An Open Letter From Mitch Goldstone
As an entrepreneurial business owner, I can’t help but notice how disengaged the Republican’s have become – fueled by giant donations from the banks. On one hand, they insist that the wealthiest Americans need monstrous-sized tax breaks to stimulate the economy and craft new jobs, yet if merchants were provided with lower credit card interchange swipe fees, we would hoard the savings.
Well, which is it?
The reality is that the super wealthy would use the tax savings to buy municipal bonds and other exotic investments, rather than toil to lower unemployment.. However, the $64 billion in annual merchant credit card fees would directly be used to boost spending, the very tool sought by congress to stimulate the economy. Merchant interchange fees were designed forty years ago as a cost-based solution to operate a four-party payment network before it was electronic; when it involved manual credit card imprinters and thick stacks of carbon copy receipts that had to be mailed away to be processed and redeemed.
Just as with my company, technology and efficiencies have led to new solutions. Twenty years ago, I charged $5.00 to scan a photo, today it is 8-cents. Yet, for the banks, they have raised debit card fees, for instance, hundreds of percent and created a phony marketing tool for bestowing “rewards” which is little more than a gimmick. Cut the gimmicks and lower the fees!
Even if businesses squirreled away all the saved interchange fees, which is not realistic anyway due to competition (something lacking among Visa and MasterCard’s 80% market power monolopy), the overhanging issue that clouds the entire interchange battle is not being addressed. The issue is that the banks, along with MasterCard and Visa conspired to violate the Sherman Antitrust Act and illegally fix prices. That violation from the credit card cartel is the issue. But, as a sideshow, the banks are bullying small businesses and panicking American families claiming that all fees will rise and their rewards – little more than multi-billion dollar marketing gimmick that tricks American families – will evaporate.
What needs to evaporate are debit and credit card interchange fees and imposing a limit of 12-cents for debit card swipe fees is a good start. Next swiping away credit card fees, the much greater issue anyway.
President & CEO
Permission granted to copy and repost, unedited in its entirety