to fight the charges in court.

via Card Probe Ends With a Whimper for MasterCard, Visa; Amex Vows a Fight.

MasterCard, Visa settlements will benefit consumers | MailTribune.com #swipefees

Under a settlement with federal regulators announced Monday, Visa and MasterCard agreed to let merchants offer customers discounts and incentives for using a particular type of card.  The settlement lets retailers express preference for a particular card issued by Visa or MasterCard, such as a basic card versus a rewards card, or for cards from another brand such as Discover

READ ARTICLE via MasterCard, Visa settlements will benefit consumers | MailTribune.com.

MasterCard, Visa settlements will benefit consumers | MailTribune.com #swipefees

Under a settlement with federal regulators, Visa and MasterCard agreed to let merchants offer customers discounts and incentives for using a particular type of card.  The settlement lets retailers express preference for a particular card issued by Visa or MasterCard, such as a basic card versus a rewards card, or for cards from another brand such as Discover

READ ARTICLE via MasterCard, Visa settlements will benefit consumers | MailTribune.com.

Merchants Win the Credit Card Wars #swipefees (via Motley Fool)

The battle over plasticOn Monday, Visa NYSE: V and MasterCard NYSE: MA agreed to a proposed settlement with the U.S. Department of Justice and several state attorneys general. In the settlement, which helped the credit card network companies avoid an antitrust lawsuit, Visa and MasterCard agreed to allow merchants to offer discounts and various other incentives to customers if they use cards that cost those merchants less in fees to accept. Before the settlement, merchants were bound by agreements that prohibited them from discriminating among different types of credit cards within the same network, even if some had higher interchange fees and other charges.

READ ARTICLE via Merchants Win the Credit Card Wars AXP, BAC, COF, DFS, JPM, MA, V.

A chance for us to decode the real price of plastic | WashPost

“We want to put more money in consumers’ pockets, and by eliminating credit card companies’ anticompetitive rules, we will accomplish that,” said Attorney General Eric H. Holder Jr.

via A chance for us to decode the real price of plastic.

NACS Reaches an ‘Audacious Goal,’ but More Battles Loom #swipefees

ATLANTA – “Since credit cards were introduced more than 60 years ago, no one dared step in to challenge the powerful banks. We did. And we got change,” said NACS President and CEO Hank Armour in his Opening General Session address on Oct. 6 at the NACS Show.

NACS’ “audacious goal” to fight swipe fees, said Armour, “was a moment our industry has been waiting for — and fighting for — for close to a decade.” 

On July 21, President Barack Obama signed into law a comprehensive financial services reform bill — a new law that contains debit card swipe fee reforms that NACS and its members called on Congress to support.

The reforms ushered under the new law will have both immediate and longer-term benefits to convenience and petroleum retailers:

• Retailers immediately can discount for different methods of payment, and it in many different ways, whether it be cents off per gallon, fixed amount per transaction, percent discount of the transaction or loyalty points for certain types of transactions.
• Retailers immediately can set a minimum transaction level, not to exceed $10, for credit card transactions to help offset fixed transaction fees.
• By May 2011 – and probably sooner than that, the Federal Reserve must issue standards for card issuers to adopt debit swipe fees that are reasonable and proportional to the cost of the transaction. Within 90 days after that, the card companies must adjust their fees. “We expect rates to be simplified and fees to be significantly reduced,” said Armour.
• The Fed must also write rules implementing non-exclusivity of debit networks, meaning debit card issuers must offer retailers at least two networks to process transactions. “This should introduce some badly needed competition and further reduce fees,” said Armour.

Armour praised the industry’s massive, history-making grassroots push to bring debit card relief to Congress through in-store petition campaigns, phone calls, meetings with representatives and senators and testimony before House and Senate committees on the devastating impact swipe fees have on the industry.

“It was our strong sense of purpose, our perseverance and our people that led to our success. Your P&Ls clearly showed that swipe fees were a major problem and that this was a battle worth fighting,” said Armour. “We demonstrated the severity of the problem and put a glaring spot light on the anti-competitive practices of Visa, MasterCard and the issuing banks.”

However, Armour stressed, the war to bring swipe fee relief across the board and fix a broken and monopolistic system is not over.

Armour said that while victory has been won on one front, this is a war with multiple fronts. The battle continues with NACS urging the Department of Justice to file an antitrust lawsuit challenging some of Visa and MasterCard’s most egregious operating rules.

“Clearly, they were listening,” said Armour. “Two days ago they filed their own lawsuit against the card companies. In response Visa and MasterCard have entered a consent decree to allow retailers to change different prices for different card brands.”

This means that retailers will be able to charge differently for Visa transactions versus MasterCard transactions – and differently for different types of reward cards within brands.

“This is a huge victory, and should introduce true market competition for the first time in credit card history,” said Armour, adding that NACS will provide a comprehensive update as soon as the NACS Show is over.

NACS also is continuing to press forward with its own antitrust litigation against Visa, MasterCard and the eight largest issuing banks. And after the November midterm elections, NACS will continue urging Congress to reform credit card swipe fees.

Armour also shared video greetings from three legislative champions on the issue – Sen. Richard Durbin (D-IL) and Reps. Peter Welch (D-VT) and Bill Shuster (R-PA) – who urged attendees to stay engaged with grassroots advocacy, whether on this issue or a host of others the industry faces.

“I want to be very clear on this. We won a very important battle – an historic battle. But the war is not over,” said Armour. We need to make sure that this legislation means real change. That requires working with the Federal Reserve to insure that the standards will produce a significant reduction in debit fees.”

“The banks will fight us every step of the way and pull every trick in the book,” said Armour. “That’s why our work is not done, and why we need your continued support.”

via NACS Reaches an ‘Audacious Goal,’ but More Battles Loom.

Rep. Welch reacts to Department of Justice announcement on credit card #swipefees

[Via Congressman Welch’s website]

Rep. Peter Welch (D-Vt.), author of House legislation to crack down on credit card swipe fees, today applauded Attorney General Eric Holder’s decision to take action against American Express over anti-trust practices related to excessive credit card swipe fees. Holder also announced a proposed settlement with Visa and MasterCard over similar allegations.

“This is a good day for merchants across the country and a bad day for credit card companies,” Welch said. “This action by the Justice Department confirms what we suspected all along: credit card companies are using their market power to force merchants to pay the highest interchange fees in the world. For years now, merchants have helplessly watched as out-of-control credit card fees cut deeper and deeper into profit margins and, in some cases, eliminate them entirely. Today, we are one step closer to fair treatment and a level playing field between merchants and credit card companies.”

At issue are allegations that the credit card companies are using their market power to prevent merchants from offering customers incentives to use cards with lower swipe fees. Credit Card companies currently restrict this practice, effectively forcing merchants to accept cards with higher swipe fees or forfeit their right to accept credit cards at all. The suit brought by the Department of Justice will challenge the credit card companies’ right to restrict this practice.

Welch has been fighting for swipe fee reform since 2008 when he first introduced the Credit Card Interchange Fees Act (H.R. 2382). That legislation included a provision that would have allowed merchants to offer incentives to customers that use cards with lower merchant swipe fees. Provisions of Welch’s bill were included in the Wall Street Reform legislation passed by the House in July.

Attorney General Eric Holder made the following statement at today’s announcement: “With today’s lawsuit we are sending a clear message: We will not tolerate anticompetitive practices. We want to put more money in consumers’ pockets, and by eliminating credit card companies’ anticompetitive rules, we will accomplish that.”

The full release from the Department of Justice is copied below:

JUSTICE DEPARTMENT SUES AMERICAN EXPRESS, MASTERCARD AND VISA TO ELIMINATE RULES RESTRICTING PRICE COMPETITION;

REACHES SETTLEMENT WITH VISA AND MASTERCARD

Department to Litigate Against American Express to Promote Competition Among Credit Card Networks Enabling Merchants to Benefit Consumers

WASHINGTON — The Department of Justice announced today that it filed a civil antitrust lawsuit in U.S. District Court for the Eastern District of New York challenging rules that American Express, MasterCard and Visa have in place that prevent merchants from offering consumers discounts, rewards and information about card costs, ultimately resulting in consumers paying more for their purchases. The department also said that the rules increase merchants’ costs of doing business. Joining the department in its lawsuit are the states of Connecticut, Iowa, Maryland, Michigan, Missouri, Ohio and Texas.

At the same time, the department announced that it has filed a proposed settlement with Visa and MasterCard, that, if approved by the court, would require the two companies to allow merchants to offer discounts, incentives, and information to consumers to encourage the use of payment methods that are less costly.

According to the complaint, American Express, MasterCard and Visa maintain rules that prohibit merchants from encouraging consumers to use lower-cost payment methods when making purchases. For example, the rules prohibit merchants from offering discounts or other incentives to consumers in order to encourage them to pay with credit cards that cost the merchant less to accept.

“With today’s lawsuit we are sending a clear message: We will not tolerate anticompetitive practices,” said Attorney General Eric Holder. “We want to put more money in consumers’ pockets, and by eliminating credit card companies’ anticompetitive rules, we will accomplish that.”

“These restrictive rules restrain competition among credit card networks for merchant acceptance and distort the competitive process,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The proposed settlement with MasterCard and Visa is an important step in bringing more credit card competition to the point of sale. The department’s lawsuit against American Express will continue that effort and, if successful, allow merchants more freedom to benefit their customers.”

Credit card acceptance costs U.S. merchants approximately $35 billion each year. Those costs are collected from merchants in the form of a “swipe fee” they pay every time a credit card is used. American Express has the highest merchant fees of any credit card network. Merchants pass on these billions of dollars in fees to all their consumers in the form of higher retail prices. By preventing merchants from rewarding consumers when they use less expensive credit cards to make a purchase, American Express, MasterCard and Visa have inhibited merchants’ ability to reduce card acceptance costs, and therefore their retail prices to consumers.

The proposed settlement requires MasterCard and Visa to allow their merchants to:

Offer consumers an immediate discount or rebate or a free or discounted product or service for using a particular credit card network, low-cost card within that network or other form of payment; Express a preference for the use of a particular credit card network, low-cost card within that network or other form of payment; Promote a particular credit card network, low-cost card within that network or other form of payment through posted information or other communications to consumers; andCommunicate to consumers the cost incurred by the merchant when a consumer uses a particular credit card network, type of card within that network, or other form of payment.

The proposed settlement allows any merchant that only accepts Visa and MasterCard to take advantage of the relief immediately.

The ongoing litigation against American Express seeks to allow merchants that accept American Express to engage in the same kind of discounting and encouragement that the proposed settlement with MasterCard and Visa allows. Until American Express’s restraints on merchants are lifted, the many merchants that accept American Express, as well as Visa and MasterCard, will not be able to take full advantage of their new options under the proposed settlement, the department said.

American Express Company, the parent of American Express Travel Related Services Company Inc., is a New York corporation, with its principal place of business in New York City. Cardholders used American Express credit and charge cards for $419.8 billion in purchases in 2009. MasterCard is a Delaware corporation with its principal place of business in Purchase, New York. Cardholders used MasterCard credit and charge cards for $476.9 billion in purchases in 2009. Visa is a Delaware corporation with its principal place of business in San Francisco. Cardholders used Visa credit and charge cards for $764.2 billion in purchases in 2009.

The proposed settlement, along with the department’s competitive impact statement, will be published in The Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to John R. Read, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street N.W., Suite 4000, Washington D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment as to MasterCard and Visa only upon a finding that it serves the public interest.

The court will determine a pretrial schedule for the case against American Express once American Express files its response to the government’s lawsuit.

Visa, MasterCard changes will benefit merchants — and maybe consumers – latimes.com #swipefees

Many merchants, long frustrated by the fees, were pleased. Mitch Goldstone, who owns Irvine photography shop and online business Scanmyphotos.com, welcomed the settlement, saying it would free up merchants to nudge consumers toward using less expensive cards.

“I was very excited today and encouraged by the Department of Justice moving forward,” said Goldstone, who is also a plaintiff in a private lawsuit against the credit card companies. After employees and rent, Goldstone said, the fees are his biggest expense.

READ ARTICLE via Visa, MasterCard changes will benefit merchants — and maybe consumers – latimes.com.

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Bill payment fees: Lenders, utilities charging customers to pay by phone – latimes.com

The credit card reform law now prohibits lenders from charging a fee for paying your bill by phone, particularly if you use an automated system. But apparently the same doesn’t apply to mortgage payments.

via Bill payment fees: Lenders, utilities charging customers to pay by phone – latimes.com.

Interchange #SwipeFees Update | Mother Jones

Whenever you use a credit card, the merchant pays the credit card company an interchange fee. Usually it’s around 1-2% of the purchase amount, but it varies with the card. It’s also invisible, and credit card companies have long prohibited merchants from passing along the charge to consumers, something they can get away with thanks to their monopoly status. Yesterday, however, the Department of Justice reached a settlement with Visa and Mastercard that changes this:

Under the terms of the proposed settlement, merchants could offer consumers an immediate discount or rebate for using a particular type of payment, a particular credit card network (Visa versus American Express#, or a low-cost card within that network #a Visa debit card rather than a Visa credit card).

READ ARTICLE via Interchange Fee Update | Mother Jones.

AmEx Shares Continue To Drop After Antitrust Suit – WSJ.com

NEW YORK (Dow Jones)–American Express Co. (AXP) shares dropped for a second day Tuesday as uneasy investors digested news that the credit-card company will fight the Justice Department over rules preventing merchants from differentiating between cards based on swipe fees.

via CORRECT: AmEx Shares Continue To Drop After Antitrust Suit – WSJ.com.

Reactions Vary to DOJ Card Actions | Credit Union Times #SwipeFees

“The retail industry is very pleased that the Department of Justice is taking action against the anti-competitive practices of the big credit card companies,” said Mallory Duncan, National Retail Federation senior vice president and general counsel. “Allowing merchants to offer a discount for lower-cost forms of payment will begin to inject competition into the credit card market, a step that the card companies have resisted for far too long. Credit cards are still going to be welcome in retail stores, but consumers are going to flock to the cards that give them the biggest discount.”

via Reactions Vary to DOJ Card Actions.

Visa Settles with U.S. Department of Justice | VISA Inc. Press Release

Visa will make formal rule changes after the court enters a final judgment following a public comment period, but will refrain from enforcing its current discounting rules in the interim. U.S. merchants will receive additional information about the settlement from their acquiring financial institution after the final judgment.

via Visa Settles with U.S. Department of Justice and Seven State Attorneys General.

How We Collude With Visa and Mastercard to Drive Up Prices — Seeking Alpha

Transactions fees are big business. Card companies make a fortune off of interchange fees. Interchange fees are the fees that banks charge businesses to process a transaction. These fees typically range from 1 to 3% of the cost of a purchase. The 3 biggest processing companies generated $35 billion dollars in revenue from transaction fees last year alone.

via How We Collude With Visa and Mastercard to Drive Up Prices — Seeking Alpha.

UPDTAE II: Visa, MasterCard changes will benefit merchants — and maybe consumers – latimes.com

Many merchants, long frustrated by the fees, were pleased. Mitch Goldstone, who owns Irvine photography shop and online business Scanmyphotos.com, welcomed the settlement, saying it would free up merchants to nudge consumers toward using less expensive cards.

“I was very excited today and encouraged by the Department of Justice moving forward,” said Goldstone, who is also a plaintiff in a private lawsuit against the credit card companies. After employees and rent, Goldstone said, the fees are his biggest expense.

READ ARTICLE via Visa, MasterCard changes will benefit merchants — and maybe consumers – latimes.com.

UPDATE II: Visa, MasterCard changes will benefit merchants — and maybe consumers – latimes.com

Many merchants, long frustrated by the fees, were pleased. Mitch Goldstone, who owns Irvine photography shop and online business Scanmyphotos.com, welcomed the settlement, saying it would free up merchants to nudge consumers toward using less expensive cards.

“I was very excited today and encouraged by the Department of Justice moving forward,” said Goldstone, who is also a plaintiff in a private lawsuit against the credit card companies. After employees and rent, Goldstone said, the fees are his biggest expense.

READ ARTICLE via Visa, MasterCard changes will benefit merchants — and maybe consumers – latimes.com.

Visa, MasterCard changes will benefit merchants — and maybe consumers – latimes.com

Consumers may be in for a major break on credit card purchases under an new agreement reached Monday between the U.S. Department of Justice and the nation’s two biggest card companies.

via Visa, MasterCard changes will benefit merchants — and maybe consumers – latimes.com.

Attorney General Chris Koster credit card antitrust lawsuit | ksdk.com | St. Louis, MO

Jefferson City, MO (KSDK) — Missouri’s attorney general joined the Department of Justice and six other attorneys general in filing a civil antitrust lawsuit against Visa, MasterCard and American Express for alleged unfair rules the major credit cards have placed on merchants.

via Attorney General Chris Koster credit card antitrust lawsuit | ksdk.com | St. Louis, MO.

U.S. Proposes Settlement With MasterCard and Visa – Andrew Martin, NYTimes.com

Mr. Duncan, of the National Retail Federation, said he could envision retailers offering free shipping on large-ticket purchases if a consumer used a less expensive type of card. “It will be as different as merchants are creative, which is how the market is supposed to work,” he said.

READ ARTICLE via U.S. Proposes Settlement With MasterCard and Visa – NYTimes.com.

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U.S. Proposes Settlement With MasterCard and Visa – NYTimes.com

Under the proposed settlement, Visa and MasterCard agree not to prohibit merchants from offering customers discounts or rebates for using a particular kind of card.

via U.S. Proposes Settlement With MasterCard and Visa – NYTimes.com.

» MasterCard, Visa settle with Justice Dept. #SwipeFees

The Justice Department on Monday sued the three largest U.S. credit card companies for anticompetitive practices and reached a proposed settlement with two of them, MasterCard and Visa.

READ ARTICLE via » MasterCard, Visa settle with Justice Dept..

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Boies Says U.S. Lawsuit Against AmEx `Doesn’t Fit’ Facts: Video – Bloomberg

David Boies, chairman of Boies Schiller & Flexner LLP, talks about the U.S. Justice Department’s antitrust lawsuit against American Express Co.

American Express vowed to fight the lawsuit while Visa Inc. and MasterCard Inc. reached a settlement with the government. AmEx is hiring Boies to handle its defense. Boies talks with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

http://www.bloomberg.com/video/63474054/

READ ARTICLE via Boies Says U.S. Lawsuit Against AmEx `Doesn’t Fit’ Facts: Video – Bloomberg.

AmEx Faces U.S. Antitrust Charges – TheStreet #SwipeFees

NEW YORK (TheStreet) — Visa (V) and MasterCard (MA) agreed to settle with the U.S. Department of Justice and the attorneys general of seven states to resolve antitrust investigations into the electronic payment firms’ merchant acceptance rules in the U.S., Visa said via press release on Monday.

via AmEx Faces U.S. Antitrust Charges – TheStreet.

Visa, MasterCard To Settle Government Antitrust Suit; AmEx Vows To Fight : NPR

According to Visa, “as part of the settlement, Visa will allow U.S. merchants to offer discounts or other incentives to steer customers to a particular form of payment including to a specific network brand or to any card product, such as a “non-reward” Visa credit card.

MasterCard says “the terms of the settlement are consistent with the Company’s long standing business practices and will require MasterCard only to modify its rules to more specifically conform to its business practices.”

READ ARTICLE Via Visa, MasterCard To Settle Government Antitrust Suit; AmEx Vows To Fight It : The Two-Way : NPR.

U.S. Government Said to Near Decision on Visa, MasterCard Antitrust Probe – Bloomberg

The talks focus on rules that bar merchants from charging extra to customers who use credit cards and steering them to competing cards, and require retailers to accept every type of card banks issue, said the people, who requested anonymity because the discussions are private. The department is leaning toward allowing the companies to maintain prohibitions against surcharging, two of the people said.

READ ARTICLE via U.S. Government Said to Near Decision on Visa, MasterCard Antitrust Probe – Bloomberg.

MasterCard and Visa Are Near – WSJ.com

By ROBIN SIDEL And THOMAS CATAN

Visa Inc. and MasterCard Inc. are close to settling a Justice Department antitrust probe over credit-card acceptance rules, potentially giving merchants more flexibility to steer customers to cheaper forms of plastic, according to people familiar with the negotiations.

READ ARTICLE via MasterCard and Visa Are Near – WSJ.com.

http://online.wsj.com/article/SB10001424052748704380504575530512939089380.html

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