How Card Issuers Sneak Around New Laws (Consumerist)

Crafty credit card issuers aren’t going to let a little thing like the law get in the way of their profits. Nope, they’re finding creative ways to get around the pro-consumer CARD act and maintain their grip on your pocketbook.

READ ARTICLE: Via Consumerist. http://consumerist.com/2010/06/how-card-issuers-sneak-around-new-laws.html

National Retail Federation Video: Battling Credit Card SwipeFee Monopoly

Repost: National Retail Federation Senior Vice President and General Counsel Mallory Duncan Duncan discusses his October 8, 2009, testimony before the House Financial Services Committee and explains how the credit card industry is in an “arms race” to raise “swipe” fees.

NACS Video: Fight Swipe Fees!

NACSTV — April 26, 2010 — NACS, the association for convenience and petroleum retailing, delivered a record-setting number of consumer signatures to Congress on April 27, telling them that hidden credit and debit card swipe fees are unacceptable and that Congress must fix a clearly broken system. Learn more at http://www.fightswipefees.com

Fight MasterCard and Visa Credit Card Swipe Fees

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 reformt, 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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Media Statement – Visa Statement Regarding the Canadian Code of Conduct – Yahoo! Finance

[And Visa, too. Interesting that the same banks that owned Visa own MasterCard; the two giant credit card association (which say they are independent) regularly act as if they are operating from the same corner office]

 

TORONTO, April 16 /CNW/ – Visa supports the Canadian government’s goal to encourage transparency and merchant choice within the payments marketplace – two important pillars on which Visa has built its business domestically and internationally.

Visa already provides merchants much of what today’s Code of Conduct requests payment networks offer, such as full transparency of interchange rates, merchant choice on acceptance of Visa Debit cards, and the ability of merchants to offer discounts for other methods of payment. We appreciate the government’s inclusion of all payment networks to ensure merchants are equally informed through a level playing field.

via Media Statement – Visa Statement Regarding the Canadian Code of Conduct – Yahoo! Finance.

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Op-Ed Columnist – Looters in Loafers – NYTimes.com

The obvious question is whether financial reform of the kind now being contemplated would have prevented some or all of the fraud that now seems to have flourished over the past decade. And the answer is yes.

For one thing, an independent consumer protection bureau could have helped limit predatory lending. Another provision in the proposed Senate bill, requiring that lenders retain 5 percent of the value of loans they make, would have limited the practice of making bad loans and quickly selling them off to unwary investors.

via Op-Ed Columnist – Looters in Loafers – NYTimes.com.

Retail Groups Urge Credit Card Reform in Senate Banking Bill (via NACSOnline)

Legislation unveiled by Senate Banking Committee Chairman Chris Dodd omits credit card interchange fee reform.

 

WASHINGTON – This week Senate Banking Committee Chairman Chris Dodd (D-CT) unveiled a financial regulation overhaul bill that omits an important issue to convenience and petroleum retailers, consumers and small businesses in general: credit and debit card interchange (or “swipe”) fee reform.

Last year, Dodd announced his intention to draft legislation addressing the country’s outrageous interchange fees. It seemed to many that the broad financial overhaul bill would be a natural home for the swipe fee fix.

Retail groups in Washington, while disappointed that this issue was left out of the legislation, expressed a strong desire to work with Dodd and members of the Senate Banking Committee to address swipe fee reform.

“What we are seeing is merely the first draft of the legislation,” according to Lyle Beckwith, NACS senior vice president of government relations.  “This bill is far from complete and we can expect to see more iterations and many amendments offered as it moves through the Senate process. All of this tweaking could allow for swipe fee language to be included.”

“Financial services reform isn’t complete without swipe fee reform,” said Mallory Duncan, general counsel for the National Retail Federation. “Chairman Dodd has acknowledged the impact of these fees on consumers in the past, and we hope to see them addressed in the final version of this legislation.”

Dodd’s legislation faces a tough road ahead — no Republicans are backing the bill yet, and numerous interest groups from the financial services industry are crying foul over provisions that either have been included or excluded. Dodd, however, is confident the bill will pass, although he recognizes some issues remain. “Over the last few months, Banking Committee members have worked together to try and produce a consensus package,” Dodd said. “Together we have made significant progress and resolved many of the items, but a few outstanding issues remain.”

The Hill reports that a full Senate Banking Committee markup is scheduled the week of March 22 and Senate Democrats are hoping to pass the bill before the Memorial Day recess.

Above content from NACSOnline; For more on card fees and what NACS is doing, visit the NACS Issue Page.

NRF Urges Dodd to Address Swipe Fees in Bill (via CSP)

WASHINGTON — The National Retail Federation (NRF) expressed disappointment that a wide-ranging financial services reform bill unveiled earlier this week by Senate Banking Committee Chairman Christopher Dodd (D-Conn.) does not address the $48 billion in credit-card swipe fees paid by merchants and their customers each year.

“Chairman Dodd’s bill takes many steps to curb the excesses of the financial services industry, but the failure to address swipe fees is a glaring omission,” NRF senior vice president and general counsel Mallory Duncan said. “These fees drive up prices for the average family by hundreds of dollars every year and depress the ability of main street merchants to thrive and grow.”

“Financial services reform isn’t complete without swipe fee reform,” Duncan said. “Chairman Dodd has acknowledged the impact of these fees on consumers in the past, and we hope to see them addressed in the final version of this legislation.”

Visa and MasterCard banks charge merchants a fee called interchange each time one of their cards is swiped to pay for a purchase. With the fee averaging about 2%, “swipe fee” collections totaled $48 billion in 2008, triple the $16 billion collected when NRF began tracking the fees in 2001. Visa and MasterCard rules effectively force merchants to pass the fees on to consumers by requiring them to be included in the advertised price of merchandise and making discounts for cash, checks or cheaper forms of plastic difficult. As a result, the average household paid an estimated $427 in higher prices in 2008, up from $159 in 2001.

Dodd included a provision in last year’s Credit CARD Act requiring the Government Accountability Office (GAO) to conduct a study of interchange fees. The study concluded that credit-card swipe fees have been increasing despite card industry claims that they have remained steady, that the fees drive up prices for consumers and that consumers could see lower prices if they were reduced. Dodd has also said that he would consider legislation barring Visa and MasterCard placing restrictions on merchants’ ability to offer a discount for cheaper forms of payment such as cash, checks and debit cards.

Three major bills that would address swipe fees are pending in Congress. H.R. 2695, the Credit Card Fair Fee Act, sponsored by Judiciary Committee Chairman John Conyers (D-Mich.) and Senate companion bill S. 1212, sponsored by Majority Whip Richard Durbin (D-Ill.) would require Visa and MasterCard banks to negotiate with merchants over the fees rather than continuing to impose them on a unilateral basis. H.R. 2382, the Credit Card Interchange Act, sponsored by Representative Peter Welch (D-Vt.) would require increased transparency, give the Federal Trade Commission (FTC) authority to prohibit interchange practices that violate consumer protection or anticompetition laws and make cash discounts easier.

NRF is the world’s largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, convenience stores, drug stores and grocery stores as well as the industry’s key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees—about one in five American workers—and 2008 sales of $4.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations.

Read more

PBS Frontline: The Card Game

Complete info on the PBS Frontline segment called: The Card Game”

Click here to watch

“As credit card companies face rising public anger, new regulation from Washington and staggering new rates of default and bankruptcy, FRONTLINE correspondent Lowell Bergman investigates the future of the massive consumer loan industry and its impact on a fragile national economy.”

THE FIGHT OVER INTERCHANGE FEES: “Interchange fees are now the central issue in what is being called the largest private antitrust litigation in U.S. history.  Five years ago, Mitch Goldstone, an independent owner of scanmyphotos.com, an online photo service company, was struggling to keep his Southern California shop afloat. He began scrutinizing every expense and revenue stream of his small business. When he realized that an already costly expense — interchange fees – was increasing, he was livid.  “It got to the point where I had just a few employees and things were looking really bleak,” said Goldstone. “Interchange fees were the one expense that was going up, no matter what I did.”  In 2005, Goldstone (PDF) and more than 30 other merchants filed antitrust lawsuits in U.S District Court against Visa, MasterCard and several of their member banks, accusing them of breaching federal antitrust law by fixing the prices on interchange fees.”

Tricks and Traps of the Card Game

Credit Unions

Why Not Cap Interest Rates?

The Military’s War on Debt

The Changes Ahead

Pending Legislation

Is a New Agency Needed?

The Changing Landscape

Payday Loans — A Primer

The Industry’s Lobbying & Financial Clout

The Fight Over Interchange Fees

A New Consumer Protection Agency?

What’s the Consumer’s Responsibility?

South Korea: A Nation Living Off Credit

Europe’s Credit/Debt Situation

PBS FRONTLINE CORRESPONDENT LOWELL BERGMAN INVESTIGATES CONSUMER LOAN INDUSTRY

FRONTLINE Presents
THE CARD GAME
Tuesday, November 24, 2009, at 9 P.M. ET on PBS

Watch VIDEO

www.pbs.org/frontline/creditcards

As credit card companies face rising public anger, new regulation from Washington and staggering new rates of default and bankruptcy, FRONTLINE correspondent Lowell Bergman investigates the future of the massive consumer loan industry and its impact on a fragile national economy.

In The Card Game, a follow-up to the Secret History of the Credit Card and a joint project with The New York Times airing Tuesday, Nov. 24, 2009, at 9 P.M. ET on PBS (check local listings), Bergman and the Times talk to industry insiders, lobbyists, politicians and consumer advocates as they square off over attempts to reform the way the industry has done business for decades.

“The card issuers could do anything they want,” Robert McKinley, CEO of CardWeb.com, tells FRONTLINE of the industry’s unchecked power over consumers. “They could change your interest rate. They could impose an annual fee. They could close your account.” High interest rates along with more and more penalty fees drove up profits for the industry, Bergman finds, as the banks followed the lead of an aggressive upstart: Providian Bank. In an exclusive interview with FRONTLINE, former Providian CEO Shailesh Mehta tells Bergman how his company successfully targeted vulnerable low-income customers whom Providian called “the unbanked.”

“They’re lower-income people-bad credits, bankrupts, young credits, no credits,” Mehta says. Providian also innovated by offering “free” credit cards that carried heavy hidden fees. “I used to use the word ‘penalty pricing’ or ‘stealth pricing,'” Mehta tells FRONTLINE. “When people make the buying decision, they don’t look at the penalty fees because they never believe they’ll be late. They never believe they’ll be over limit, right? … Our business took off. … We were making a billion dollars a year.”

It took the economic collapse in the fall of 2008 to set the stage for potentially historic change in the consumer credit business. President Obama and his team pushed through a credit card reform bill in May, and they’re now looking to establish a new Consumer Finance Protection Agency. But the banking and financial services industries contribute huge amounts of money to Congress — and the jury is still out on whether the new regulations can pass. “It’s a step in the right direction, but it’s a modest step,” says Harvard law professor Elizabeth Warren. “It’s a set of very discrete new laws. And the credit industry instantly set to work on how they could run around them. By itself, that set of rules won’t change the game.”

“It’s hard for them to get a bill through the U.S. Senate when the industry is pouring money into Washington,” says Martin Eakes of the Center for Responsible Lending of the banks’ political clout. “As Sen. [Dick] Durbin from Chicago recently said, ‘The banks, even as unpopular as they are right now in this crisis, still own this place.'”

The Card Game is a FRONTLINE co-production with Cam Bay Productions and The New York Times. The film is written and produced by Lowell Bergman and Oriana Zill de Granados. The correspondent is Lowell Bergman. FRONTLINE is produced by WGBH Boston and is broadcast nationwide on PBS. Funding for FRONTLINE is provided through the support of PBS viewers. Major funding for FRONTLINE is provided by The John D. and Catherine T. MacArthur Foundation. Additional funding is provided by the Park Foundation. FRONTLINE is closed-captioned for deaf and hard-of-hearing viewers and described for people who are blind or visually impaired by the Media Access Group at WGBH. FRONTLINE is a registered trademark of the WGBH Educational Foundation. The executive producer of FRONTLINE is David Fanning.

Source: PBS Press release

Credit Cards Lobbyist Tries To Explain Higher Card Rates (via KFI-AM 640)

Lobbyist Tries To Explain Higher Card Rates on the Thursday, October 29th 6pm segment of The John and Ken KFI-AM 640 Los Angeles radio show.

Listen here

Alternative link to listen, click here

NACS Leads Credit Card Petition Against Unfair Fees

Banking, credit card cartel so intoxicated by greed that their advocacy lobbyists just issued this…

Electronic Payments Coalition, the group funded by Visa Inc.,  MasterCard Worldwide and the major banks and credit card issuers (payment card networks and financial services companies) just issued this press release. Click here.

We disagree with it, including this key point:  The problem with cash discounts is that they don’t allow for different prices depending on the type of payment card used.  There are about one-hundred separate merchant interchange fees and it is nearly impossible to know what the cost is for each transaction. In other words, they prevent Visa and MasterCard from competing over the cost of acceptance. The same principle applies to the honor-all-cards rules, which prevent merchants from exercising a preference for lower-cost cards, thereby preventing competitive forces from placing downward pressure on interchange fees. Not to mention the condescending, patronizing attitude that credit card companies know better than merchants how to treat a merchant’s customers.

 

—————-

PRNewswire release

Merchants Can Already Discount for Cash, But Don’t – So What Would H.R. 2382 Really Do?

Electronic Payments Coalition Unveils the Truth About Rep. Peter Welch’s Interchange Bill

WASHINGTON, Oct. 7 /PRNewswire/ — In advance of the October 8th hearing in the House Financial Services Committee on H.R. 2382, “The Credit Card Interchange Fees Act,” sponsored by Rep. Peter Welch (D-VT), the Electronic Payments Coalition has issued the following statement:

“H.R. 2382 is one of the most egregious assaults on consumer protection that this country has seen in some time. Disguised as a measure to allow for cash discounts – something that is already allowed by federal law and by all card network contracts – the bill would instead open up the door for bait-and-switch advertising schemes, charging additional checkout fees at the register, and discrimination against certain card holders. The bill is chock full of provisions that mean one thing: consumers will pay more so merchants can pay less. Bottom line – retailers don’t want to pay their fair share for a service that brings them more sales and higher profits – and want their customers to pick up the tab instead.”

The Electronic Payments Coalition released today a document detailing the anti-consumer protection measures detailed in H.R. 2382. This document follows this statement.

Rep. Peter Welch’s H.R. 2382 – “The Credit Card Interchange Fees Act” – would…

Leave consumers vulnerable and unprotected against deceptive, bait-and-switch advertising.

Rep. Welch’s legislation would eliminate important consumer protections on how merchants are allowed to advertise their prices – restrictions that are in place expressly to protect consumers. This would allow retailers to promise one low price, then charge more – potentially a lot more – when the customer reaches the cash register. Consumers would be left unprotected, forced to pay the demanded price regardless of what was advertised – and retailers would profit unjustly from their dishonest schemes.

Leave consumers stranded at the checkout counter.

Imagine getting to the front of a long line at the grocery store, only to discover that the store doesn’t accept your alma mater’s credit card. Or they won’t accept the card that donates a few cents of every purchase to your favorite charity. This legislation allows merchants to pick and choose which cards they will accept – and which cards they won’t – with no advance warning to their customers.

Dramatically reduce – or eliminate – the card rewards programs that are used by 80% of American households.

H.R. 2382 would prohibit a slightly higher interchange rate for rewards cards – cards that are traditionally used by customers who are proven to spend more when they shop, in turn providing greater value to merchants. Unfortunately, merchants don’t want to pay for this benefit – and the result would be far fewer rewards for American consumers who value such programs. In fact, similar regulation in Australia has resulted in a 23% reduction in the value of rewards programs for consumers.”

Force businesses to disclose highly confidential financial information to the public and to their competitors.

H.R. 2382 would require every contract, rate agreement, and rule on merchant discount rates to be submitted to the Federal Reserve, which would then be responsible for publishing every bit of it. This would involve literally millions of documents, most containing highly sensitive financial information. The chaos that would result from the sheer volume of contracts – not to mention the compromised financial information – would be incredibly harmful to retailers and to financial institutions.

Falsely characterize interchange as a consumer fee, by requiring that it be disclosed on consumer statements.

It’s simple: consumers don’t pay for the cost of card acceptance. It’s a cost of doing business for merchants that accept cards. Despite this clear distinction, H.R. 2382 would force card issuers to print the amount of interchange, as well as the total amount various merchants paid for each charge – an amount that varies depending on what each merchant negotiated – on consumer’s credit or debit card statements. This is nonsensical, unrealistic, and would ultimately confuse consumers and the financial decisions they make.

About Electronic Payments Coalition

The Electronic Payments Coalition (EPC) includes credit unions, banks, and payment card networks that move electronic payments quickly and securely between millions of merchants and millions of consumers across the globe. EPC’s goal is to protect the value, innovation, convenience and competition in today’s growing electronic payments system. EPC educates policymakers, consumers, and the media on the system’s role economic growth, and the importance of protecting consumer choice and stability for the continued growth of global commerce. http://electronicpaymentscoalition.org/

SOURCE Electronic Payments Coalition

Consumers Petition for Lower Credit Card Swipe

Network Rivalry Sparks 10-Year Quadrupling of PIN-Debit Pricing (Digital Transactions)

Excerpt:

Improved processing technology and the weak economy should be driving card-acceptance prices down, according to Mitch Goldstone, president and chief executive of ScanMyPhotos.com in Irvine, Calif. “The only justification is when you have an anti-competitive business model and you can illegally fix prices,” says Goldstone, the lead plaintiff in a pending class-action lawsuit against bank card interchange. “That’s what it’s all about.”

 

Click here to read entire Digital Transactions article. (Aug 14, 2009)

Merchants Fight MasterCard and Visa Card Fees

Watch this ABC WCBV-TV News segment on merchant interchange fees and the escalating battle against credit card company fees.

NewsCenter 5’s David Brown reported that they are unregulated credit cards fees charged to store owners for every credit and debit card transaction. It’s a hidden fee that is eventually passed on to the consumer.

Why Credit Card Companies Full of Hot Air

 

A leading argument to sustain soaring merchant interchange credit card fees is to cover the cost of affinity reward programs.  The banks were passing along the frequent flyer reward costs to merchants, and thus consumers, who are the ones buying the merchandise.

Now that millions of cardholders are losing their accounts, those rewards are being terminated as well.  When a cardholder is delinquent on their credit card bills by even a day, they risk losing all their accumulated reward points as well.

Well, what is it?  If interchange fees are lowered, Visa and MasterCard’s argument is that consumers will have to pay higher fees. As it is, the banks are already raising rates, closing accounts and changing the terms with wanton disregard for their customers.

Watch What Congress Needs to Know About Interchange Fees

From UnfairCreditCardFees.com

Big Day For Wells Fargo

Lots of  WayTooHigh.com readers today and many from Wells Fargo too. Did they surf our site on their own time, or bill American taxpayers to read about their egregious New York Times ad campaign?  Whoever I discussed the ad with equally asked the same question: why didn’t Wells Fargo’s CEO John Stumpf just sent an email or Twitter his staff to let them know just how much he values his “team.”

If You Thought The Madoff Scandal Was Large, Look at Visa and MasterCard Fees

Visa’s earnings are up 35%, when the global economy is depressed. The credit card giant even had a 17% increase in its revenues.  This at a time when merchants are going bankrupt and some of the credit card association’s member banks are defaulting or being nationalized by the U.S. Government, yet both credit card companies are shining.

Why?

During the past four years, along with many others, I have been exhaustively blowing the whistle and calling attention to the banks anti-competitive and illegal price fixing of the merchant interchange fees. As the nation looks for ways to remedy the fiscal crisis through tax refunds and billions in new spending, the best and most instant solution is to force MasterCard and Visa to end its unbridled market power and cease its interchange fees, which is nothing more than an antiquated pricing model that has little relevance today. The nation could instantly benefit by putting the nearly $60 billion in fees paid by U.S. consumers and merchants back into our pockets, rather than into the highly mismanaged and arrangant banks’ vaults.  Forget the banks’ Vegas trips and charter jets, look instead at the interchange fees for real savings. Redirecting the interchange fees and Visa and MasterCard’s collusive merchant discount fees could immediately help the economy recover.

After reading today’s House Financial Services subcommittee meeting with Harry Markopolos, a private fraud investigator from Boston, I was reminded why this case is so important.  Just as Mr. Markopolos blew the whistle nine years ago and nobody listened, I began blowing the whistle and calling attention to the illegal price fixing and anti-competitive credit card fees back in early 2005.  Today, the class-action litigation is nearing class certification and it remains as perhaps the largest antitrust litigation in U.S. history.

I see the role of the lead plaintiffs in this litigation as a cross between Erin Brokovich and Harry Markopolos, and we will prevail.

“Throwing money at credit card industry not the answer” (via Daily News)

Now we learn that Treasury Secretary Henry Paulson has a plan to save Christmas by using taxpayer funds to bolster the credit card market. But before we shower taxpayer dollars indiscriminately at every down-at-heel, ragamuffin credit card lender, we should take a hard look at how they got themselves into so much trouble. Just throwing money at the credit card industry without requiring a systemic change in how it does business is merely asking for a repeat of the crisis.

The card industry’s business model is the heart of the problem and needs to change. Just as with subprime mortgages, the credit card business model creates a perverse incentive to lend indiscriminately and let people get into so much debt they can’t pay it back. 

Card issuers make money on every credit card transaction, regardless of whether the consumer pays interest. The bank that has its name on the card receives around 2% of every transaction in a fee paid by the merchant (and passed on to all consumers in the form of higher prices). This is called the interchange fee. The banks will collect about $48 billion in interchange fees this year.

Because interchange is based on transaction volume, it creates an incentive for banks to issue as many cards as possible, regardless of the creditworthiness of the borrower. So, by creating a huge revenue stream unrelated to interest, interchange encourages banks to engage in reckless lending – and virtually every credit card loan is a “liar loan” with no income verification.

Click here to read more.

Hate your Credit Card Bills? MAXED OUT – NOW ON DVD

CitiGroup Inc. to Fire Upwards of 50,000 Employees

In another sign of the baking industry’s dismal leadership and failed strategies, according to the Wall Street Journal, “Citigroup plans to announce job cuts of up to 50,000 through attrition and layoffs as Chief Executive Vikram Pandit addresses employees in a town hall-style meeting Monday morning. Citigroup’s head count would be cut to 300,000 from about 350,000 at the end of the third quarter.”

 

 

 

“A Quiet Windfall For U.S. Banks” (via Washington Post)

Excerpt, by Amit R. Paley, Washington Post Staff Writer, Monday, November 10, 2008; A01. Click here to read more

 

The financial world was fixated on Capitol Hill as Congress battled over the Bush administration’s request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.

But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.

Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation by acquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company’s losses to offset their gains and avoid paying taxes.

Lawmakers decried the tax shelters as a scam and created a formula to strictly limit the use of those purchased losses for tax purposes.

Lawmakers decried the tax shelters as a scam and created a formula to strictly limit the use of those purchased losses for tax purposes

The Treasury notice suddenly made it much more attractive to acquire distressed banks, and Wells Fargo, which had been an earlier suitor for Wachovia, made a new and ultimately successful play to take it over.

The Jones Day law firm said the tax change, which some analysts soon dubbed “the Wells Fargo Ruling,” could be worth about $25 billion for Wells Fargo. Wells Fargo declined to comment for this article.

Sen. Charles E. Grassley (R-Iowa), ranking member on the Finance Committee, was particularly outraged and had his staff push for an explanation from the Bush administration, according to congressional aides.

[source: Washington Post, Nov 10]

Visa and MasterCard Responds to Global Recession by Maintaining High Merchant Fees

When it comes to Visa and MasterCard’s nearly $50 billion annual hidden tax on Americans, they are in a world all unto themselves.

The economic realities of a global recession and market meltdown is universal, yet retailers are not seeing any real relief from the fees we are forced to pay the banks and those “discount” fees to Visa and MasterCard.

Heck, even OPEC and its cartel-commandeering of gas prices were forced to lower their fees – and big time!  The housing industry is in turmoil, auto manufacturers and car dealers are hemoraging and gas is less than half the cost from just a few months ago, yet interchange fees are stubbornly high.

In the past few months, oil prices have dived below a (once whopping) $70 a barrel; in the past few months crude prices have lost more than half its value.

These are huge numbers. Consumers are buying less and everyone is impacted, even OPEC. Then there is Visa, MasterCard and its member banks and their unbridled greed. They have the market power and strength to collude and fix prices – Visa and MasterCard control about 80% of the credit card business.

The world is hurting and the two giant credit card associations and its thousands of member banks are doing nothing about it, or so it seems. They are artificially keeping those rates at record levels. Why exactly do merchants in the U.S. pay nearly three times other industrialized nations’ interchange fees?

The recent victory by Discover Financial Services, literally on the courthouse steps, flaunts the card associations’ impudence and disregard.  Price fixing, unfair fees and scorn for their customers are a hallmarks for Visa and MasterCard.

Oil price declines are just another example of how powerful the banks are, and just how remorseless they are by protecting their mighty credit card fee scheme.  It seems that they do not care and instead want to milk consumers and merchants for every penny, up to the last minute.

In July, when oil prices peaked, the interchange fees were still at near record levels. Technology, efficiencies and now, the global economic crisis is having no impact on the fiefdom enjoyed by the banks.  Perhaps as the Federal government nationalized the banks, they will demand that their “partners” seize upon this opportunity to review their interchange fees?

After all, the U.S. government is also a player in the merchant interchange battle – they pay millions each year in fees when people charge with credit and debit cards for services and products sold by the government.

In an earlier WayTooHigh.com posting, I quipped that a barrel of gas would more likely fall to $50 than interchange fees be lowered. {who would have known?]  Interchange fees are the cost that merchants are forced to pay to the banks, and in turn to Visa and MasterCard though a not-very “discount” fee.

Visa and MasterCard’s Roadmap to Bankruptcy?

A strange event played out after Visa and MasterCard collectively warned in their respective SEC IPO filings that if the merchant interchange litigation was successful, both credit card associations risked “insolvency.”Who would have thought?To protect themselves from bankruptcy, banks are facing shotgun mergers with other named defendants. The financial institutions spent millions, not just on lavish parties, but in protecting their credit card pricing schemes (with today’s ultra tech-advanced efficiencies, these fees are largely unnecessary). Law firms are making millions representing the banks. Some are growing their entire operation, hiring staff and enjoying the benefits of their representation. Are their shareholders watching?  During the past year, $8.3 trillion in shareholder wealth has been lost, so the once huge interchange fee boondoggle isn’t looking nearly as grand as before.  However, it is still something that much be addressed, especially now as we face a global crisis of confidence in the banking system. 

The rational for merchant credit card fees is mostly obsolete today.  It was designed to be cost-based – to cover the four-party electronic payment network back when we had manual charge card receipts.  The fees keep growing, even though efficiencies keep declining.  Many other nations understand that whether the forced merchant credit card fees are .50% or .70 %, the rates are unfair and too high; the average merchant interchange credit card fee in the U.S. stands at about 1.70 percent.

This nearly $50 billion annual credit card fee scheme seemed like a hefty chuck of change. But, now that banks are facing billions in lost market capitalization and disdain from American consumers, they have even larger worries.The public’s unrestrained infuriation with the banks is just as vast as are the nation’s retailers. The approval ratings for the banks, and by proxy, Visa and MasterCard’s market power and alleged price fixing are getting as low as are their plunging Moody’s ratings. It is even getting to the point that the scorn against the banks and credit card companies are more humiliatingly low then even the anemic approval rating for outgoing President Bush.  Presidential candidate John McCain and his cozy relationship with the banks and call to support them at the expense of consumers will be no better.

Back in 2005, which I was among the first to file a Federal antitrust complaint against Visa, MasterCard and its member banks, the battle was much simpler. Today, the banks are fighting for their future. They are at risk of being seized by a Federal nationalization of their operations. Visa and MasterCard are facing their own profound disgust for their business model, control of Washington legislators and lead cause for harming American families facing financial disaster.

It is turning out that what appeared like an ocean-sized legal challenge for the banks, Visa and MasterCard, has become diminutive in comparison to their larger hurdle and fiscal afflictions brought on by gross mismanagement, greed and un-American pursuits. Maybe Visa and MasterCard’s lawyers knew something when they cautioned that if the merchant interchange antitrust class-action litigation is successful their clients will also face bankruptcy.

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News Alert: Paulson gives new detail of bank ownership plan

WASHINGTON (MarketWatch) — Treasury Secretary Henry Paulson on Friday gave some new details of the emerging plans by the federal government to inject capital directly into a “broad array” of financial firms. In a statement after the G7 meeting, Paulson said that officials are working on a “standardized program that is open to a broad array of financial institutions.” The plan is to attract private capital to complement the government’s funds, he said. Paulson went out of his way to say existing shareholders would be protected, saying the government would only make the purchases through a “broadly available equity program” without any voting power, “except with the market standard terms to protect our rights as investors.

 

 

Along the way, thousandsof its member banks reaped millions. They glamorized 

their balance sheets, which is now spiraling downwards.  They tried to dodge legal liabilities as they unloaded part of their Visa and MasterCard vault. These member banks mutually controlled the giant credit card networks, some are now facing their own insolvency and government intervention.

“Battle Cry Against Credit-Card Fees” (via CSP)

Industry making progress in interchange fight, said Armour; Oneslager on advocacy

CHICAGO — “There has been no bigger battle and no more important one than our fight to reduce the outrageous credit-card fees that we pay,” said NACS president and CEO Hank Armour during the NACS Show 2008’s Opening General Session. And, based on the progress made and the pressure the industry continues to put on the issue, “2009 looks to be the watershed year in which we may finally get significant relief,” he added. “This is the biggest issue that our industry has faced in decades, and we’ve taken it head on,” said Armour. “With the tremendous help and support of many of you, we made a lot of progress this year.” The Credit Card Fair Fee Act was successfully passed out of the House Judiciary Committee (H.R. 5546), and the legislation was also introduced in the Senate (S. 3086), he said.  “We obviously have the credit-card companies’ attention,” said Armour, referencing some of the public relations stunts that Visa and MasterCard attempted this summer to deflect attention away from the issue of interchange. “While Visa and MasterCard claim they have fixed the problem, they haven’t. The only thing they fix—and they continue to do so—is the price.”  “Honestly, advocacy was never one of my passions,” confessed Balmar Petroleum president and NACS 2007-08 NACS chairman Richard Oneslager during his NACS Show Opening General Session address. “But advocacy is one of my passions today, and for one simple reason: Credit-card fees are destroying our industry.”  Oneslager introduced attendees to a credit-card fee “ticker” that will run throughout the NACS Show, a physical manifestation of what the industry’s $7.6 billion paid in credit-card fees in 2007 looks like per second. Just a few minutes into his presentation, the ticker already topped $100,000.  Despite challenges over low gas margins and high credit-card fees, Oneslager said that the convenience and petroleum industry is poised for continued success because it delivers what consumers want. “We offer them convenience. We save them time. We simplify their lives. We offer them comfort,” said Oneslager. “That is why we are well positioned, in good times and bad.”  Two areas, in particular, present retailers with opportunity, said Oneslager. Foodservice, when executed well, can help many retailers make up for poor motor fuel margins and redefining why people come to our stores. And there is a growing importance of what he called the “refreshment shopping occasion.” Today, nearly 40% of the industry’s gross margin dollars come from beverages—whether packaged beverages, beer or dispensed beverages, particularly coffee.  “I joined NACS because of the value I saw in gaining knowledge—such as what the hot growth categories are—and making connections with other retailers experiencing the same challenges I face,” said Oneslager.  But, he stressed that advocacy is essential. “I would be letting you down, not fulfilling my duty as chairman, if I let you walk out of here today with the belief that running a good business, paying NACS dues, and attending the NACS show is enough. It’s not,” he said. “We are in a battle for our future [with credit-card fees], and it requires all of you to rise up and take action,” he added.  Changing the existing situation with the credit-card companies “will require you to take action,” he stressed. “We are not going to be able to outspend the credit-card companies, so we are going to have to outwork them. Like many of you, I always came to the NACS Show to take things—to take a look at new products and services, and take home ideas that can grow,” added Oneslager. But as more retailers get engaged in advocacy, “you will allow us to take control of our own destinies. And that is the most important takeaway of all.”  The National Association of Convenience Stores (NACS) is the international association for convenience and petroleum retailing, representing more than 2,200 retail and 1,800 supplier member companies. The U.S. convenience store industry, with more than146,000 stores across the country, posted $577 billion in total sales in 2007, with $408 billion in motor fuels sales.

[source: CSP]

Visa and MasterCard’s Perfect Storm

If you didn’t trust Visa and MasterCard’s member banks before, just wait. 

I wonder whether anyone can score a lower approval rating than Congress – hovering at a paltry 10 percent?    The banks, along with Visa and MasterCard must be among the most despised entities in the nation. 

Poll anyone whether they trust the banks now.  

How about asking American’s how they feel about the credit card associations’ merchant interchange fee pricing schemes? 

WayTooHigh.com has more than 1,100 prior postings, spanning more than three-and-a-half years.  We will continue the battle and draw attention to this issue.

Visa and MasterCard’s Impact From Banking Instability and Upheavel

Another outcome from the global banking crisis, including today’s news that Citigroup will acquire the banking operations of Wachovia, raises added concerns. While the banking industry’s two giant credit card associations want consumers to think that Visa and MasterCard play fairly, do not violate the law and offer boundless competition within the credit card market, the reality is that the banking industry consolidation is yielding an even more unstable and a more tilted playing area. 

Banks are defaulting and being nationalized.  How will this impact their credit card operations and will they attempt to further raise merchant interchange fees in an attempt to strengthen their balance sheets on the backs of businesses and consumers?

After Visa and MasterCard went public in an attempt to shift ownership from the banks, now many of the leading banks are consolidating and their percentage of control is creeping back.  JP Morgan Chase, Bank of America and Citigroup, all named defendants in the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, are amassing assets and extending their cartel-like market power over the electronic payment system.

Consumers and businesses have lost confidence in the banking industry. Its corporate leaders are under fired, or have been fired. Government intervention at this late hour is doomed and the question remains: why didn’t the government clamp down on the trillions in unstable and ruinous mortgages years ago. A similar question is why did the government permit banks to reap hundreds of billions in anticompetitive and unfair fees at the expense of merchants and consumers?

While the banking crisis is taking all the attention, merchant interchange fees continue to slice away at our nation’s economy.  These fees generate nearly $50 billion each year at the expense of Americans; it removes much needed capital from our economy and is aggressively plundered by the banks as we are learning on the failed housing market and other disastrous schemes.

According to The Wall Street Journal (Sept 29), “Citigroup has put up for sale a Japanese call center valued at about $2 billion, the latest push by the financial conglomerate to drum up fresh capital.”  If the banks are desperately seeking cash, as a merchant, I am extra worried that they will again hit up their interchange pricing fiefdom to  get fast cash at the expense of retailers and consumers. 

Congressman Welch Supports Credit Card Reform; Encourages Congress to Act on Credit Card Interchange Fees that Hurt Both Merchants and Consumers

Washington, D.C. – September 23, 2008 – Today, the House of Representatives passed the Credit Cardholders’ Bill of Rights Act, legislation to rein in unfair and deceptive credit card company practices. Congressman Peter Welch (D-VT) made the following floor statement in support of credit card company reforms and urged subsequent legislative action on credit card interchange fees, one anticompetitive card company practice not being specifically addressed today:

“This bill is the beginning of important reforms in credit cards – the beginning of increased protection for consumers of credit card companies. The other side of the coin, which we’re not taking up today but will hopefully get to, is for merchants who pay fees to credit card companies for every single credit card transaction – the so-called interchange fees.

Mr. Speaker, in the United States, our credit card interchange fees are the highest, the highest, in the entire world accounting for as much as 2% of the cost of every credit card transaction, in some cases a good deal more. These bloated interchange fees are passed on to the consumer. The average American family in fact pays an extra $300 a year in items they purchase as a result of credit cards.

I have introduced legislation, H.R. 6248, the Credit Card Interchange Fees Act, which would require credit card companies to disclose their interchange rates, terms, and conditions to consumers, businesses, and the public. In addition, the bill would empower the Federal Trade Commission to review these rates and rules and prohibit any practices that violate consumer-protection or anti-competitive laws. Chairman John Conyers also has important legislation – the Credit Card Fair Fee Act – that has been passed out of the Judiciary Committee and would give merchants a seat at the negotiating table to determine the fees assessed for every sale made by credit card.

In the next Congress, I look forward to continuing to work with my colleagues on the Financial Services Committee and the Judiciary Committee to pass legislation into law that protects both the consumer and the merchant from credit card companies.”

Congressman Peter Welch is the sponsor of HR 6248, the Credit Card Interchange Fees Act of 2008, and is also an original co-sponsor of HR 5546, the Credit Card Fair Fee Act. The Merchants Payments Coalition applauds Congressman Welch for his leadership on this important merchant and consumer issue and looks forward to prompt Congressional consideration of credit card interchange fees.
UnfairCreditCardFees.com is run by the Merchants Payments Coalition (MPC), a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees. For further information, please visit http://www.unfaircreditcardfees.com

“Hidden Credit Card Fees Are Costing You” (via CNN Money)

New legislation may mean an end to interchange fees, which cost the average family more than $400 a year

By Jessica Dickler, CNNMoney.com staff writer

Last Updated: July 31, 2008: 5:20 PM EDT

NEW YORK (CNNMoney.com) — Swiping your credit card at the register may save you time, but it certainly won’t save you money. Thanks to hidden fees, credit card purchases are costing you more than you may know.

Whether you use a card or not, you’re probably paying more than $400 a year in “interchange fees,” which are factored into the prices of everything from gas to groceries.

Every time a credit card or debit card is used to pay for a transaction, merchants pay a “merchant discount fee” to the bank for processing the payment. That covers the cost of renting the credit card terminal, customer service and an interchange fee, which all adds up to about 2% per transaction.

The interchange fee is by far the biggest chunk of the merchant discount fee. But it goes largely undetected by consumers because it’s included in the advertised price of items and, merchants say, is too complicated to break out on individual receipts.

But credit card use has become so prevalent, it’s costing retailers a fortune in fees. So merchants pass on this cost to consumers by way of higher prices, which means that even shoppers who don’t use plastic end up paying more.

The average American family will pay $427 because of interchange fees in 2008, up from $378 in 2007, according to National Retail Federation estimates. The amount has nearly tripled from the $159 paid in 2001, the year NRF began tracking interchange fees. Collectively, that’s $48 billion that the credit card companies will make from interchange fees this year, up from $42 billion last year and $16.6 billion in 2001.

So where does all that money go? Credit card issuers use this revenue stream to pay for the processing, in addition to reward programs, credit losses and general operating costs.

But many consumer advocacy groups believe it’s time to put a stop to the bank fees that eat into retailers’ profits, and push up prices paid by consumers.

Congress takes action

“At a time when Americans are struggling to pay for groceries and to fill the gas tank, doing something about a hidden fee that drives up the cost of basic necessities should be one of Congress’ top priorities,” Steve Pfister, NRF senior vice president for government relations said in a statement.

Last week the House Judiciary Committee voted to move forward with the Credit Card Fair Fee Act of 2008, which requires lenders to negotiate with merchants and retailers on terms for fees paid when processing card transactions. The hope is that more flexibility to negotiate will bring interchange fees down, which will in turn allow merchants to keep their prices down. It also calls for the credit card companies and banks to be more transparent about their fee structures.

Most retailer and consumer groups support the change. As the legislation moves to the House floor, banking groups are voicing their opposition.

Edward Yingling, president and CEO of the American Banker’s Association, said in a statement that the bill “interferes with the smoothly functioning electronic payment system that currently works to the benefit of consumers, businesses and the broader economy.”

Not only would hindering the electronic payment system hurt businesses that benefit from faster transaction times and increased sales, the banking group said, but the legislation could also hurt consumers, by forcing credit card companies to raise their interest rates to cover costs.

Josh Floum, general counsel for Visa Inc., called the Credit Card Fair Fee Act “an anti-consumer bill that would mandate unnecessary regulatory intervention into a fiercely competitive industry that is benefiting consumers, merchants and financial institutions.”

And if passed, the bill would give more power to the largest retailers and therefore “suppress competition and innovation and result in unintended and harmful consequences for consumers,” Floum said.

MasterCard echoed the sentiment in a press release issued in response to the Judiciary Committee’s approval. “It would be inappropriate for the U.S. government to set prices and negotiate the terms of contracts for private commercial entities.”

But merchants aren’t buying it. Mallory Duncan, chairman of the Merchant Payments Coalition, a retailing advocacy group, said the system as it stands hurts retailers more than it helps them.

And retailers aren’t the only ones losing out, says Duncan. In tough economic times, consumers can’t afford to cough up extra cash to credit card companies. “They’ve had a very sweet ride for 30 years,” Duncan said.

Now lawmakers in Washington will duke it out. The issue pits those who say they are trying to alleviate the financial burden on consumers against those who are aiming to prohibit regulatory intervention and uphold the free market policy the credit card contracts are based on.

Congress is likely to vote on the Credit Card Fair Fee Act by the end of this year.

[Source: CNN Money]

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

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

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

MasterCard to drop ‘illegal’ fees

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

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

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

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

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

“Old Foes Unite to Keep Charging Credit Card Fees to Merchants” (via The Hill)

WayTooHigh.com – The Credit Card Interchange Report Comments:

Even financial interpreter Jim Cramer is in for a grueling week as Visa and MasterCard readies for what both companies warn might lead to their “insolvency” [according to their SEC filing statements].For an update on Thursday’s planned Capital Hill combat against the giant credit card associations and its member banks, click here to read Jessica Holzer’s May 12^th The Hill column.   

You know there are splinters in Visa and MasterCard’s haywired argument when lobbyists for the banks and the credit unions join forces; while they are gasping, we are ready to further illuminate the issues. It has been more than three-years since launching the class-action complaint to arrest this $40 billion annual hidden tax on merchants and consumers.

Let us not forgot that interchange fees were designed decades ago to cover the cost of a four-party electronic payment network – back when we used manual credit card imprinters and mailed in thick bundles of carbon copy credit card receipts to clear the payments. Back then, it took days to transfer funds, today it is instant and efficient.

Today’s efficiencies have done away with the antiquated payment process, yet the fees are higher than ever. Why the disparity as interchange rates abroad are a fraction of the nearly 2.0% tax charged in the U.S.?

 

 

This is the “perfect storm.” 

We are ready to explain why interchange fees are obsolete, illegal and anti-competitive. Even the banking industry’s shareholders are in for another bombshell so audible and eclipsing that the impact from their executive’s round of previously misfortunate decisions and billions in prior writeoffs may be petite in comparison. A trial by jury allows fort trebled damages.

When was the last time you heard the U.S. Federal Reserve explain that interchange fees “dampen innovation” for check writing? Never: there are no interchange fees to clear checks. Likewise, why hasn’t the Fed explained that merchants “derive huge benefits” from accepting paper checks for payment? Again, there are no fees to clear a check and if it is so significant a cost, why hasn’t the banking industry demanded interchange fees for that payment form?

The banking lobbyists are ready and so are we, but our story is being told by regular shop owners to personalize the issue. After years of toil, merchants and consumers are at the cusp of forcing the demise of these unbridled and unnecessary interchange fees on American’s and our neighbors around the world. The American public is fed up with the banking industry’s mismanagement and audacity; the days of cartel-like price-fixing will vanish, just as did those bulky manual credit card imprinters also disappear.

“Visa’s IPOIs Worth a Close Reading” (via WSJ)

Understanding the Word “Insolvency” Is Crystal Clear

Visa Inc. Files 10-K Annual Report, Amends S-1 Registration

  

Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

 

 

 

 

 

 

 

 

 

Visa and MasterCard: How to Profit Off a Devistating Natural Disaster

Visa and MasterCard profiting from a devastating natural disaster?

This is another image crisis for the two leading credit card associations and their thousands of member banks.  When the public understands that with each electronic payment donation to help the people affected by the Asian cyclone, Visa and Mastercard are doing more than clearing the charges.  They are reaping profits from a global tragedy.  There should be additional pressure placed on their continued profiteering – this time at the expense of vital aid needed for that region of the world, ratherthan to help fund the banks’ other fiscal missteps.

If you thought that Visa, MasterCard and thousands of banks were heartless by reaping windfall profits during our economic energy crisis and record fuel prices, just wait. Even more dismaying than forcing credit and debit card holders to pay upwards of $2.50 for merchant interchange fees when they pay at the pump, is the current Asian disaster.

The United Nations estimates 1.5 million people have been “severely affected” by the May 2nd cyclone that swept through Myanmar. The death toll in that Cyclone-ravaged region could hit hundreds of thousands of people. What are Visa and MasterCard doing? As far as we know, every time an electronic payment donation is sent to The American Red Cross and other relief efforts, the two leading credit card associations and their thousands of member banks make a profit. The interchange fee, which could be upwards of 2.0% from each donation is being delivered to financial institutions, rather than in direct aid to the people in need.

Even with this horrendously inappropriate level of profiteering, your help is needed. Our ScanMyPhotos.com blog: Tales from the World of Photo Scanning has more info on how you can help.

Even worse is that the American Red Cross is in violation of their credit card merchant agreement and is risking disqualification from Visa and MasterCard because nation’s premier emergency response organization demands a minimum electronic payment of $5.00.  Click here to read how they explain the merchant interchange fee issue.

Will Visa and MasterCard waive its interchange fees for American Red Cross and other related transactions? 

As the pressure grows for Citigroup Inc’s new CEO, Vikram Pandit to address the troubled bank’s missteps, I wonder whether he has the influence to make the call to Visa and MasterCard on behalf of all the card associations’ member banks? 

Are Visa and MasterCard Merchants Violating Their Rules?

“Tragedy of Dead and Survivors in Myanmar Grows Worse” (via Aung Hla Tun reporting for Reuters) 

Visa Inc. Makes Operating Regulations Available to the Public

Before reprinting today’s Visa Inc. press release, these thoughts:

Our merchant interchange antitrust litigation is based on many years of alleged illegal activities.  Just as if a convicted bank robber apologizes and cleans up their act, they are still in violation of the law.  So too are Visa and MasterCard.  Because most of the same banks that control a large percentage of Visa’s newly public shares are also owners of MasterCard, we expect that the same decision will be forthcoming by the other credit card association. 

Moving forward, this is a smart decision and one more confirming action that Visa recognizes that they were in error and are quickly trying to fix their business model; from creating an independent board, to less ownership by the banks, to posting interchange rates online (although mostly as an attempt to respond to merchant concerns) and now this.  

The Visa Inc. May 9th press release is reprinted below.

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Visa Inc. Makes Operating Regulations Available to the Public

Move Seeks to Increase Company’s Transparency

SAN FRANCISCO, CA, May 8, 2008
Visa Inc. announced today that it will for the first time make its Visa International and Regional Operating Regulations available publicly, effective May 15, 2008.

The Operating Regulations, which will be available on Visa’s corporate website at www.corporate.visa.com, are the set of rules which govern the participation of issuing and acquiring financial institutions in the Visa system.

 

“As Visa continues to evolve to meet the needs of customers, we are committed to providing our partners and interested parties with greater insight into Visa’s operations,” says Joseph W. Saunders, Chairman and CEO, Visa Inc.  “Greater transparency is one of the ways we hope to strengthen our working relationships in the marketplace.”

 

Previously, Visa Inc. made its Visa USA Operating Regulations available to merchants and third party agents under a non-disclosure agreement.  On May 15, Visa’s rules will be publicly available to interested parties, including all Visa rules related to merchants’ participation in the system.  However, to protect cardholder and merchant safety and the Visa system, Visa has omitted proprietary and competitive information, as well as certain details from the rules relating to the security of the network.  For example, in the merchant rules, Visa has omitted authorization limits by country and processing codes which could aid fraudsters.

 

“Today’s announcement builds on our commitment to making Visa transparent in an increasingly competitive environment,” adds Saunders.  “While our operating regulations only govern our client financial institutions, we believe that merchants and others will benefit from access to the rules, which provide a greater understanding of the complexities of electronic payments.”

 

Payments and Banking Blogs

From PaymentsNews.com, they have assembled a link to several of the most recent and favorite payments and banking blogs. 

• Aneace’s Blog by Aneace Haddad
• Bankervision by James Gardner
• Banking Kismet by George Pasley
• Banking on Customers by Thad Peterson
• Banking Unwired by Ehab Bandar
• The Bankwatch by Colin Henderson
• The Digital Money Forum Blog by Dave Birch
• The FinanSer by Chris Skinner
• Forte Financial Blog by Erin McCune
• Javelin Strategy & Research Blog
• Mobile Banking by Brandon McGee
• Merchant Account Blog by Jamie Estep
• NetBanker by Jim Bruene
• OneTouch Online Purchasing Blog
• Payments Industry Thoughts by Will Burns
• Payment Systems Blog by David Bergert
• The Official PayPal Blog
• PIN Debit Blog
• WayTooHigh – The Credit Card Interchange Report

No to Clinton-McCain Gas Tax Holiday; Yes to Permanent Interchange Fee Holiday

Two of the presidential candidates jumped into the nation’s economic energy crisis today by proposing a “gas tax holiday” to save motorists money. 

Senator Barack Obama, was smart and chose not to side with Senator’s Clinton and McCain.   And, if the presidential hopeful really want to make an impact, rather than just reducing the record prices at the pumps by temporarily lowering taxes, he should demand that Visa and MasterCard immediately remove their merchant interchange fees at all service stations.  Just look at both card association’s record earnings this week [28% quarterly increase for Visa and more than doubling for MasterCard] to understand why this is a national imperative.  There is a reason Visa and MasterCard’s stocks are soaring – windfall profiteering at the pumps

The argument that American’s are entering the peak driving season, and thus will increase demand on prices is wrong.  Motorists are driving less, and getting rid of their gas guzzling vehicles in exchange for more economical automobiles.  Even at ScanMyPhotos.com, we are providing free gas cards to help soften the effects from consumers driving less. Last week, The Los Angeles Times and the Associated Press reported on our campaign for providing free gas.

So far, none of the presidential candidates have pointed fingers at Visa and MasterCard and its member banks for their windfall profiteering from charging upwards of $2.50 in credit card interchange fees every time a motorist fills-up with a credit card.

“Gas Tax Holiday is a Dumb Idea:” Robert Reich

Two Chinese Companies [Government] Bails Out The Banks Through Visa Inc. Shell Game

If you watched 60 Minutes on Sunday evening, you heard a frightening scenario that the Chinese government might be gaining unreasonable power, influence and control of U.S. businesses, especially in the financial services sector.

According to the Teshreen Press and Publishing Foundation, two Chinese nationals now own ~$400,000,000 in Visa, Inc., which means that those two recent checks totaling nearly 1/2 billion dollars to the banks – which owned the giant credit card processing cartel – was paid off by China.  This raises so many concerns, from attention towards Visa’s Olympic sponsorship, how interchange merchant fees are structured in China, to questions of whether Visa and its member banks might gang up with China to wound the sovereignty of Taiwan?

We wonder whether Visa Inc cardholders understand these ramifications and the Chinese connection?

• China Life purchased nearly ~300 million dollars in Visa Inc.

• China’s Sovereign Wealth Fund also bought ~$100 million dollars in Visa Inc.

Click here for more information.

[NEWS UPDATE: Olympic Torch Snuffed Out In Paris]

 

Will the government Bail Out Visa and MasterCard Next?

We’re just saying… based on the rash of Federal Reserve and government bail outs to the financial services industry, we can’t help but wonder whether the next target for a giant handout will be Visa, MasterCard and its thousands of member banks when payment due on their merchant interchange antitrust liability comes do, as we expect it will?

Will Wall Street and regulators explain away that the banks again will need financial support to cover their multi billion dollar antitrust liability, should they be found guilty of illegal price-fixing? 

“Lenders Labeled New Marketing Villains”(AdAge)

Click here to view the March 10th AdAge article by Matthew Creamer  (Subscription required).

Excerpt:

• “Debt: It’s the new obesity. Just as food companies have gotten spanked for pumping their products full of fat and sugar, companies that spend big to market credit cards and add more flab to the already-chunky financial waistlines of Americans are coming under increasing fire from politicians, consumer advocates and customers feeling burned by their monthly statements.”
• “Just as food companies have gotten spanked for pumping their products full of fat and sugar, companies that spend big to market credit cards and add more flab to the already-chunky financial waistlines of Americans are coming under increasing fire from politicians, consumer advocates and customers feeling burned by their monthly statements.”

Shareholders Take Visa; Banks Run With $10,000,000,000 Payday

Because the new Visa Inc. shareholders remain hypnotised by the market success of MasterCard’s IPO, here are some leading morning-after profiles about why the banks bailed on Visa, cashed out $10 billion, plus another $3 billion for litigation reserves. 

Visa is the richest IPO ever in U.S. history, but for who?

Did you know that the initial initial public offering was expected to yield only $5 billion?  And, after deducting the legal reserves, the banks and the underwriters proceeds that is about all that might be left.

“At Stake is More Than $50 Billion if the Merchants are Successful” (Legal Times)

Visa Inc. IPO Valuation – $74 a share?

“[B]anks Also Stand to Shed Some Liability” (The Charlotte Observer)

“Visa’s Lucrative House of Cards” (SF Chronicle)

Twilight Zone: The Movie, Visa and MasterCard Style

UnfairCreditCardFees.com

Visa Inc. IPO Largest in US History; First it was 5, then 10 and Now $18.8 Billion – That’s Some Rich Valuation Appreciation

“Significant Victory” Announced Against MasterCard by Class Plantiffs

 “Visa’s initial offering expected to fetch $5-billion”

Visa’s Inc’s $10,000,000,000 Misguided Hedge From Litigation

“Visa’s IPO Use of Proceeds Plan and Interchange Overview

Visa Inc. Files 10-K Annual Report, Amends S-1 Registration

How the Fed’s $200-Billion Intervention Indirectly Boosts Visa’s IPO Valuation

“Will Visa IPO Deter Antitrust Lawsuits?” (Financial Week)

“IPO View – Visa IPO Hit by Unexpected Snag–Recession Fears” (Reuters)

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Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Visa, Inc. Due Diligence: Have Investors Talked With Merchants?

After reading the Visa, Inc. IPO Risk Factors, we wonder whether investors will actually stop by and talk with the millions of merchants, companies and organizations which are forced to accept MasterCard and Visa – the two control a whopping 80% market share of all electronic payment processing solutions.  For us, the key word is “Interchange” and the below thousand plus news and commentary postings by WayTooHigh.com provides just the start.

Visa and MasterCard Adjusting Interchange Rates

“Visa, Inc. FORM S-4 SEC Registration Statement” (click here to view the SEC filing)

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Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

It’s a Record!

If it isn’t delayed or cancelled, the Visa Inc. IPO won’t be the only record to be broken.

Today marks the highest – record-setting number of domestic and international visitors to WayTooHigh.com – The Credit Card Interchange Report since we launched this news and commentary site in 2005 to chronical our battle against Visa, MasterCard and its member banks’ anti-competitive merchant interchange fee price-fixing litigation.

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Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Visa Inc. IPO Update

Although it is just our opinion that the Visa IPO will be derailed, we still assert that potential investors are still hypotized with the same exuberance that Bear Stearns’ chairman, James Cayne possessed when playing in the recent North American Bridge Chapionship in Detroit. 

According to The Wall Street Journal, Mr. Cayne was away from a cell phone and email during last summer, during the firm’s impending fiscal crisis.  Even our company, ScanMyPhotos.com is always accessable with iPhone, 24/7 Live Support and other tools to provide instant access.

In the case of Mr. Cayne, as quoted in the Journal [“Cayne on Golf Links, 10-Day Bridge Trip Amid Summer Turmoil”] by Kate Kelly [Nov 1], “[a]ttendees say Mr. Cayne has sometimes smoked marijuana at the end of the day during bridge tournaments.”  In the case of what might turn into an oversubscribed Visa IPO, unless Visa pulls the plug, we can’t help but ask what the new shareholders are also smoking? 

The IPO, along with its risk factors represents a new vanguard of greed in the eye of the financial markets’ tornado-like storm.

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Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Visa IPO Derailed, Suggests Mitch Goldstone

[March 18, 2008, update:  Visa prices IPO at $44 a share, above expected range, raising a record $18 billion]

With thirty-minutes until the U.S. financial markets open, Mitch Goldstone, co-editor of WayTooHigh.com – The Credit Card Interchange Report is making the call that this week’s planned multi-billion dollar exit parachute for  thousands of banks which own the giant credit card association will fizzle.  The Visa IPO was planned as the nation’s most ambitious public offering, yet Visa Inc. is also facing the largest antitrust litigation too, one which in their own words could cause the credit card processing firm to become insolvent if we are successful.

This should now come as no surprise, especially after former Fed Chairman, Alan Greenspan described the financial mess as being the worst since WWII: “Greenspan Worns of Worst Crisis Since 1945.”

Obviously, the banks think differently, especially JP Morgan Chase, which is much more than a lead underwriter.  Did you know that they are also a primary investor in Visa Inc and own one of the largest Visa and MasterCard electronic payment processors, Chase Paymentech?

“I had more than a feeling that the IPO was dead on arrival several weeks ago and have been calling attention to the reasons ever since,” said Goldstone, who is lead plaintiff in the merchant interchange class-action against Visa, MasterCard and major banks.  On March 1st, WayTooHigh.com, which has been chronicling the interchange battle with daily news and commentary updates since early 2005, had this posting:  Why the Visa Inc. IPO Might be Delayed for Shelved?   Several other similar commentaries were subsequently published by WayTooHigh.com. 

“Although there have been no other public reports which we read suggesting Visa Inc. might delay or cancel its IPO, we are not surprised.  After all, the banks were equally in the dark when it came to not protecting themselves and shareholders by acting to thwart the sub-prime mortgage meltdown and other costly missteps,” said Goldstone.

Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

World Stock Markets Plunge More than 5% on Monday; Oil at $111.00; Gold up 2%

We cannot help but think back to the recent presidential news conference where the U.S. president seemed stunned and in disbelief that there was $4.00 a gallon gas being sold in the States.  We wonder whether Mr. Bush is also aware of this dire global market crisis, where the Federal Reserve is ponying up unprecedented billions to a multitude of bankers?   The same bankers who are hoping to reap billions from this week’s Visa Inc. IPO, and the same bankers who looked the other way during the sub prime mortgage fiasco, and the same bankers who stand accused of illegal price-fixing by agreement by artificially setting the MasterCard and Visa merchant interchange fees.

If We Were in Vegas, Our Wager Would Be on Visa’s IPO Not Happening

[March 18, 2008 update:  Visa prices IPO at $44 a share, above expected range, raising a record $18 billion]

Based on the dire financial news reports, stock market turmoil – from Bear Stearns to soaring gold and other commodity prices and non-stop Federal Reserve interventions, we are thinking that the Visa IPO will not happen this week, or any time in the near future.

Let’s see who will be right – us or the thousands of gleefully greedy banks hoping to bailout and transfer partial ownership on an already battered investment community.

From this weekend’s broad-base of WayTooHigh.com readers and the page-viewed areas of interest – specifically about our Visa IPO commentaries – we still think the public offering will be canned or minimally, delayed.

We guess Visa’s public reason will be due to “market conditions,” but we can’t imagine investors ponying up to own a piece of a company that, according to their SEC filing could become insolvent if our merchant antitrust litigation is successful.

Recent Postings of Interest

Visa Inc. Files 10-K Annual Report, Amends S-1 Registration
key point: “Failure to successfully defend or settle the interchange litigation would result in liability that to the extent not covered by our retrospective responsibility plan could have a material adverse effect on our results of operations, financial condition and cash flows, or, in certain circumstances, even cause us to become insolvent.” 

“Visa: Bailing Out The Banks” (NY Times)

“Should You Join the Visa IPO Craze?” (via Charlotte Observer)

Visa Inc. IPO Largest in US History; First it was 5, then 10 and Now $18.8 Billion – That’s Some Rich Valuation Appreciation

Visa’s Inc’s® $10,000,000,000 Misguided Hedge From Litigation (WayTooHigh.com)

Understanding the Word “Insolvency” Is Crystal Clear (WayTooHigh.com)

Thousands of Banks Pin Hopes on Visa Inc. to Bail Them Out

“Significant Victory” Announced Against MasterCard by Class Plantiffs

DISCLAIMER – Just to be crystal clear, we are repeating our website disclaimer:  This informational web site was created to provide news and commentary updates only. None of the information posted on WayTooHigh.com is intended to constitute legal arguments; it reflects only the opinions of its co-editors and not of any other plaintiffs or other parties involved in the merchant antitrust litigation. The information is not guaranteed to be correct, complete, or current.  We make no warranty, express or implied, about the accuracy or reliability of the information posted by WayTooHigh.com or at any other Web site to which this site is linked.

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Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

“Carlyle Capital in Default, on Brink of Collapse (via Reuters)

More trouble for the banks.  By way of pure coincidence, Carlyle Group, the buy out firm is in default on ($16.6 billion) – nearly as much money as Visa hopes to raise next week. 

Perhaps they can double-down.  

Can the banks hold on until the Visa Inc. IPO bailout? 

Click here to read the Reuters article.

How the Fed’s $200-Billion Intervention Indirectly Boosts Visa’s IPO Valuation

28-days to a Market Nightmare

(click herefor update from Ye Xie and Gavin Finch at Bloomberg on “Concern Fed Package Wont Suceeed“)

Tuesday’s $200-billion infusion in Treasury securities did more than subsidize the market’s 400-point Dow rise (3.6%), it indirectly is fortifying investor confidence in advance of next week’s planned Visa IPO. It is also a maneuver to briefly sustain market perceptions that the banks are again fiscally healthy.

A weakened stock market would have spelled trouble for getting the Visa, Inc. IPO off the ground. Without this help from the Federal Reserve to the banks, the stock market’s glumness would overshadow what is planned as the nation’s largest initial public offering ever.  Instead, the Fed designed this liquidity quick-fix that will last just 28-days- coincidentally, just long enough to see the Visa IPO get funded.

What happens on April 9^th, when the $200-billion bailout is called back?

The billions in increasingly valueless home loan packages will again be an issue in 28-days, but just after the investors’ sentiment is uplifted by this artificial market manipulation.  As the banks rush to unload giant portions of their ownership in Visa Inc. investors should look closely at the real fable behind this Fed action.

• What happens to the equity market and the post-Visa IPO valuations then?
• What happens next month to the valuation and liquidity of the mortgage-backed securities that are being held as collateral?
• The banks’ balance sheets will be mellowed and ripened with billions of dollars gained from transferring part ownership of Visa Inc. into public hands.
• The same Visa, Inc. IPO risk factors remain, even after the Fed’s funding prop.
• In 28-days, after the Fed’s temporary fix by buying mortgage securities that others don’t want expires, what do the new Visa Inc. Shareholders do after the banks have their money?

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Want to know more about lead plaintiff ScanMyPhotos.com?  Click hereand read their daily blog: Tales from the World of Photo Scanning

“Banks Face ‘Systemic Margin Call,’ $325 Billion Hit: JPM” (Reuters)

Click here to read the Reuters article by Eric Beech.

“Congress Takes On Credit Card Interchange Fees” (ConsumerAffairs.com)

Click here for the Martin Bosworth March 7th article in ConsumerAffairs.com.

“Banks CEOs Face Grilling over Compensation” (CNBC)

[Via AP, CNBC] “Slated to appear Friday before the House Oversight and Government Reform Committee were Angelo Mozilo of Countrywide Financial, the nation’s largest mortgage lender; Stanley O’Neal, formerly of Merrill Lynch & Co. ; and Charles Prince, formerly of Citigroup.”

 Click here to read article  

“Retailers Welcome Antitrust Legislation Addressing $40 Billion in Hidden Credit Card Fees” (Via NRF News Release)

[Via Businesswire, March 6, 2008]

WASHINGTON–The National Retail Federation today welcomed the introduction of landmark antitrust legislation that would address hidden MasterCard and Visa fees that cost merchants and their customers more than $40 billion a year.

“This legislation would use the nation’s antitrust laws to rein in the greed of the credit card companies,” NRF Senior Vice President Mallory Duncan said. “With the rapidly increasing use of plastic, credit card companies and their banks are seeing a windfall that is costing U.S. consumers tens of billions of dollars each year. These are fees that most consumers don’t even know they’re paying because Visa, MasterCard have tried to keep them secret. The introduction of this legislation marks the beginning of the end of credit card company rip-offs.”

“Rather than allowing these fees to continue to be set in secret and imposed on a take it or leave it basis, this legislation would require negotiations and allow retailers to seek fair terms and conditions that will ultimately mean a better deal for consumers,” Duncan said. “Consumers are already angry at the way they’ve been treated by credit card companies, and this bill is an important step toward making credit card companies treat both merchants and their customers with respect.”

The Credit Card Fair Fee Act was introduced today by House Judiciary Committee Chairman John Conyers, D-Mich. The bill is the first attempt by Congress to address credit card interchange fees, and is the outcome of a hearing held in July 2007 where Duncan, testifying on behalf of NRF and the Merchants Payments Coalition, argued that interchange practices violate federal antitrust law.

Averaging close to 2 percent, interchange is a fee Visa and MasterCard banks charge merchants every time a credit card or signature debit card is used to pay for a transaction. Visa and MasterCard collected an estimated $42 billion in interchange fees in 2007, an increase of 17 percent over the previous year and 150 percent since 2001.

Interchange is largely unknown to most consumers because Visa and MasterCard don’t disclose the fee on monthly statements and effectively keep merchants from disclosing it on receipts. But Visa and MasterCard effectively require merchants to pass the fees on to consumers by requiring them to be included in the advertised price of items and making cash discounts difficult. The fees amount to about $350 per household each year.

The Conyers bill would require credit card systems possessing “substantial market power” to negotiate with merchants to reach a voluntary agreement on credit card terms and conditions. If an agreement cannot be reached, both sides would be required to submit to binding arbitration by a three-judge panel appointed by the Department of Justice and Federal Trade Commission.

The arbitration proceedings would take place with a limited 60-day discovery period and other statutory deadlines, and the judges would be required to apply a market standard reflecting a perfectly competitive system where neither side had market power. Terms and conditions set by the panel would be in effect for three years, at which time the process would repeat itself. Both sides would receive limited immunity from antitrust laws in order to participate in the process.

The legislation requires that terms and conditions set under the process be available to any merchant regardless of size, industry or location. Individual merchants or groups of merchants would remain free to negotiate voluntary arrangements with credit card companies and their banks.

NRF is leading retailers’ fight against soaring interchange costs. During last summer’s testimony before the Judiciary Committee’s Antitrust Task Force, Duncan explained to lawmakers how Visa and its member banks come together to set interchange rates that all banks agree to charge regardless of which bank’s name is on a card. MasterCard follows a different procedure that also results in all its banks agreeing to charge the same. In either case, the two card associations each operate as illegal price-fixing cartels in violation of antitrust law, he said. With Visa and MasterCard together controlling at more than 80 percent of credit card purchase volume, retailers cannot afford to refuse the cards, he said.

The National Retail Federation is the world’s largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry’s key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail companies, more than 25 million employees – about one in five American workers – and 2007 sales of $4.5 trillion. As the industry umbrella group, NRF also represents over 100 state, national and international retail associations. www.nrf.com

More Windfall Profiteering – Barrel of Crude Oil at Record $105.97

Is anyone else wondering why there is silence as the banks, Visa and MasterCard are celebrating extraordinary windfall profiteering at the pumps?  Crude oil reached another record high – $105.97, which means even more profiteering.

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Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Why Visa, MasterCard and its Member Banks Are Accused of Illegal Price-Fixing by Agreement

Repost from Nov 21, 2007.  Click here

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Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

“MasterCard Files Appeal of European Commission Decision” (via MasterCard press release)

[Source: MasterCard Worldwide press release]

MasterCard seeks to annul decision which would harm consumers and undermine European competitiveness and innovation

    WATERLOO, Belgium, March 3 /PRNewswire-FirstCall/ — MasterCard Europe has applied to the European Court of First Instance to annul the European Commission’s decision on MasterCard Europe’s cross-border interchange fees, and said it believes it has strong grounds for its request. The December 19, 2007 decision requires the company, among other things, to repeal its intra- EEA fallback interchange fees by June 21st.

    The company reaffirmed its intention to comply with the Commission’s Order while the appeal proceeds, as well as its commitment to ensuring that its payments services remain competitive and continue to benefit its customers as well as the millions of European cardholders and merchants who rely on MasterCard and Maestro cards.

    MasterCard said its concerns with the decision focus on:

• The Commission’s failure to recognize that four-party payment systems cannot operate without default settlement terms between banks that issue cards to consumers and those that acquire transactions for merchants, which requires the setting of an interchange fee;
• The Commission’s refusal to recognize the efficiencies that four-party payment systems create and the fairness of MasterCard’s interchange fees; and
• The Commission’s inaccurate conclusion that, despite MasterCard’s May 2006 IPO, MasterCard and its customers continue to be “an association of undertakings”, and its mischaracterization of MasterCard’s interchange fees as decisions of an association that restrict competition under EC Treaty rules. 

“MasterCard firmly believes that market forces, not regulation, should drive key decisions such as the setting of interchange fees and retailers’ choices over which forms of payment to accept. If left unchallenged, and especially if followed by national regulators, the Commission’s decision would not only be bad news for consumers but a blow to the European payments industry,” commented Javier Perez, President of MasterCard Europe.   Perez continued: “From a business point of view, a payment system that does not allow for efficient recovery of costs is not sustainable in the long term, nor is it desirable because it limits the scope for innovation in payment services offered to consumers.   “The Single Euro(pean) Payments Area (SEPA) for payment cards, launched at the beginning of the year, will continue to require enormous investment and commitment by market players. It’s difficult to expect them to expand
into new markets when regulation lowers the incentive to take those risks.  In our view, the best way to proceed for the payments industry and SEPA is to follow the established European public policy principle of relying on competition to deliver what consumers want.”

Why the Visa Inc. IPO Might be Delayed for Shelved?

As WayTooHigh.com – The Credit Card Interchange Report prepares to post our 1,000 news and commentary update since 2005 – back when we launched what was the first of fifty separate antitrust complaints against Visa, MasterCard and major banks – there are nearly 1,000 prior posting that paint a tapestry of reasons why the banks’ scheme to unload part of their holdings in Visa might not happen.

President Bush Isn’t Aware of $4-a-gallon Gas, But We Are

We are troubled that at yesterday’s (Feb 28) Presidential news conference, Mr. Bush was surprised and unaware that Americans are paying nearly $4-a-gallon to fill up their cars. 

Click here to view video 

Of equal concern is that if the President was surprised and unaware of what motorists are paying at the pumps, then he must also be in the dark on the nearly $40 billion siphoned out of our wallets each year by the banking cartel for merchant interchange fees for Visa and MasterCard’s electronic payment network.

But, now that he knows it, the next question is why are the banks able to force motorists using plastic at service stations to fork over a percent of each fill-up? These fees were designed to be cost-based, not to enrich thousands of banks who use these revenues to cover their billions in losses from misguided mortgage and other fiasco’s.

MasterCard had earlier announced a $50 cap at the pumps, but we are unsure if that ever took hold, and we are not sure if Visa followed along.  Did they?  And then two more questions:

1. Why are the banks still able to get upwards of 1.7% for each charge? 
   
2. If the credit card associations can place a limit on interchange fees at the pumps, why not for all electronic payment transactions elsewhere, from Rolex watches to a latte at Starbucks?

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Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Visa, MasterCard and the Banks Windfall Profiteering at the Pumps

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$101.11 

It’s a record price at the pumps, which again raises the question: why are the banks allowed to reap windfall profits during our nation’s economic energy crisis? 

As more motorists are forced to pay with plastic – due to the record costs to fill up their tanks, Visa, MasterCard and its thousands of member banks are earning windfall profits.  They demand a percent of each sale for each credit card transaction, even though the interchange fee cost is nearly zero (it is estimated that the actual fees to process electronic payments are about 13% of the total interchange fees collected).   

Related Links

FAST FACT: Record gas prices leads to possible profiteering and windfall for credit card companies

Banks Benefit When Oil Surges

Crude-oil Futures Hit $100 a Barrel on Nymex

More Oil Profiterring. A Barrel of Gas Now at $86

Oil Jumps to Nearly $100, Generates More Interchange Fee Profiteering

Oil Surges Past Record High, Above $78 a Barrel; Yields More Windfall Profiteering For Banks 

Interesting Question: Why Only Cap Interchange Fees At The Pumps?

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

The Battle Against Visa and MasterCard is Poised to Get Very Loud

According to American Banker reporter Stacy Kaper (Thurs, Feb 21) “Interchange Limits Heat Up on Hill; Conyers, Durbin draft bills giving retailers more sway over fees.”

Key points extracted from the American Banker article, include:

• House and Senate Judiciary committee leaders are drafting legislation that would limit interchange fees.
• The credit card industry is already under siege by lawmakers who want to rein in various practices, but a crackdown on interchange fees would be a first at the federal level and could threaten an estimated $36 billion in annual revenue for the industry.
• House Judiciary Committee Chairman John Conyers is expected to offer an interchange bill with Rep. Chris Cannon, R-Utah.
• According to a draft of the bill, it would create a three-member board of lawyers appointed by the Federal Trade Commission and the Justice Department to regulate interchange rates.
• Senate leaders are considering offering a similar measure
• The legislative push is the result of work by the Merchant Payment Coalition — a retailers’ lobbying group fighting to reduce the merchant discount fees from which interchange fees are derived.
• Because “there is no competition between the thousands of rival banks participating in a given electronic payment system regarding these fees and rules, merchants are denied access to the electronic payment system on rates and terms that would have been negotiated in a perfectly competitive marketplace,” the draft bill says.
• A sweeping credit card reform bill introduced this month by House Financial Services Committee leaders Barney Frank and Carolyn Maloney would require the Federal Reserve Board to make annual reports to Congress on how much banks earn from merchant fees.

 

 

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Visa Inc. IPO Largest in US History; First it was 5, then 10 and Now $18.8 Billion – That’s Some Rich Valuation Appreciation

Click here to read the AP story on Visa’s planned ~$19 billion IPO.

click here to read Reuter’s story on the Visa Inc IPO

[WayTooHigh.com Editor’s note: Investor’s, drunken with jubilation over MasterCard’s valuation, would be wise to sober up and read the Risk Factors which Visa Inc explains could lead to insolvency of our merchant antitrust litigation prove successful.  Forget not what MasterCard did in an attempt to transfer its legal liabilities from the banks to shareholders.  The Visa IPO smacks of a giant shell game. The same banks which owned MasterCard, tested the waters with by selling off a chuck of the much smaller credit card association.  Now, the same thousands of banks – facing billions in losses from other management missteps are now seeking to cash out again, and at a much higher level.  Check back often for regular updates and commentaries on the planned Visa Inc. IPO].

Related WayTooHigh.com postings

“Significant Victory” Announced Against MasterCard by Class Plantiffs

 “Visa’s Initial Offering Expected to Fetch $5-Billion” (The Globe and Mail) [that’s some inflation…. From $5 billion to $19 billion?]

Will Visa USA’s “Consumer Education” Tool be Silenced During Their IPO?

“Visa’s Pending IPO”

Visa’s Inc’s® $10,000,000,000 Misguided Hedge From Litigation (WayTooHigh.com)

“Visa’s IPO Use of Proceeds Plan and Interchange Overview (commentary, WayTooHigh.com)

“Visa Reveals Plan to Restructure for IPO” (via AP)

  

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click hereand read their daily blog: Tales from the World of Photo Scanning

“DEBIT-CARD PURCHASERS PENALIZED FOR PIN USE” (previously published in The Red Tape Chronicles; MSNBC.com)

Excerpt, originally posted: Friday, November 16 by Bob Sullivan in The Red Tape Chronicles

“Not long ago, I wrote a column explaining the difference between credit and debit, advising consumers to put the cash cards away and always use old-fashioned credit cards when shopping. Unexpected fees for PIN-based debit card transactions are just another reason to do that.   Less security, but more profit.  The answer is simple: easy money.   First, let me explain the terms. “Debit or credit” is a misleading question. While all the plastic in your wallet looks the same, most of us carry around three different ways to pay: a regular credit card, a bank/ATM/debit/cash card that can be used with a PIN code to buy things at retail stores (PIN-debit transactions) and a bank/ATM/debit/cash card that can be used with a signed slip to buy things (signature debit). It’s the last two we’re concerned with here.”

Click here to read The Red Tape Chronicles article and hundreds of reader comments. 

  

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Cal National Bank’s Most Distasteful Promotion yet?

One bank is touting that your house be used as their ATM card and use your nest egg as collateral for your every day spending needs.

According to the Cal National website, use “[a] Home Equity Card, for convenient access to your line of credit wherever Visa^® is welcomed. Or access your line by writing a check—it’s your choice.” 

What does this mean?

Forget for a moment the sub-prime mortgage meltdown and national housing market collapse, but instead, look at Cal National and its latest gimmick.  They want you to use your Visa card to access your home equity line of credit.  Risk everything and then a portion of the charges will be diverted back to Visa and Cal National from interchange fee payments.

As if the housing crisis isn’t bad enough, now banks are promoting that homeowners access their available line of credit by using a Visa card. 

We’d like to see that commercial during the Summer Olympic Games.  “Max out the remaining valuation of your home by buying stuff on your Visa card.” 

Have they no shame?

Editors note: WayTooHigh.com is edited by the owners of ScanMyPhotos.com.  This site features the most comprehensive international breaking news, daily updates and commentaries on the history of merchant interchange fees. The goal in representing millions of merchants and cardholders is to reform an antiquated, costly and unfair payment system and explain why the nearly $40 billion annual merchant interchange fee is a hidden tax on consumers and retailers.  WayTooHigh.com, The Credit Card Interchange Report, is co-edited by Carl Berman and Mitch Goldstone, founders of California-based 30 Minute Photos Etc., the national online boutique photo service, 30minphotos.com and its newest division, ScanMyPhotos.com. Berman and Goldstone are also the lead plaintiffs and class representatives in the multi-billion dollar antitrust class-action litigation against Visa, MasterCard and member banks. This informational web site was created to provide news and commentary updates only. None of the information posted on WayTooHigh.com is intended to constitute legal arguments; it reflects only the opinions of its co-editors and not of any other plaintiffs or other parties involved in the merchant antitrust litigation. The information is not guaranteed to be correct, complete, or current. We make no warranty, express or implied, about the accuracy or reliability of the information posted by WayTooHigh.com or at any other Web site to which this site is linked.

  

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Gold, Oil and WayTooHigh Hit Record Highs

With almost 1,000 posts since our battle against Visa and MasterCard began in 2005, we have a milestone to announce.

It is not just the multi-billion dollar interchange fees that are at record highs.  Even gold and oil’s record highs today are not in a field of their own.  WayTooHigh.com – The Credit Card Interchange Report also recorded its highest number of recent daily visits today.  And, to think, we are not even a cartel –  just entrepreneurs taking on the banks and Visa and MasterCard! 

While we are heartened that the credit card associations, banks, their legal teams, advocacy groups and major media outlets are also regular readers of WayTooHigh.com, it is much more reaffirming that we are also visited each day by America’s largest multi-national conglomerates and small mom-and-pop stores. 

Sunday’s Academy Awards telecast and MasterCard’s commercials will be a reminder that gimmicks and visibility do not trump the law and conviction of outrage by its cardholder and retailer customers.  This Sunday, it’s the Academy Awards MasterCard commercials, then this Summer, during the Olympics, it will be Visa’s turn to spin their story.

During the 60-second MasterCard spots on Sunday’s Academy Awards, think of the single mom walking into a corner convenience store in the inner-city, rather than the planned MasterCard sweepstakes contest they will instead be promoting.  Back to our profile: The mom walks in, buys a gallon of milk for cash and thus subsidizes the signature cardholder’s free trip to Europe from an identical purchase of milk because they paid with a premium signature MasterCard.  The merchandise cost the same, but the interchange expense is shared by the cash paying shopper.  Then, ask the question: why exactly is the person paying with cash subsidizing the frequent flier mileage gained from affinity cardholders?  It would take an Academy Award performance to explain how that is a fair transaction.

Our readers are part of the reason we want to incite millions of merchants and consumers to stand up and say enough to the nearly $40 billion in hidden fees forced upon us by Visa, MasterCard and its member banks.  There is no choice and there is no competition.

Leading Recent WayTooHigh.com Postings

Starbucks Coffee Chain To Close More Than 7000 stores
Stock Market Meltdown… Visa’s IPO Mess
Win One For MasterCard’s “Priceless.com”
Visa’s International Merchant Discount
WayTooHigh.com – The Credit Card Interchange Report
Chase Paymentech Chargeback Fees Are Unfair
Visa’s Inc.’s Planned IPO & MasterCard
“MasterCard Europe to Challenge European EU
“Merchants Want Lawmakers to Regulate Credit cards
Twilight Zone: The Movie, Visa and MasterCard

  

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Twilight Zone: The Movie, Visa and MasterCard Style

Do you remember the segment in the 1983 film, The Twilight Zone where a person befriends a mysterious 10-year-old boy and ends up trapped along with his relatives in an alternate reality created by the boy’s imagination?  To us, that is how MasterCard and Visa operate. People are frightened to call attention to the two giant credit card associations’ collusive price fixing schemes.  There are dozens of class-action law suits, all which followed after we initiated the first updated case in May 2005, but there are millions of other stories too. 

Because nearly every merchant, non-profit and entrepreneur across the globe is beholden to Visa and MasterCard and its 80% market power, many are silent on what is a nearly $40-billion annual hidden tax. 

WayTooHigh.com – The Credit Card Interchange Report has been filing news and commentary updates for nearly three years and are pleased to have such broad-based readership – beyond the defendants and their high-powered advisors. 

But, how many other businesses were brave enough to do what 30 Minute Photos Etc. [ScanMyPhotos.com] did: actually call and email Visa and MasterCard and ask them to rescind their fees [see profile]?  Because they were non-responsive, they now face a multi-billion dollar antitrust suit that, according to them could cause both card association’s to become “insolvent.”  Not to fret, as the banks would never let that happen.

When we launched our litigation, the banks appeared much more stable, but over the years, they have paid out billions from their misadventures and executive mismanagement decisions.  When a single trader can cause more than $7 billion in losses, our suit is looking less weighty.  But, we long knew that we were well inside the Twilight Zone when we decided to stand up to the banks and their payment card pricing schemes.

“BofA Boosts its NASCAR Incentives”

Bank of America might not seem worried by the billions from a sub prime mortgage meltdown or its recent quarterly results and instead, we quip, could be using cash reaped from cash cows like its merchant interchange fees to speed forward with marketing projects.  Or, are they just so focused on their huge cash inflow from potentially unloading part of their stake in Visa, Inc?  Either way, spending they are doing.

According to The Charlotte Observer (Jan 23), the bank [which is a defendant in our antitrust price-fixing litigation] is speeding forward and that “[a] sharp drop in profits isn’t keeping Bank of America from pursuing NASCAR fans as new customers.  The Charlotte-based bank on Tuesday announced it was more than doubling the number of drivers featured in race-themed accounts.  The bank also will boost its NASCAR rewards program…”

Click here to view the entire article.

Fed Cuts Interest Rates .75%; Why Don’t Banks Cut Interchange Fees Too?

Due to the global financial crisis of confidence, if the Federal Reserve can implement such fast-action by slashing key interest rates by .75%, why aren’t MasterCard and Visa’s member banks also at the same table, helping to soften the economic chasm? 

Interchange fees – a relic pricing schemed from decades ago – account for nearly $40 billion in hidden charges each year.  It is based on an antiquated system designed decades ago to cover a four-party payment system.  If the Federal Reserve has no fees to clear checks, why are Visa and MasterCard’s network able to charge so much? 

Today, the entire electronic payment network is seamless, automated and highly advanced.  Think of the Internet network as a model for efficiency.  There are few manual credit card imprinters today, instead, it is mostly automated and efficient, yet the fees are anything but modern.  With today’s emergency market conditions, if the electronic payment system were to be altered, think of the immediate cash infusion that consumers and merchants would have, rather than the banks, which as we know are facing management quagmire, as they continue to report billions in write-offs and steep revenue declines. 

Stock Market Meltdown… Visa’s IPO Mess… BAC Quarterly Profits Down 95%… Will Interchange Fees be Lowered?…

The banks must be in full throttle panic. 

If you thought that it could not get worse than Bank of America (defendant in our litigation) reporting its quarterly profit fell by 95% and had trading losses of more than $5 billion, it did. 

It potentially just got much worse.

When the U.S. markets open Tuesday morning, investors will recognize that the financial institutions’ latest flotation tool – unloading part of their Visa investment and trying to potentially pass off the litigation liability onto public hands – has become much less attractive. 

Has their liquidity just been shattered?

If you thought the billions in bailout dollars to the banks was a huge chunk of change, just study our 931 prior WayTooHigh.com posts.  Our multi-billion dollar merchant antitrust litigation – as we battle the banks and MasterCard and Visa over their years of alleged illegal, anticompetitive price fixing is impacting all consumers and merchants.

One news report indicated that the current bank bailout will be about $40 billion, an interesting amount, as it nearly parallels the annual bill that consumers and retailers are forced to pay to the card associations’ member banks each year.$40,000,000,000 is a great deal of money, especially when you multiply it over many years.

With the stock market meltdown, we cannot help but pause to reflect on the banks’ most recent billion-dollar planned bailout by cashing out part of their ownership in Visa.  Will the IPO move forward, or be shelved due to market conditions?  If so, think of the additional lost revenues to the banks; the IPO valuation must be much lower today than initially forecast.

WILL INTERCHANGE FEES BE LOWERED?

We guess that Tuesday’s market reactions will force more interest rate reductions. Why then aren’t Visa and MasterCard’s member banks also following along and lowering their merchant interchange fees too?

There are already calls for the U.S. Federal Reserve to suspend the pending market free-fall and change investor psychology by lowering interest rates a full 1.0 percent.  We know where an additional $40 billion could come from to immediately upright the economy.  Perhaps the presidential candidates will share our view too.

 

 

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Why Interchange Fees Concern Retailers and Consumers

repost (jan 2007)

Having just returned from the International Consumer Electronics Show in Las Vegas, there were several instances where I felt more like a rock star than an entrepreneur at the world’s largest consumer technology trade event. There were lots of smiles and thumbs-up from those who were familiar with my role as lead plaintiff in the merchant interchange litigation. Business owners and even consumers were in our camp. Several people I ran into shared their own horror stories.

For me, the point of excessive interchange fees hit home during Michael Dell’s Tuesday keynote presentation at the Venetian Hotel. At one point, he had “Doctor Evil,” the character from the Austin Powers films appear on stage after a 30-year deep freeze. Doctor Evil showed Dell Computers’ founder his 30-year-old computer and wanted to get his “crap” off the antiquated machine; Dell was introducing new products to preserve files stored on older model computers. I couldn’t help but draw several analogies about credit card fees and the differences in technology and higher fees than from three decades ago when antiquated manual card imprinters were used.

As a speaker at CES, I addressed the future of the photo imaging industry, but throughout the show, many people I met were familiar with our litigation against Visa®, MasterCard®and its member banks. CES was not a very friendly place for the card associations, especially because it united retailers and ordinary shoppers together; both are impacted by these fees.

One observation I raised was how ironic it was that the nation’s largest trade show just celebrated its 40th anniversary – it was founded in New York City in 1967. While the bulk of the products promoted at the show will be purchased with Visa or MasterCard (they control 80% of the market), the two leading card associations operate in a 1960’s type-fee structure. Back then we were in a paper economy, today with technology, everything is digital, yet Visa and MasterCard’s price structure is based on costs from 40-years-ago.

Click here for previous “Credit Card Interchange Fee Draw Criticism and Concern at CES” press release.

Overview of Interchange Issues:

• Interchange fees have more than doubled in the last 10-years.
  
• Few customers know about interchange fees because it is virtually impossible for merchants to tell customers what the exact fee is.
  
• Every consumer pays for these hidden credit card fees, even cash customers because the cost is built into every product – a gallon of milk bought with cash by a mom is also paying to award premium signature card holders’ bonus mileage to Europe.
  
• Interchange fees are one of the worst and most unfair fees paid by American consumers – it’s more than six times what people paid in ATM fees.
  
• Visa and MasterCard control an 80% market share of the card market and control a system that is anti-competitive.
  
• Visa and MasterCard threw a bone to service stations and motorists last fall, after the peak summer driving season by capping fill-up interchange fees at $50. This was a hollow gesture and not very genuine, especially as fuel costs have recently subsequently plunged.
  
• Huge profits: Even though the actual cost to process a $1 transaction is virtually the same as that of a $10,000 transaction (buy a soda or a Cartier watch), the interchange fee is based on a percentage of the total. Even Realtors lowered their take when housing prices soared. The interchange fees are far higher than the actual cost o the transaction they are meant to pay for. The technology used to process credit card transactions are today more efficient and less expensive.
  
• Why are interchange rates higher in the U.S. in most other industrialized nations? U.S. interchange fees are close to 2%, while other countries, like the UK are typically 0.7% and Australia averages 0.55%.
  
• Did you know that merchants are forbidden from disclosing to consumers the fees that are charged?
  
• Behind closed doors, Visa and MasterCard meet to increase these anti-competitive hidden fees. We understand that these price-fixing practices are in violate antitrust laws.
  
• Few things are more anti-competitive than the credit card market – virtually every other marketplace lowers prices because of competition.
  
• Study the market dynamics of other counties with significantly lower interchange rates to understand that the banks and card association are still doing well and they have not experienced disruptions in transaction handling processes, despite lower rates.
  
• The banks which make up Visa and MasterCard have colluded to set these fees which in any other industry would be a clear violation of federal antitrust laws
  
• With a new consumer-friendly House, it will be interesting to see what actions Congress and the Senate might take in the coming months. [The Senate may launch a hearing of its own and we certainly would welcome an opportunity to share our retail and ecommerce experiences].[Source: WayTooHigh.com]

Credit Card Interchange Fees Article by Steven Semeraro

“Three Decades of Antitrust Uncertainty. Click here to view.

The $40 Billion Network Few Understand

Purchase NY, San Francisco CA and computers across the nation and overseas will be abuzz over this commentary.  Think of the television networks, lottery networks and any other giant system that operates a mechanism for connecting people together. 

Competition and illegal price-fixing are nonexistent outside the world of credit card payment networks.  Most other networks are free of charge, yet the credit card networks, built decades ago to cover the cost of paper and mechanical transactions, remains in charge.  And, charge it does.  With reports that the actual cost for each electronic transaction is about 13% of the revenues generated, this is one antiquated system that few understand.  As more people read WayTooHigh.com – The Credit Card Interchange Report, more frustration will generate more questions on these unfair fees. 

  

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Presidential-Sized Prediction

From Visa’s sponsorship of the Olympics to its contrived IPO in 2008, we are closely monitoring the company’s influences.

Global interest is also brewing to further expose our illegal price-fixing complaints and demand for monumental reforms at the credit card giant and by its co-defendants who also use the antiquated electronic payment network of supracompetitive fees to strangle the world’s economy.

As U.S. presidential candidates are seeking to restrain the oil cartel’s power, they should wisely do the same with the bank-controlled merchant interchange fees.  Beyond the banks lobbyists and hefty political contributions, they would win over many more votes from ordinary consumer-citizens. 

Forty-billion dollar each year flowing out of our economy to help fund the banks other fiscal quagmires is defiant to the principles of fair competition.

In 2008, Interchange fees should be abolished and penalties assessed for the years of multibillion dollar price-fixing violations.  The banks’ multibillion dollar hidden tax scheme on retailers and consumers is obsolete.  Technology and economic efficiencies today should hasten the removal of these fees.

Visa and MasterCard staffers and paid advocacy supporters may suggest it is not a “hidden fee,” because they now post a matrix of multi-page schedules and conditions on their websites.  But, what is crystal clear is that the world’s retailers, large and small, are against these unwarranted fees.  We are your core customers and even though you have an extraordinary 80% market power, it is time you listened.

More and more consumers are beginning to understand why it makes no sense to impose 1%, 2% and more in revenue sharing from each credit card transaction. Why nations that are technologically less developed than the U.S. pays a quarter or a third the rates charged in the States.

With nearly 900 previous news and commentary postings, WayTooHigh.com is pleased that the scope of our readership is global and we hope this projection is accurate.

[Commentary: WayTooHigh.com]

The Internet vs. Electronic Payment Network

Riddle: What’s the difference between the worldwide Internet communications network and Visa and MasterCard’s electronic payments network?  $40,000,000,000 each year.

Could you imaging if the banking cartel wielded an equal market power over the Internet as they do on what today should be a very low cost four-party payment network?

  

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Banks Benefit When Oil Surges

Today’s front page Wall Street Journal profile on the impact of $100.00 a barrel oil omitted one of the most prominent beneficiaries from surging oil prices – the banks, along with Visa and MasterCard.

When you view the Olympics next summer and see all those friendly Visa advertisements connected with the credit card company’s worldwide sponsorship, remember that they are also part of a giant cartel that is profiteering from our global economic energy crisis. 

With record prices at the pump, more motorists are forced to charge for each fill up; they simply do not have enough cash.  At the service stations, each time a motorist swipes their credit card, a fee based on the total cost is assessed in interchange costs.  As gas prices rise, so to the windfall profits that the credit card associations’ member banks reap.

[commentary: WayTooHigh.com]