The Merchants Payments Coalition issued the following statement in response to today’s successful vote against Sen. Jon Tester’s (D-MT) amendment

“Merchants and consumers across the country owe a huge thank you to all of the Senators who reaffirmed the swipe fee reform law in the face of unprecedented pressure from Wall Street banks. For nearly a decade, the country’s biggest banks and credit card companies have worked tirelessly against these long-awaited reforms, and Main Street has finally prevailed. Today’s vote sent a message to the big banks and their allies that the Senate is prepared to support Main Street by protecting these critical reforms.
“The Federal Reserve can now proceed with its rulemaking to curb swipe fee abuse, and we look forward to seeing the final rule so that Main Street retailers and consumers can start seeing some relief from out-of-control debit fees on July 21.” 
 
###
 
The Merchants Payments Coalition is a group of convenience stores, retailers, and small business owners whose membership associations represent approximately 2.7 million stores and 50 million employees. For more information, go to http://www.unfaircreditcardfees.com or visit us on Twitter. 
 

Henry Helgeson, CEO of Merchant Warehouse is wrong on electronic payment interchange #swipefees

CardLine’s PaymentSource quoted Henry Helgeson, CEO of a processing company called Merchant Warehouse, Inc. where he spouted the same old invalid argument that giant banks want American’s, Congress and the Federal Reserve to believe merchants will not pass on to their customers the billions in savings from the new Durbin lower debit fees.

Surprisingly, Mr. Helgeson acknowledges that his company WILL
pass on to its merchant customers the lower debit fees, even though they
are not required to.  As a merchant (retail and eCommerce business owner) I am perplexed that Mr. Helgeson would risk his entire company, his merchant customers and perhaps soon-to-be former customers by taking sides with the giant banks by spouting their propaganda.  MasterCard and Visa’s member banks reap nearly $62 billion dollars a year from these merchant interchange swipe fees, which were designed forty years ago to cover antiquated carbon copy analog payment network.

Unlike the electronic payment network member banks which are without real competition (MasterCard and Visa wield 80% market power), merchants will all be compelled to rebate all saved interchange fees.  Merchants will not JUST lower prices, but we will hire more employees, invest in infrastructure and transparently benefit the economy rather than just the banks’ vaults.  Even so, the legal argument is being clouded by the bank’s multi-million dollar advocacy campaign.  The last thing Citigroup, JPMorgan Chase, Bank of America, Wells Fargo and thousands of other banks want you to know is that the argument is not about refunding savings to consumers, but rather it is all about anticompetitive illegal price-fixing.

As a lead plaintiff, suing MasterCard, Visa and major banks in what could be the largest anti-trust litigation in our nation’s history, I have been leading the battle against them for half a decade. For news and commentary updates follow WayTooHigh.com and Twitter

Mitch Goldstone
President & CEO
ScanMyPhotos.com

Federal Reserve Board Press Release: Proposed Rule That Would Establish Debit Card Interchange Fee Standards [#SwipeFees]

Press Release

 

Release Date: December 16, 2010

For immediate release

The Federal Reserve Board on Thursday requested comment on a proposed rule that would establish debit card interchange fee standards and prohibit network exclusivity arrangements and routing restrictions.

The Board’s proposal would implement the debit card interchange fee and routing provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Debit card interchange fees are established by payment card networks and paid by merchants to card issuers for each transaction.

The proposed new Regulation II, Debit-Card Interchange Fees and Routing, would establish standards for determining whether a debit card interchange fee received by a card issuer is reasonable and proportional to the cost incurred by the issuer for the transaction. These standards would apply to issuers that, together with their affiliates, have assets of $10 billion or more. Certain government-administered payment programs and reloadable general-use prepaid cards would be exempt from the interchange fee limitations.

The Board is requesting comment on two alternative interchange fee standards that would apply to all covered issuers: one based on each issuer’s costs, with a safe harbor (initially set at 7 cents per transaction) and a cap (initially set at 12 cents per transaction); and the other a stand-alone cap (initially set at 12 cents per transaction). Under both alternatives, circumvention or evasion of the interchange fee limitations would be prohibited. The Board also is requesting comment on possible frameworks for an adjustment to the interchange fees to reflect certain issuer costs associated with fraud prevention.

If the Board adopts either of these proposed standards in the final rule, the maximum allowable interchange fee received by covered issuers for debit card transactions would be more than 70 percent lower than the 2009 average, once the new rule takes effect on July 21, 2011.

The proposed rule would also prohibit all issuers and networks from restricting the number of networks over which debit card transactions may be processed. The Board is requesting comment on two alternative approaches: one alternative would require at least two unaffiliated networks per debit card, and the other would require at least two unaffiliated networks per debit card for each type of cardholder authorization method (such as signature or PIN). Under both alternatives, the issuers and networks would be prohibited from inhibiting a merchant’s ability to direct the routing of debit card transactions over any network that the issuer enabled to process them.

According to the recently released 2010 Federal Reserve payment study, debit card use in the United States now exceeds all other forms of noncash payments and, by number of payments, represents approximately 35 percent of total noncash payments.

Comments on the proposal are due by February 22, 2011.

Federal Register notice: 636 KB PDF

Statement by Chairman Ben S. Bernanke

Statement by Vice Chair Janet L. Yellen

2010 Banking and Consumer Regulatory Policy

 

Most Recent Tweets from @WayTooHigh [#SwipeFees]

  

1. GOP against financial reform, concern re “competition,” if honest issue, should break up MasterCard, VISA 80% monopoly #swipefees 
2. UPDATED BANKING NEWS Lake Forest autism charity wins $20,000 in online vote http://ht.ly/18aqjj   
3. Shareholders will have to force banks not to buy elections   
4. In the Economy | Dow Dives 260 on Earnings, Consumer Worries http://ht.ly/18anMg   
5. Financial Blog Alert CD rates in Indianapolis, Indiana – If you like to stay local with your CD investments, Bankrat… http://ht.ly/18anN1 
6. Bank of Americia, a leading credit card issuer and mjr VISA/MasterCard shareholder, down more than 9% today #swipefees   
7. #SwipeFees = anti-competitive; like Pepsi/Coca-Cola telling stores they will be fined if they charged people less for other brand   
8. Could you imagine if credit card biz settled for a bln $, let’s say, they’d made that up in a few days of #SwipeFees. NOT   
9. RT @Taylor_West: I also missed my one-year Twitter anniversary, which was apparently six days ago. Alas. [Happy Tweetversary, Taylor] 
10. Financial Blog Alert Ignore the doomsayers? – You may have heard predictions of gloom and doom for the stock market … http://ht.ly/18aiDh   
11. MasterCard & VISA are desperate, unAmerican and enemy of small businesses #SwipeFees   
12. #swipefees fund MasterCard, VISA, banks & credit unions vaults not electronic payment network, they was built decades ago   
13. MasterCard & VISA have ~100 #swipefees, better chance in Vegas guessing what your #SwipeFees were   
14. http://www.enewspf.com/index.php/latest-news/latest-local/17565-durbin-statement-on-the-passage-of-sweeping-wall-street-reform-bill- 
15. UPDATED BANKING NEWS Asia mostly lower, as strong yen slaps Nikkei http://ht.ly/18afTA   
16. Financial Blog Alert How optimistic are you? – So how are we all feeling two years after the global economic collaps… http://ht.ly/18afVB   
17. Bank of America emphasizes its ATMs with new eBanking account http://ht.ly/18afVX   
18. Financial Reform Could Hurt Consumers – A change in regulations for debit cards may benefit retailers to the detrime… http://ht.ly/18afX2   
19. Visa fake “survey” not 1st time tricking consumers. They fund “Americans for Consumer Education and Competition” http://ht.ly/20eCP   
20. Next up, post financial reform bill is curbing MasterCard, Visa and banks’ CREDIT card antiquated #Swipefees   
21. Financial Reform Bill Passes — And Regulators Are Left… http://huff.to/8Z5xzp (HuffPost) #SwipeFees   
22. Banks Already Gearing Up To Profit Off Of New Rules http://huff.to/d9AAzp #swipefees. (HuffPost)   
23. I’m competitive, a capitalist and staunchly pro-consumer AND support the new Financial Reform Bill/Law #swipefees   
24. RT @Taylor_West: Big win for small biz in #WallStReform – finally some fairness on debit & credit card #swipefees. [tkx to you too!]   
25. RT @PMAMagazine: #PMANewsline: Retailers benefit from steady second quarter e-commerce sales http://bit.ly/9vDaZG   
26. Financial reform creates political opportunity to reinvent all credit/debit card #swipefees $MA $V   
27. Over 5 1/2 years, WayTooHigh.com has nearly 1800 posts battling MasterCard/VISA #swipefees [SwipeFees.org]   
28. If US were to reduce interchange #SwipeFees rate from 2.0%t to 0.5%, the savings would be $36 bln p year, (Economic stimulus)   
29. Thanks to the mlns of other retailers/ecommerce biz owners for helping to pass financial reform, limit debit card #swipefees   
30. RT @NACSonline: @WayTooHigh thanks for all your help!! [you too, big day, next “credit card” #swipefee reform, Mitch]   
31. Financial Blog Alert New overdraft regulation pulls down CD rates http://ht.ly/18acG0   
32. Free travel rewards on your credit cards same marketing scheme as comps at casinos. Not FREE + YOU pay #swipefees   
33. Post financial reform law, all merchants & ecommerce biz’ must double-down to reform credit card #swipefees too   
34. Visa, MasterCard compete to deliver highest returns to banks rather than lowest prices to consumers #SwipFees   
35. credit card electronic payment network must be paved with GOLD, taking in ~$120,000,000 in “Swipe” EVERY day   
36. In the Economy | Stocks Jolted by Consumer, Earnings Issues – U.S. stocks got off to a weak start Friday after Bank … http://ht.ly/18aa5P   
37. Financial Blog Alert Nervous dates for Obamacare prom – Now the delicate courting dance begins between the Obama adm… http://ht.ly/18aa6s   
38. Can Twitter SM tool help shame giant Visa and MasterCard #SwipeFees cartel; follow along and let us see (@WayTooHigh)   
39. MasterCard, VISA “rewards” uses accurate name; #swipefees reward BANKS   
40. When the mlns of merchants + all cardholders beat MasterCard/VISA cartel, must demand they don’t raise other fees #swipefees   
41. Merchants/consumers pay charge/debit card #swipefees, but often “rewards” never redeamed   
42. Last holdout relic from analog carbon copy analog days are credit card interchange #swipefees   
43. What next? Will VISA buy a “study” proclaiming all cardholders use all their accumulated “reward” perks. Prepaid 100% via #swipefees   
44. Headline News – July 16, 2010 – Headline News is brought to you by Glenbrook Partners and our PaymentsJobs.com job b… http://ht.ly/18a7jf   
45. In the Economy | Stocks Hit by Consumer Data, Mixed Earnings http://ht.ly/18a7k1   
46. MasterCard, VISA, banks’ $48bln #swipefees compromise strength of every business worldwide.   
47. GOP against financial reform, concern re “competition,” if honest issue, should break up MasterCard, VISA 80% monopoly #swipefees   
48. UPDATED BANKING NEWS Citigroup profit dips 10 percent, loan losses fall http://ht.ly/18a4D5   
49. In the Economy | Stocks in Red on Big Earnings Day – U.S. stocks got off to a weak start Friday after Bank of Americ… http://ht.ly/18a4Dh
50. Financial Blog Alert Don’t click on that FDIC’ link – The Federal Deposit Insurance Corp., or FDIC, has issued a war… http://ht.ly/18a4DR   
51. Financial Blog Alert Feds tell banks to be nice to folks affected by oil gusher http://ht.ly/18a4DQ   
52. Last time VISA, MasterCard lost suit, paid ~$3B settlement then RAISED fees to more than cover, not this time! END #swipefees   
53. Thanks @NACSOnline and your members for helping to pass financial reform & limit debit card #swipefees   
54. Mitch Goldstone, Pres & CEO of ScanMyPhotos.com calls MasterCard/Visa #SwipeFees “a vulgar statement of credit card greed.”
55. MNRetailersAsso NRF Calls Passage of Landmark Swipe Fee Fix a Major Victory for Retailers and Consumers over Debit and Credit Card Fees http://bit.ly/9sihKO 
56.  National Restaurant Association Praises Senate Passage of Interchange Fee Reform http://bit.ly/d1eeIe   
57. Who makes more money from apps, credit card companies for Apple? Yup! The banks in #swipefees http://ow.ly/22DGy   
58. Bank of America Corp. reported Friday a net profit that slipped 3% in the second quarter  
59. Florida Bank to Acquire Anderen – Florida Bank Group said Thursday that it will acquire Anderen Financial, of Palm H… http://ht.ly/189Zb1
60. UPDATED BANKING NEWS JP Morgan Had a House Made of Diamonds, and So Should You [Recessionomics] http://ht.ly/189ZcC   
61. In the Economy | Futures Pause After Bank of America Earnings Beat http://ht.ly/189Zd6   
62. UPDATED BANKING NEWS Market Snapshot: U.S. stocks get lift from BP, Goldman news http://ht.ly/189IEH   
63. Congress Passes Financial Reform Legislation – The U.S. Senate gave final passage today to the long debated financia… http://ht.ly/189GDL
64. National Restaurant Association Praises Senate Passage of Interchange Fee Reform http://bit.ly/d1eeIe   
65. #SwipeFees Update | Most Issuers Report Fewer Chargeoffs in June http://ht.ly/189BNG   
66. #SwipeFees DC News | Think Reg Reform Is Done? Just Wait for the ‘Corrections’ Bill http://ht.ly/189BNJ   
67. Senate passes FinReg (Financial Reform Bill) #swipefees. Good 1st step in reining in MasterCard/VISA fees   
68. #SwipeFees DC News | Congress Finishes Regulatory Reform – The Senate, 60 to 39, approved the version completed by a… http://ht.ly/189sqz 2  
69. Financial Blog Alert Women need long-term care insurance even if it is pricey http://ht.ly/189ssN   
70. Post financial reform law, all merchants & ecommerce biz’ must double-down to reform credit card #swipefees too
71. Thanks to the mlns of other retailers/ecommerce biz owners for helping to pass financial reform, limit debit card #swipefees  
72. Thanks the National Retail Federation for helping to pass financial reform & limit debit card #swipefees 2  
73. Thanks to 7-Eleven franchisee and customers for helping to pass financial reform & limit debit card #swipefees   
74. RT @cbsmoneywatch: Senate Passes Financial Reform http://bnet.io/9c4Tgq
75. UPDATED BANKING NEWS J.P. Morgan Chase earnings surge 76% – J.P. Morgan Chase said Thursday that its second-quarter … http://ht.ly/189pMo 1
76. Financial Blog Alert Financial reform will change mortgage world http://ht.ly/189pNe
77. Can credit card issuers and acquirers become like rats in a cage? RT (@WayTooHigh) to make it happen 
78. Funny, banks say merchants will keep #swipefees savings, hey, that’s what THEY do as their costs go down, they raise fees!   
79. SwipeFees,net, SwipeFees.org and the 5 1/2 yr WayTooHigh.com blog shut down this am – trying to get reestablished. Hello media, legal team
80. Banks must be steaming now, not directly accusing ’em of forcing WayTooHigh.com down, but interesting FinReg vote same day?!
81. Senate passes FinReg (Financial Reform Bill) #swipefees. Good 1st step in reining in MasterCard/VISA fees

Follow WayTooHigh.com on Twitter – http://www.Twitter.com/WayTooHigh

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

U.S. Banks Post Profit, but Woes Persist – WSJ.com

WASHINGTON—A total of 775 banks, or one-tenth of all U.S. banks, were on the Federal Deposit Insurance Corp.’s list of “problem” institutions in the first quarter, as bad loans in the commercial real-estate market weighed on bank balance sheets.

via U.S. Banks Post Profit, but Woes Persist – WSJ.com.

VISA’s Lobbying Effort to Stop Financial Reform Hits a New Low — WASHINGTON , May 21 /PRNewswire-USNewswire/ —

VISA using children, firefighters and seniors to justify fleecing small employers and consumers

WASHINGTON , May 21 /PRNewswire-USNewswire/ — Dennis Lane, single store 7-Eleven Franchise owner and national spokesman for the campaign to Reform Swipe Fees NOW!, released the following statement regarding VISA’s response to the U.S. Senate’s passage of sweeping financial regulatory reform.

“The credit card industry has officially hit a new low in their campaign to block financial reform.  To justify fleecing small business owners like me, they are now hiding behind seniors, veterans, firefighters and even children to justify their business practices.  Their unprecedented multi-million dollar lobbying having failed, they have now resorted to using human shields in a last-ditch effort to scuttle reform that will benefit millions of small businesses and their customers.”

From VISA’s statement upon passage of the Senate financial reform bill (S. 3217)

• “Those who rely on prepaid cards for government disbursement, such as child support, could be particularly hard hit.”
• “…could especially harm community banks and credit unions that depend on interchange to offer competitive banking services to firefighters, police officers, teachers, veterans, congressional staffers and other customers.
• “This could be especially devastating for those on a fixed income who rely on prepaid cards for government disbursements such as social security.”

“Each of these suggestions is ridiculous, and VISA knows it. Rather than hurt workers and families, swipe fee reform will help small businesses grow, improve wages and benefits, and lower prices for consumers.  But with its lobbying efforts failed, it’s become increasingly clear that the card industry is willing to say just about anything to protect the billions they are making exploiting small business.

“We need Congress to finish what it has started. For reform to be complete, it must include interchange reform.  For our economy to grow again, we cannot allow VISA and the nation’s largest financial institutions to continue siphoning away billions each year from hardworking small business owners.”

About Reform Swipe Fees NOW: Reform Swipe Fees NOW is a project by the Retail Industry Leaders Association (RILA).  The project unites U.S. business owners, small and large, in a campaign for fair credit card swipe fees.

SOURCE Reform Swipe Fees NOW

VISA’s Lobbying Effort to Stop Financial Reform Hits a New Low — WASHINGTON , May 21 /PRNewswire-USNewswire/ —.

U.S. Senate Passes Commonsense Swipe Fee Reform to Aid Small Business and Consumers

Main Street merchants applaud Senate for taking immediate action to help retailers

and their customers across the nation

WASHINGTON— The Merchants Payments Coalition, representing 2.7 million U.S. businesses, released the

following statement after the U.S. Senate voted to include commonsense swipe fee reform in the Restoring

American Financial Stability Act of 2010 through an amendment introduced by Sen. Richard Durbin. Specifically,

the measure will ensure the debit card transactions are reasonable and proportional to the cost of processing the

transaction:

“Tonight, the Senate stood up to the credit card companies and big banks and stood strong for Main Street

businesses and our customers. Swipe fees have spiraled out of control in recent years, and this amendment is

necessary to rein in these excessive fees and ensure that Main Street receives a fair shake. These fees are harmful

across the board – from large businesses to small retailers to American consumers.”

“Because of Sen. Durbin’s amendment and his efforts to push this measure through the Senate, business owners

and their customers are one step closer to real, tangible reform. This amendment will enhance transparency and

help protect businesses and their customers alike from these unfair, hidden fees.”

“Now that the Senate has acted in such a strong and unambiguous way, business owners across the country hope

that Congress will continue moving forward with this measure to bring fairness to credit and debit card swipe fees

– and that it eventually reaches President Obama’s desk to become law.”

###

The Merchants Payments Coalition is 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 more information about credit card swipe fees, please visit http://www.UnfairCreditCardFees.com.

[via MPC Press Release]

Visa Inc. Statement: Senate Passage of S. 3217 – (via Corp Press Release)

Visa Inc. Statement: Senate Passage of S. 3217 – VISA Inc. Corporate Press Release)

SAN FRANCISCO, May 20, 2010 (BUSINESS WIRE) — The following is a statement from Visa Inc. in response to Senate passage of S. 3217:

“We are disappointed that legislation intended to make our financial system safer and fairer for consumers includes an irresponsible and anti-consumer amendment offered by Senator Durbin. Adopted with no debate or review of facts, the amendment allows retailers’ to shift their cost for accepting debit cards onto the backs of consumers while they continue to receive the value of electronic payments — including faster check-outs, ticket lift and guaranteed payment.

“Written and backed by lobbyists representing the nation’s largest retailers, the Durbin amendment could significantly harm consumers. Consumers could have less choice, higher costs and could experience an increase in costs for checking accounts and online banking fees and reduced debit card benefits like fraud protection and rewards. Those who rely on prepaid cards for government disbursement, such as child support, could be particularly hard hit.

“For financial institutions, this amendment could force them to reduce or eliminate valuable debit and checking account services and could especially harm community banks and credit unions that depend on interchange to offer competitive banking services to firefighters, police officers, teachers, veterans, congressional staffers and other customers.

“The Durbin amendment also gives retailers the power to set arbitrary, minimum purchase requirements for consumers choosing to pay with plastic. This means that customers who want to buy a gallon of milk or loaf of bread could be forced to buy more unnecessarily if they use electronic payments at the register. This could be especially devastating for those on a fixed income who rely on prepaid cards for government disbursements such as social security.

“The Durbin amendment is not germane to the overall Financial Reform bill legislation. We hope Congress sees the amendment for what it is — an attempt by retailers to increase their profits at the expense of consumers.”

SOURCE: Visa Inc. via Businesswire

For Visa Inc. 
Steve Burke, 703-683-5004, ext. 108 
sburke@crcpublicrelations.com

National Restaurant Association Applauds Senate Interchange Reform Amendment

[via press release from National Restaurant Association]

Provision Will Help Restaurateurs By Ensuring More Reasonable Costs to Processing Transactions

(Washington, D.C.) – The National Restaurant Association today praised U.S. Senate passage of an amendment sponsored by Sen. Dick Durbin (D-Ill.) that will give restaurants and other merchants a break on some payment card-processing fees set by banks and credit card companies. The Senate voted 64 to 33 to include the proposal in the financial reform bill, which is expected to pass the Senate sometime next week.
“Interchange fees are often restaurants’ third greatest operating expense, behind labor and food costs. Merchants pay about $48 billion in interchange fees every year,” said Scott DeFife, Executive Vice President for Policy and Government Affairs for the Association. “We are grateful to Senator Durbin for his leadership on this important issue, and appreciate the bipartisan support for addressing the problem of interchange fee practices that provide zero transparency or negotiation with merchants.”

Interchange fees, also known as “swipe fees,” and related contractual restrictions benefit credit card companies and card-issuing banks at the expense of merchants and consumers. The amendment would authorize the Federal Reserve to issue regulations that ensure interchange fees imposed on debit card transactions are “reasonable and proportional” to the costs of processing transactions. Debit transactions come directly from consumers’ checking accounts and are not credit, yet the interchange rate on debit transactions continues to increase.

The proposal would also permit merchants to set minimum and maximum transaction levels for credit cards. As a result, retailers would be free to choose their payment methods. Under current rules, merchants that accept credit or debit cards cannot set minimum transaction levels, although they sometimes lose money on small charge or debit transactions. Additionally, the amendment would increase competition and allow businesses to offer discounts to customers who pay with cash, checks, PIN debit, etc., which carry lower rates than credit cards.

The Association has long advocated for fairer transaction fees and is a member of the Merchants Payment Coalition, 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. The coalition recently launched a new ad campaign to educate Congress and the public about interchange fees.

Both Credit And Debit Rise for Visa, Along with Acquirer Fees

San Francisco-based Visa instituted an acquirer price increase last year (Digital Transactions News, March 17, 2009). In a conference call with analysts, Visa chief financial officer Byron H. Pollitt Jr. attributed the data-processing revenue growth to VisaNet’s 14% transaction increase and “the continuing effect of previously enacted pricing actions,” according to the Seeking Alpha transcript service.

It looks like another “pricing action” is on the way. Referring to an April price increase by MasterCard Inc., an analyst asked Visa executives if “you have raised merchant assessment pricing as well?” According to Seeking Alpha, chief executive Joseph W. Saunders responded, “Well, we’ve already announced an increase in our acquirers fees similar to the one that MasterCard did and ours is effective in July.” A Visa spokesperson declined further comment. As they do with interchange, acquirers are likely to pass on such network fee increases to their merchant clients.

via Digital Transactions: Both Credit And Debit Rise for Visa, Along with Acquirer Fees

[Follow WayTooHigh.com on Twitter – http://www.Twitter.com/WayTooHigh

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

Small Business Advocates Commend California Investigative Hearing on Credit Card Fees (NACS)

Hearing provided a critical opportunity to address the impact of hidden swipe fees and review possible solutions.

SACRAMENTO – Monday afternoon, California Assemblyman Pedro Nava, chair of the Assembly Banking and Finance Committee, held an investigative hearing on the impact of hidden credit card swipe fees on California consumers and small businesses. Californians paid nearly $5 billion in swipe fees in 2008.

Small-business owners and advocates know that these hidden fees — which total more than credit card annual fees, cash advance fees, over-the-limit fees, and late fees combined – are crippling Main Street businesses and hurting their customers at a time when they can least afford it.

This hearing provided a critical opportunity to address the impact of hidden swipe fees and review possible solutions. The hearing is particularly notable both because of the size and impact of the California economy in the United States and because Visa’s headquarters are located in the state.

“This hearing is important, because it shows that Assemblyman Nava is listening to his constituents and that he recognizes, at a time when the economy is already so bad, that we can’t afford to let Visa, MasterCard, and the big banks rake in billions of dollars in hidden fees on the backs of small businesses and consumers,” said Mitch Goldstone, president and CEO of ScanMyPhotos.com, an Irvine, Calif.-based retail and online business that feels the impact of ever-increasing swipe fees every day.

“It’s also important that it’s happening in California. First, because we have such a large economy on our own, and reforms that start here often get picked up across the country. And second, because Visa is headquartered in California, this represents a dramatic signal to them that lawmakers are joining small businesses and our customers in saying ‘enough is enough,’” said Goldstone in a press release.

“Reforms are needed to create a transparent process for businesses to negotiate rates and enhance public awareness of interchange fees, which continue to increase,” testified Liz Garner of the Food Marketing Institute the hearing.

“Card companies and banks collect an interchange fee averaging about 2 percent on every credit and debit card transaction, and can raise the rates at any time by any amount,” she said. “We are working for a more competitive and transparent card system that works better for consumers and merchants alike, and hearings like this one are a critical step in that process.”

Credit card interchange fees squeezed American consumers and businesses to the tune of $48 billion in 2008. These hidden fees are set in secret by the banks and credit card companies and charged to store owners every time they run a customer’s credit card.

Americans pay the highest swipe fee rates in the industrialized world. On average, two dollars of every $100 a consumer spends using a credit card goes directly to the credit card industry. That adds up to $427 a year for every American household. Since 2001, the amount Americans pay in swipe fees has tripled.

source: NACSOnline 

Why the credit card industry does better when their customers are doing worse

Since 1990, I have owned and operated a photo imaging business in Irvine called 30 Minute Photos Etc. and now ScanMyPhoto.com.   Times are tough for a lot of retailers just like they are for a lot of our customers.   But it’s not just the economy that make times tough for retailers and our customers.    It’s the credit card industry.  

The credit card business is designed to do better when Americans are doing worse.   Visa, MasterCard and their bank partners are arbitrarily raising interest rates on existing credit and debit card, raising credit card late fees, and even charging interest on credit card debt that is paid on time.  

But what actually cost consumers more is the huge, hidden fees on every credit card transaction known as interchange that is passed through to customers in the form of higher prices.  Two dollars out of every $100 spent in the U.S. in stores and gas stations goes to pay interchange also known as swipe fees whether the customer uses plastic or not.   

But it’s not just credit card hidden fees that are skyrocketing, debit card fees are also rising.  As Andrew Martin wrote in “The Card Game – How Visa, Using Card Fees, Dominates a Market”  in the New York Times on January 5, 2010, Visa pushed signature debit over PIN debit starting in the early 1990s because they could charge 13 times the fee for signature debit than they could for PIN debit – even though PIN debit is the more secure choice for the customer and less prone to ID theft.  

WATCH VIDEO

That’s right.   Visa decided to push signature debit even though it compromises cardholder security compared to PIN debit just to make more money for its member banks.  Visa and MasterCard also have rules that prohibit merchants from telling customers that they are paying inflated fees at point of purchase due to swipe fees.   Visa and MasterCard partner banks won’t disclose on their customer’s monthly card statements how much these fees cost them either.   And merchants are prohibited from discounting the price for customers who pay by cash, checks, or lower cost debit, such as PIN.    

 It’s outrageous behavior like this by Visa, MasterCard, and their partner banks that led me to become the lead plaintiff in what may be the largest class-action antitrust litigation in U.S. history, one designed to help rein in the credit card industry.

Interchange fees were designed 40 years ago to cover the costs for manual credit card imprinting (remember carbon copy receipts?). Today, technology and other efficiencies have made credit card swipe fees all but unnecessary.  There are no interchange fees when using store gift cards or writing checks – but due to unbridled market power of Visa, MasterCard and their partner banks there are still interchange swipe fees.  

Ten years ago, when my company first started using digital scanning, it cost $5 dollars per photo because the process was so expensive.   Today I charge 5 cents because the process has never been cheaper.  Unlike the credit card industry, I operate in a free market.  Even if I tried to charge $5 for digital scanning like ten years ago no one would pay it – they just go down the street to the next guy with a digital scanner.  

It has never been cheaper to swipe a credit or debit card.  But unlike the market for digital scanning – or for that matter gas, groceries, and all other retail goods and services — there is no competition down the street to lower the cost of card transactions.   Visa and MasterCard control 80% of the card market and their respectively card networks set the price.  That’s why credit card swipe fees, unlike retail prices, are the same in all fifty states.   No wonder the cost of swipe to consumers has tripled since 2001 to $427 per average household.     

Every other economically advanced country has either reformed interchange or is in the process of doing so.    But largely because of the power of the credit card industry in Congress, Americans pay the highest credit and debit card swipe fees in the world.   We pay four times what Australians pay for the exact same set of credit card goods and services.  So write your congressperson, write your senator, and tell them that you want them to put out the fire that is burning a hole in your pocket.

FightSwipeFees.com Credit Card Interchange Background

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.

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.

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.

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.

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.

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.

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.

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.

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.

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).

A rare bi-partisan consensus has emerged that the forces that drive free enterprise should also drive how swipe fees get set. Currently, Congress is considering legislation specifically focused on this issue as well as other bills that are expected to address reform. The following are key actions taken or expected to be taken in the near future:

• H.R. 2965, the Credit Card Fair Fee Act and S. 1212, the Credit Card Fair Fee Act. These bills are very similar and each will allow merchants to come together and negotiate with the credit card companies and their banks swipe fee rates and acceptance terms. Similar legislation was passed by the House Judiciary Committee in 2008.
• H.R. 2382, the Credit Card Interchange Fees Act. This bill will repeal some of the rules imposed by credit card companies on merchants that are anti-competitive, empower the Federal Trade Commission to take further action if necessary and will require disclosure of swipe fee rates and rules.
• Government Accountability Office report on Rising Interchange Fees (PDF).  This report confirms many of the most harmful aspects of unfair, hidden swipe fees. The report shows that the credit card companies and their issuing banks have been misleading the public about their increasing rates and about the benefits of credit cards to businesses. The report also outlines an unfair, anti-competitive system that hurts Main Street businesses and their customers in order to pad the banks’ bottom lines, with little relation to the actual costs of processing payments.

 

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.

source: http://fightswipefees.com/about.asp

Be Part of the Biggest Consumer Petition Drive in American History

via NACS Press Release

NACS launches phase two of a consumer petition campaign to tell Congress, ‘’Stop unfair credit card fees.’

ALEXANDRIA, VA – More than 8,000 retail stores have signed up as part of the biggest consumer petition drive in American history. These retailers and their customers are telling Congress, “It’s time to reform unfair credit/debit card swipe fees.”  Now, NACS is empowering other retailers to join the campaign by visiting www.nacsonline.com/fightswipefees.This fall, 7-Eleven franchisees delivered nearly 1.7 million customer signatures to Congress — the largest number of signatures collected for a public policy issue in history — urging members to “Stop unfair credit card fees.” 

Beginning December 15, NACS is coordinating an unprecedented campaign to generate millions more signatures from convenience customers, encouraging Congress to reform unfair credit and debit card interchange, or “swipe,” fees. 

The campaign, the second phase of the industry’s consumer petition campaign, was announced on October 21 at the NACS Show in Las Vegas and immediately generated the participation of thousands of stores throughout the country,.

Both 7-Eleven CEO Joe DePinto and Alimentation Couche-Tard CEO Alain Bouchard, who led his company’s credit card interchange petition drive that collected 400,000-plus customer signatures at its Circle K stores, urged retailers to launch their own petition drive in their stores in a video introduced at the NACS Show. 

NACS has made joining this effort easy. All the materials retailers need to participate in the latest petition campaign are available free of charge at http://www.nacsonline.com/fightswipefees. These materials can be downloaded and sent to a local printer and then displayed in stores. 

If you have not already signed up, visit www.nacsonline.com/fightswipefees today.

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

Credit Card Gas Fee Rally (repost)

NACS Leads Credit Card Petition Against Unfair Fees

NRF Testifies that Credit Card Companies are in an ‘Arms Race’ to Increase ‘Swipe Fees’ Paid by Merchants and Consumers (NRF via BW)

WASHINGTON–(BUSINESS WIRE)–The National Retail Federation today warned Congress that credit card companies are in an “arms race” to increase the $48 billion in “swipe” fees paid by merchants and their customers each year, and urged passage of legislation that would put rules governing the fees under the jurisdiction of the Federal Trade Commission.

“There is an arms race to create cards with higher fees and more bells and whistles,” NRF Senior Vice President and General Counsel Mallory Duncan said. “The market checks that would normally exist to curb this escalation in fees are diminished because the card companies know that every merchant is required to take these expensive new cards or lose their ability to accept any cards. The Welch-Shuster bill would allow the most expensive cards to be refused, and while we expect that few merchants would actually refuse cards if this were passed, it would make the card companies think before they reflexively introduce cards with higher fees.”

“Most consumers don’t know it, but every time they swipe a rewards card with its miles and concierge services, they are driving up the price of everything they buy even higher,” Duncan said. “This particularly hurts less-privileged Americans who don’t have rewards cards or can’t get cards at all because Visa and MasterCard rules effectively require that everyone pay the credit card price even if they are paying with cash, check, debit card or even food stamps.”

“There is no regulator that reviews whether credit card company rules are unfair, deceptive or anticompetitive,” Duncan said. “This legislation would deal with this absence of oversight by directing the Federal Trade Commission to review card company rules and prohibit practices that meet that description. That is the minimum level of protection that this market needs to begin to function properly.”

Duncan testified before the House Financial Services Committee today during a hearing on H.R. 2382, the Credit Card Interchange Act of 2009, sponsored by Representative Peter Welch, D-Vt., and co-sponsored by Representative Bill Shuster, R-Pa. The bill would require credit card companies to disclose interchange rates, terms and conditions, and give the Federal Trade Commission authority to review interchange and prohibit any practices that violate consumer protection or anti-competition laws. Merchants would be allowed to give cash discounts and set minimum credit card purchase amounts, and could choose which credit cards to accept.

Interchange is a fee averaging 2 percent that Visa and MasterCard banks charge merchants each time one of their credit cards is swiped to pay for a purchase. But Duncan explained to the committee that the rate can range from as low as about 1.5 percent for an ordinary card to 3 percent or more for “gold” and “platinum” cards that offer rewards like travel miles or concierge services. In recent years, card companies have created an escalating series of rewards cards – each carrying more rewards but also higher fees – and “upgraded” millions of consumers. The higher-fee cards can’t be turned down by merchants because of Visa and MasterCard’s “Honor All Cards” rule. The practice, along with marketing that has pushed the use of plastic and introduced cards into new areas like taxis, has helped triple interchange revenue from the $16 billion collected when NRF began tracking the fees in 2001 to the $48 billion collected last year.

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 cash discounts difficult. The result is that the average household paid an estimated $427 in higher prices last year, up from $159 in 2001.

Merchants have long sought to offer cash discounts, but Duncan said an amendment to this spring’s credit card reform bill that would have blocked credit card companies from interfering with that ability was met with “howls of protest’ from the card industry and was not included in the final measure.

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 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. www.nrf.com.

Financial Coalition Supports Interchange Reform

Americans for Financial Reform adopts official position to reform deceptive credit card interchange practices.

 

[repost from NACSOnline]

WASHINGTON – Americans for Financial Reform, a group of about 200 national and state organizations that support reform to our nation’s current financial sector, announced its support this week to reform credit card industry practices.

The group released a position paper that outlines its members concerns and support for legislative action that would bring transparency and fairness to a broken system — particularly hidden “swipe fees” (interchange fees) “paid by all Americans, regardless of whether they use credit, debit, checks or cash.”

The group writes:

“Swipe fees have grown at a staggering pace — from about $16 billion in 2001 to about $48 billion in 2008. This is a clear sign of a broken market. Not only do these huge fees injure consumers by inflating the cost of goods and services, they create incentives for banks to view credit and debit cards as fee engines. It is not coincidence that consumer-side fees such as late fees, over-limit fees, overdraft fees and others have seen rapid increases during the last several years, just as swipe fees have exploded. Seeing the potential income from fees has made banks’ business models develop such that they often view their customers as fee-generating machines. These business models have dictated the proliferation of cards and incentives for increased card use without appropriate attention to the risks that consumers might not have the ability to repay the debts they incur on these cards.

“And unfortunately, those credit card swipe fees continue to accelerate, because there is nothing — no marketplace or competitive force — to restrain Visa and MasterCard from charging consumers and merchants more, even though technological advances should have reduced the cost of providing the services. So, not surprisingly, these fees have been skyrocketing.

“There are two essential elements to a competitive marketplace: information and choice. Accurate and transparent information is necessary for consumers to make accurate choices. When information is readily available consumers can make choices, effectively compelling firms to compete for their purchases. And choice is a necessary element too. Absent choice, the discipline of the market will be lost. The credit card market lacks both choice and adequate information. From a consumer’s perspective, it lacks choice because it is an oligopolistic market in which a small set of card issuers dominate the market and establish a set of hidden practices that increase consumer costs.

“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.           

“Credit card industry practices must be reformed in order to deal with these market failures and the resulting injury to consumers. Transparency and market forces are needed to check the growth of unjustifiably high swipe fees. Consumers have a right to know the amount of the swipe fees charged in conjunction with their transactions. Merchants too must be given information about the type of card that they are receiving at the point of sale and the corresponding interchange fees. In addition, the Visa and MasterCard operating rules that dictate how the credit and debit card systems operate must be provided to a regulator that, in turn, makes those materials public for everyone to see and analyze.

“Visa and MasterCard rules that are unfair, deceptive, or anticompetitive must also be abolished. These practices harm consumers by increasing the cost of goods and services and by preventing retailers from offering or encouraging the use of lower cost payment options. This process should start with providing a strong regulatory agency, such as the Federal Trade Commission (or Consumer Financial Protection Agency) the power to review the Visa and MasterCard rules and prohibit any it finds to violate these tenets that govern transactions throughout our economy. Additionally, specific, anticompetitive rules must be overturned immediately to allow merchants to do the following:

• Provide consumers with discounts for using cheaper credit or debit cards or other forms of payment that are cheaper such as cash and checks. The credit card networks and banks should not be able to limit how these discounts are displayed or advertised by merchants. Ensuring that merchant pricing is accurate and clear is the role of state consumer protection laws. Banks do not limit merchant pricing displays to protect consumers — they do it to prevent competition in the market and prevent transparency in their fees.
• Communicate merchant preferences among payment types to consumers. The “honor all cards” rule that requires merchants to accept every card Visa or MasterCard creates — no matter how high they set the fees for that card — should not stand.
• Accept certain cards at some merchant sites, rather than at all locations, and set minimum or maximum purchase size limits for transactions involving a card.

“A large set of organizations are working together to advance our common interest in an accountable, transparent and secure financial system, and to accomplish our shared policy goals. Because the organizations involved and the issues addressed are diverse, not every organization works on or has a policy position on every specific issue. We are unanimous in our call for change to repair our nation’s broken financial system, establish integrity in the financial markets, and facilitate productive economic activity that benefits all segments of our communities.”

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

Prepaid, but Not Prepared for Debit Card Fees (NYT)

Andrew Martin at The New York Times wrote (p. 1 Oct 6th) about the latest credit card prepaid pricing tricks.  Of extra interest is the photo showing several prepaid “debit” cards and all challenge the results of the earlier MasterCard and Visa settlement; the “debit” cards are indistinuishable from traditional credit cards, other than the cleverly hidden word “debit.”

Click here to read more.

Excerpt:

The MiCash Prepaid MasterCard docks cardholders a $9.95 activation fee. Like many competitors, it then charges numerous recurring fees, including $1.75 for each A.T.M. withdrawal, $1 for each A.T.M. balance inquiry, 50 cents for each purchase, $4 for monthly maintenance, $2 for inactivity after 60 days and $1 for a call to customer service.

The Millennium Advantage Prepaid MasterCard goes further, listing an application fee of up to $99. The Silver Prepaid MasterCard advertises that it does not charge for overdrafts as many debit cards do, but it gives itself the option of charging a $25 shortage fee if customers exceed their balance.

 

House Committee To Review Interchange Bill

NACS urges retailers to contact Committee members and plead their case before the hearing.

The House Financial Services Committee has scheduled a hearing for Oct. 8 to receive testimony on the Credit Card Interchange Fees Act (H.R. 2382), NACS reported.

 This legislation, introduced by Reps. Peter Welch (D-VT) and Bill Shuster (R-PA), would begin to change many of rules imposed on merchants by the credit card companies.

In preparation for the hearing, NACS is stressing that it is important for members of the Committee to understand the effect credit card company policies and rates have on your business and is urging retailers with operations in districts represented by House members serving on this Committee to contact these legislators and ensure they understand the importance of this legislation to your business.

 Visit the Financial Services Committee’s Web site to see which representatives serve on this Committee. You can contact these members by calling the Capitol Switchboard at (202) 224-3121.

H.R. 2382 aims to prohibit anti-competitive practices, which are banned through contracts merchants sign with Visa and MasterCard. 

“NACS believes that these are fundamental rights that ensure an open, competitive market and should not be able to be limited by the credit card companies. These include, but are not limited to, additional charges for premium cards or access devices, pricing display restrictions, ‘honor all cards’ rule, and reason code 96 chargebacks,” the association noted.

In addition the legislation aims to disclose rules that provide the FTC authority to eliminate anti-competitive rules, requiring the credit card companies to disclose all terms, rates and conditions to the FTC and allows the FTC review and determine if practices are anti-competitive; requires full disclosure of interchange and other fees collected from merchants to the fed and the public; and requires the full disclosure of interchange or other merchant-paid fees to customers. 

[Source Convenience Store Decisions]

Dodd Will Push To Control Bank Fees For Merchants

From The Hartford Courant (8/24). Click here to read more.

Excerpt:

U.S. Sen. Christopher Dodd is coming out swinging again at banking fees, saying he will push for more changes in credit card fees — this time those paid by merchants — even as he seeks to limit bank income from overdraft charges.

Dodd said Wednesday that he will propose legislation to “substantially modify” the fees that merchants pay so they can accept major credit cards and have those transactions processed through banks. Dodd, architect of credit card reform signed into law in May, previously indicated that he next intended to take aim at “interchange” or “swipe” fees.

“Every state you go to, you hear it from retailers,” Dodd said. “The fees are excessive.”

What Is “Interchange” [video: Electronic Payments Coalition]

You just have to watch this how-to video. The key facts about illegal antitrust price-fixing are omitted, as are the reasons why merchant interchange fees in the U.S. are upwards of six-times what other industrialized nations pay. Remember, this video and the organization promoting it is funded by the banks and Visa and MasterCard. 

The problem is that few understand what these fees are; it is a hidden tax on consumers – amounting to upwards of $48 billion in anticompetitive charges each year. As proof, since this video was posted, only about 450 people viewed it, which my guess was largely from those who produced it.

Consumers Petition for Lower Credit Card Swipe

Video: Credit Card Bill of Rights WUPW

More Scheming by Visa and MasterCard

About three months ago, I bought new tires and was pleased to learn that it included a $50 rebate. But, the hoops to redeem that incentive were challenging.

Here is what happened:

Rather than receive a $50 check (which would have no interchange fee), a Visa-branded credit card was mailed and JUST received.  The credit card issuers have created a giant windfall scheme for themselves at the expense of consumers.

The rules for redeeming the card is extensive and means that if there is a micro-balance, they keep it. I did a previous posting on this situation.

Premier Shopping Mall Agrees with WayTooHigh.com

All About the Visa and MasterCard Promotional Gift Card Scheme

 

To access the funds on the electronic payment card you MUST present the card to the service station attendant inside when you fill up. Don’t try to insert it into the gas station pumps’ electronic card reader. It won’t work.  Another rule is: “Please note. Ask the attendant to swipe the card after you have filled up to assure the success of your transaction.” Yeah, right!  Try doing that, as clerks must swipe the card to reserve payment up front.

For regular checkouts, “you must always select ‘Credit’ when making purchases. You are authorized to make purchases that do not exceed your available balance.” This is a pure SCAM. Who makes an exact $50 purchase?  Try using the “gift” card at a restaurant. Imagine being on a date, presenting the card and having the server explain that you can’t! Either way, the merchant is charged the much higher credit card interchange fee, rather than the debit card flat rate.  If it was a check that we deposited into our bank account, there would be no fees and we easily would have the entire gift valued, rather than these games which reduces the value.

My guess is many consumers get frustrated and use part of the balance and dispose or file away the card and thus the issuer gets to keep the balance.  What happens to the company that tendered the rebate “gift card?  Did they pay full price to the card issuer, or a discount?  I can only imagine the amount never redeemed.

Another scheme and pure profit center for the credit card issuers.

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.

Merchants take a swipe at card fees (via American Public Media)

Listen to this radio segment on Marketplace Morning Report.  Every time you charge your Big Gulp at 7-Eleven, a credit card company swallows part of the profit. But Slurpee slingers have had enough of the merchant fees. Stacey Vanek-Smith reports.

New York Times Submitted “Letter to the Editor”

In response to Andrew Martin’s July 16th “Card Fees Pit Retailers Against Banks” New York Times article, I submitted this response:

Dear Editor,

I appreciated your thorough article, ‘Card Fees Pit Retailers Against Banks,’ New York Times, July 16, 2009, describing the serious problem of exorbitant and ever-increasing interchange fees incurred by merchants in the United States. 

It is ironic that in a day and age when many businesses face possible extinction due to rapid advancement in technology that card payment systems like Visa and MasterCard continue to thrive and grow using magnetic strips embedded in plastic cards, which is a device closer to the bygone era of carbon copies than to advance technology. 

All merchants should applaud the populist pressure and Congressional efforts to confront this hidden tax on the economy represented by interchange fees.  It is important to note, however, that the problem is even greater for Internet-based merchants who have no choice but to accept payment cards and are captives to this system developed by the banks. 

Perhaps this is the reason that banks impose even higher interchange fees on internet merchants, who also often receive no payment guarantee.  That is why we, along with many other traditional merchants, both large and small, are leading efforts in the In re Payment Card Interchange Fee antitrust lawsuit in the Eastern District of New York to eliminate interchange fees and other abusive rules imposed on merchants. 

Hopefully, through our efforts, combined with those of other merchants, their customers and Congress, we can succeed in eliminating this abuse of market position by the banks and their card companies.

Sincerely,

Mitch Goldstone
President/CEO ScanMyPhotos.com

 Mr. Goldstone edits WayTooHigh.com, The Credit Card Interchange Report covering news and commentary on his battle against Visa and MasterCard

 Additional comments are posted on the NYT’s community forum website.

Recent Tweets

Collection of recent Tweets from @WayTooHigh. Follow us on Twitter

 

WayTooHigh: J.P. Morgan Chase reports 36% profit rise in second quarter

1 minute ago from HootSuite · Reply · View Tweet

 

WayTooHigh: RT @SandraHop: Retailers Prepare to Fight Credit Card Fees http://bit.ly/DL75z (expand)

about 9 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: Visa: You Owe $23 Quadrillion (via NPR) http://ow.ly/horj

about 10 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: RT @Fcheese3: Retailers Prepare to Fight Credit Card Fees.. http://digg.com/d1wwhb

about 10 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: credit card issuers ADVERTISE to FORCE consumers to use plastic vs cash, then disassociate for taking responsibly for the surged in charges

about 10 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: Andrew Martin’s NY Times interchange article DOESN’T mention ZERO interchange fees in some nations, 4 writing checks, PINbased ATM in Canada

about 10 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: NYT article suggests MasterCard, Visa and CC issuers are fronting the rewards, MERCHANTs are paying extra for this perk http://ow.ly/hopH

about 10 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: NYTimes article doesn’t explain why intl interchange fees are a 1/3rd and less than in U.S. http://ow.ly/hopn

about 10 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: Andrew Martin at the New York Times has an article [“Retailers Prepare to Fight Credit Card Fees”] on interchange fees – http://ow.ly/hooY

about 10 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: Treasury Department officials believe they will lose their entire $2.3 billion investment in CIT. (WSJ) #18000

about 12 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: Sam Stein at the Huffington Post contributed reporting to this article on credit card interchange “swipe” fees – http://ow.ly/gVx4

about 12 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: Noticing term “credit card interchange fee,” being described as “swipe fee.” Smart double meaning: swipe card and $ from consumers

about 12 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: Not good news for small business financing and the economy: CIT says discussions with government have ceased, with no likelihood of support

about 13 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: In ’08, U.S. paid over $48 billion in interchange fees, more than 2X what was paid in credit card late fees and 3x ATM fees

about 15 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: The credit card interchange fee is the biggest credit card fee you’ve NEVER heard of, avg U.S. household paid $427 in SWIPE fees last yr

about 18 hours ago from HootSuite · Reply · View Tweet

WayTooHigh: Re merchant lawsuit, Visa has about $10bln in trust from banks to cover litigation costs http://ow.ly/gi2y (via Fortune) #18000

about 19 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: Bank of America accused of anti-consumer practices (via Jonathan Stempel – Reuters) http://ow.ly/gbUY #18000

about 19 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: scathing report about the state of credit card fees on businesses delivered http://ow.ly/gs64 #18000

about 21 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: Way to go MasterCard! Charge customers up to ~30% merchants up to ~5%, yet you get 16% discount on legal settlement http://ow.ly/gs5k #18000

about 21 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: @BankTechNews – Maria Aspan at Bank Technology News has profile on credit card interchange battle: http://ow.ly/gXHU

about 23 hours ago from HootSuite · Reply · View Tweet

 

WayTooHigh: I was asked by someone today to sum up the credit card interchange antitrust litigation. Very simple, it’s about illegal price fixing

1 day ago from HootSuite · Reply · View Tweet

 

WayTooHigh: United Airlines (UAL) passing credit card fees to some travel agents, http://ow.ly/hi9c

1 day ago from HootSuite · Reply · View Tweet

  

WayTooHigh: It takes unbridled greed by Visa, MasterCard and the credit card issuers cartel to continue raising “SWIPE” interchange fees in a recession

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WayTooHigh: Michael Moore’s new film about global corporate economic meltdown (“biggest robbery in the history of this country”) http://ow.ly/fR8n

1 day ago from HootSuite · Reply · View Tweet

WayTooHigh: Mitch Goldstone reboardcast, KFI-AM interview re MasterCard, Visa credit card fees, gas prices (7/03/08, starts 4-min in) http://ow.ly/dyRR

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WayTooHigh: MASTERCARD says credit card interchange fees not, now, hidden, Can you figure out what each cost was? (115 pages) http://ow.ly/d6xa #18000

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WayTooHigh: RT @consumerist: 7-Eleven Asks Consumers To Help Fight Credit Card Companies [Interchange Fees] http://tinyurl.com/mhup5e (expand)

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WayTooHigh: scathing report about the state of credit card fees on businesses delivered http://ow.ly/d6nO #18000

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WayTooHigh: Did MasterCard, Visa credit card interchange fees put Starbucks on brink? Pushing people to use credit cards, pay micro-fees on sm chgs.

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WayTooHigh: Credit Score Shell Game: As High Scores Vanish, Borrowers’ Luck Runs Out (via Nancy Trejos Washington Post) http://ow.ly/ftsd #18000

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WayTooHigh: Case why credit card interchange fees should be FREE, follow our 1200+ prior postings since 2005 at http://www.WayTooHigh.com

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WayTooHigh: consumer anger about bank fees is adding momentum to the long-running merchant campaign against interchange http://ow.ly/gXGb

1 day ago from HootSuite · Reply · View Tweet

 

WayTooHigh: ScanMyPhotos.com FORCED to accept Visa and MasterCard for our ecommerce business, as are most online companies, they wield 80% market power

2 days ago from HootSuite · Reply · View Tweet

 

WayTooHigh: Later this month stay tuned for more profiles on ScanMyPhotos.com & we’ll be sure to mention our battle against Visa, MasterCard fees #18000

2 days ago from HootSuite · Reply · View Tweet

 

WayTooHigh: technology has brought our cost to scan a photo from $5 to 5-cents, yet MasterCard and Visa keep raising their unjustfied interchange rates

2 days ago from HootSuite · Reply · View Tweet

 

WayTooHigh: TARP Recipients Fighting To Keep Charging Exorbitant Credit Card Fees (via Huffington Post) http://ow.ly/gVvw

2 days ago from HootSuite · Reply · View Tweet

WayTooHigh: million-signature petition campaign calling on Congress to reform unfair and excessive credit card transaction fees. http://ow.ly/gZRv

2 days ago from HootSuite · Reply · View Tweet

 

WayTooHigh: Happy to see 7-Eleven® convenience store chain petition campaign against MasterCard and Visa credit card charges http://ow.ly/gZNi

 

WayTooHigh: Credit card rewards to become less rewarding (via Juan Lagorio, Reuters) http://ow.ly/gidv #18000

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WayTooHigh: Do something good today: Make someone laugh

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WayTooHigh: Sam Stein at the Huffington Post contributed reporting to this article on credit card interchange “swipe” fees – http://ow.ly/gVx2

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WayTooHigh: Controversies over credit card interchange fees (via Kimberly Schiller) http://ow.ly/h55u

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WayTooHigh: banks, credit card co’s protect key source of profits: credit card swipe fees (HuffPost) http://ow.ly/gVwc

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WayTooHigh: Disappinted. My local U.S. Congressman wrote op-ed in OC Register against health care (we cover 100%), yet Congress gets full coverage!

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WayTooHigh: RT @consumerist: 7-Eleven Asks Consumers To Help Fight Credit Card Companies [Interchange Fees] http://tinyurl.com/mhup5e (expand)

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WayTooHigh: When I sued Visa, MasterCard + its member backs for illegal price-fixing of credit card fees back in ’05, never imaginged power of Twitter

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WayTooHigh: RT @moneymender: 984 million bank-issued Visa & MasterCard credit & debit card accounts in the U.S in 2006. (Sources: Visa MC)

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7-Eleven®Launches Unprecedented Million-Signature Petition Campaign to Stop Unfair Credit Card Transaction Fees

6,300 Stores Participating across USA

Dallas (July 8, 2009) – In communities across America, 7-Eleven store owners and operators are undertaking an unprecedented, million-signature petition campaign calling on Congress to reform unfair and excessive credit card transaction fees.

Some 6,300 7-Eleven® franchisees, licensees and store operators in the U.S. are working to change the way credit card companies’ do business with retailers across the country and are taking their beef to the street – or in this case to their counters and customers.

Interchange fees are hidden fees to the consumer and are set privately by credit card companies and charged to store owners every time that a customer uses a credit card. Transaction fees squeezed American businesses and their customers to the tune of $48 billion in 2008 alone. On average, an American store owner will actually pay nearly twice as much in transaction fees as they earn in profits, according to the National Association of Convenience Stores 2007 State of the Industry data.

“7-Eleven stores are operated by franchisees who represent more than 6,000 small businesses on Main Streets and in neighborhoods across America,” said Darren Rebelez, 7-Eleven, Inc. executive vice president and chief operating officer. “This petition drive is a grassroots effort to get a fair deal, spearheaded by small business owners in the communities where they live and with the customers they serve every day.

“Interchange fees are hurting individual small business operators, which represent more than 75 percent of 7-Eleven stores in the U.S.,” Rebelez said. “Because more and more customers are using credit cards for small purchases, there are small transactions where the operator actually loses money. The fundamental challenge is that in most business relationships, both parties have the ability to negotiate, and in this case we do not. ”

The petition drive takes place at all of 7-Eleven’s U.S. stores, and a copy of the petition will be prominently offered for signatures at every check-out counter. At the end of the petition drive, 7-Eleven expects to deliver one million signatures to Congress, calling on them to stop credit companies from charging unfair, hidden transaction fees and to pass legislation empowering retailers to negotiate with credit card companies.

“We’re not asking for a bailout, we simply want to negotiate in good faith with credit card companies in the same manner we negotiate with thousands of our other business partners,” Rebelez said.

American consumers pay among the highest transaction fees in the industrialized world. An average of $2 out of every $100 Americans spend goes to transaction fees, and for many businesses, transaction fees are now their highest non-labor cost, growing even faster than health care costs. As other countries have reined in excessive transaction fees in recent years, and the actual cost of processing credit card transactions has gone down, Americans are now paying triple the amount in transaction fees they paid in 2001, reaching $48 billion last year alone.

Rebelez added, “In the convenience industry, credit card companies come out the winner making more than twice the profits of the industry in total. To date, we have been unable to convince these companies to come to the table to negotiate fair fees. In order to survive and stay in business, our franchisees and licensees plan to make a significant, collective statement with this petition drive. With this unprecedented effort, Congress will hear the message of 7-Eleven’s small business owners and our customers across the country loud and clear,” he said.

The 7-Eleven petition drive will continue through Aug. 10. At the conclusion of the campaign, the top signature-gatherers from each of 7-Eleven’s seven U.S. geographical divisions will be flown to Washington to personally deliver the signatures to Congress.

About 7 Eleven, Inc.
7 Eleven, Inc. is the premier name and largest chain in the convenience retailing industry. Based in Dallas, Texas, 7-Eleven operates, franchises or licenses approximately 7,800 7-Eleven® stores in North sales of more than $53.7 billion. For 15 consecutive years 7-Eleven has been listed among Hispanic Magazine’s Hispanic Corporate Top 100 Companies that provide the most opportunities to Hispanics. 7-Eleven is franchising its stores in the U.S., and is expanding through organic growth, acquisitions, and its Business Conversion Program. Find out more online at www.7-Eleven.com.

[source: 7-Eleven press release]

Electronic Payments Coalition Opposes Chairman Conyers Interchange Legislation

[source: Electronic Payments Coalition, press release, June 4.  Note: EPC is the advocacy component, controlled by credit unions, banks and payment card networks (MasterCard and Visa)].

Merchants Want Consumers to Foot the Bill for Their Costs of Accepting Credit and Debit

WASHINGTON, June 4 /PRNewswire/ — The Electronic Payments Coalition issued the following statement in response to the interchange legislation introduced today by Congressman John Conyers (D-MI):

“The Electronic Payments Coalition strongly opposes interchange legislation introduced today in the U.S. House of Representatives by Rep. John Conyers (D-MI) – a bill nearly identical to one that received broad bipartisan opposition last year.

This legislation is an attempt by giant retailers to make consumers pay for one of their business expenses – the cost of accepting credit and debit. It’s simple: merchants do not want to pay their fair share to accept debit and credit cards, and they want consumers to foot the bill.

If this legislation passes, American families will end up footing retailers’ bills when it comes to accepting debit and credit cards.

 Merchants that accept credit and debit cards benefit from more sales, lower costs and greater profits. It is only fair that they pay a fee for this service.

At a time when American families everywhere are struggling to make ends meet, they shouldn’t be forced to pay more so giant retailers can profit at their expense. We understand that every business wants to find ways to cut overhead costs for valued services, but forcing consumers to pick up the bill for giant retailers just isn’t fair.

Consumers pay their bills. Giant retailers should pay theirs, too. On behalf of every American consumer who pays his or her own bills, the Electronic Payments Coalition urges Congress to oppose this harmful legislation.”

MasterCard: Legislation Would Let Merchants Keep the Benefits of Card Acceptance But Make Consumers Pay the Price

[source: MasterCard Worldwide press release, June 4]

Purchase, NY, June 04, 2009 – MasterCard said today that legislation introduced today by U.S. Rep. John Conyers (D-MI), by exempting merchants from antitrust laws, would take away the fundamental protections that these laws provide consumers. This would result in less credit availability, along with higher prices and reduced benefits when Americans choose to use their credit or debit cards. Antitrust laws are designed to protect competition and consumers, but this bill would have the opposite effect.

Conyers’ legislation, H.R. 2695, would give merchants a special exemption from antitrust laws enabling them to engage in anticompetitive and collusive behavior when establishing the fees and terms applicable to accepting payment cards. The bill is part of an organized merchant campaign to shift their card acceptance costs to consumers, and does not require merchants to pass on any savings to consumers if they succeed in lowering these fees.

When similar legislation was considered last Congress, it stirred considerable controversy and was only narrowly approved by a deeply divided Judiciary Committee. In addition, a wide array of organizations from non-profits to community banks and credit unions to minority small businesses voiced their opposition. The Department of Justice also expressed concern about the bill indicating that its antitrust exemptions “would appear to be the type of naked collusion that the antitrust laws condemn as per se unlawful because such conduct lacks plausible benefits to competition.”

Experience demonstrates that consumers lose when merchants no longer pay their fair share for the valuable benefits they receive from accepting payment cards. This is precisely what happened in Australia when the government reduced interchange fees. Although it cut costs for merchants, many Australian consumers now pay more for their payment cards and receive less in return as a result of the government’s intervention. Furthermore, there is no evidence that merchants reduced prices for consumers as a result of the government’s intervention.

Both merchants and consumers benefit from the ability to use and accept electronic payments, and in today’s free market system, each pays a share of the cost of the service. The benefits and the cost of card payment services are now shared between merchants and consumers but the merchants behind the Conyers bill seek to retain the benefits while shifting the costs to consumers.

Finally, MasterCard noted that any serious discussion of these issues should wait for the results of the Government Accountability Office (GAO) study ordered by Congress as part of the Credit CARD Act. Consumers stand to be severely damaged by government intervention and the findings of the GAO study may help avoid consumer harm that inevitably flows when merchants no longer pay their fair share for the benefits they receive.

MasterCard Merchant Interchange Fee Comments

On the MasterCard Worldwide website, the credit card giant has a posting and disclaimer about merchant interchange fees that is very interesting.

Interchange rates and fees are established by MasterCard and are generally paid by financial institutions called “acquirers” that provide card acceptance services to merchants. Acquirers pay these fees to card issuers. Interchange rates/fees are only one of the many cost components of the Merchant Discount Rate (MDR) that is established by acquirers and paid by merchants in exchange for card acceptance services.

Please note that MasterCard is not an issuer and has no involvement in acquirer/merchant pricing policies.

While MasterCard is not a card “issuer,” the giant credit card company is attempting to distance itself from the merchant interchange antitrust litigation by suggesting they are not involved in pricing policies. That is what this antitrust litigation is about –  price-fixing. At the time the lawsuit was filed, which I am a lead plaintiff in, MasterCard was entirely owned by its member banks.  While MasterCard may claim it is not involved with “pricing policies,” it was its board members (the banks) that collectively set the fees; many of those board members were also controlling Visa as well.

NACS Applauds Re-Introduction of Credit Card Fair Fee Act

WASHINGTON — NACS applauded the reintroduction of the “Credit Card Fair Fee Act,” bipartisan legislation introduced today by House Judiciary Chairman John Conyers (D-MI) and Representative Bill Shuster (R-PA) that seeks to address the more than $48 billion that Americans annually pay in credit card swipe fees.

Similar to legislation introduced last Congress by Chairman Conyers and supported by NACS, the bill, H.R. 2695, seeks to help level the playing field for retailers by giving them a seat at the negotiating table with banks to determine the fees assessed for every sale made by credit card, and ultimately reduce the costs of everyday goods for consumers.

Credit card swipe fees — called “interchange fees” by the big banks that set these rates — are a percentage of each transaction that Visa and MasterCard and their member banks collect from retailers every time a credit or debit card is used. These fees average about 2 percent in the United States, the highest rate in the industrialized world.

In 2008, credit card fees cost U.S. convenience stores $8.4 billion — compared to only $5.2 billion in store profits, according to NACS data. Almost all of these credit card fees are attributable to credit card swipe fees.

Currently, credit card swipe fees are set in secret by the banks and hidden from view. Raising these fees is how Visa and MasterCard — which together control more than 80 percent of the U.S. credit card market — encourage banks to issue more credit and debit cards.

“We are delighted that Congress is taking a closer look at these outrageous fees on the heels of its reform of the credit card industry’s abusive lending practices,” said NACS Chairman Sonja Hubbard, CEO of Texarkana, Texas-based E-Z Mart Stores. “Now it’s time to address the rest of the credit card industry’s abusive practices.”

“Right now swipe fees are fixed by the banks, hidden from the public and forced on retailers in a take-it-or-leave-it offer,” said Hubbard. “The Credit Card Fair Fee Act would allow retailers and the card associations to negotiate on equal footing, and we applaud this bipartisan effort to make it happen,” she said.

Over the last several years, the public, consumer groups, the Federal Reserve and Congress have scrutinized unfair credit card practices, policies and fees. Swipe fees have been the subject of multiple hearings in both the House and Senate under both the Republican and Democratic Congresses, and the banking industry has intensely lobbied against any reform — something it continues to do.

“It is simply outrageous that the banking industry — which received hundreds of billions of dollars in taxpayer-funded bailout money — continues to spread fear and misinformation in their lobbying efforts,” said Hubbard. “The bottom line is that unless Congress fully addresses how credit card swipe fees are determined, and why they are set in secret and hidden from consumers, the banking industry will have free reign to establish higher rates and create new hidden fees that continue to punish Americans,” she said.

[source: NACS]

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

NRF Urges Senate to Pass Amendment to Credit Card Reform Bill Making Cash Discounts Easier WASHINGTON, May 12, 2009 – The National Retail Federation today urged the Senate to approve an amendment that would make it easier for retailers to offer discounts to customers who use cash or other low-cost forms of payment rather than credit cards that carry increasingly high processing fees. “Retailers should be able to offer discounts to their customers in any legal way they choose without interference from the credit card companies,” NRF Senior Vice President for Government Relations Steve Pfister said. “By reinforcing retailers’ ability to offer discounts, the Durbin-Bond amendment will directly help reduce the prices that consumers pay for goods and services.” Pfister’s comments came in a letter to members of the Senate, which is expected to vote this week on legislation that would block a number of abusive credit card industry practices such as applying interest rate increases retroactively to existing balances or “double cycle” billing, where interest charges are computed on outstanding balances from more than one billing cycle. Senate Majority Whip Richard Durbin, D-Ill., and Senator Christopher “Kit” Bond, R-Mo., plan to offer an amendment to the legislation that would make it easier for merchants to offer a discount to customers who use low-cost forms of payment. Current federal law allows merchants to offer a discount in such cases, but complicated credit card company rules make it extremely difficult to do so in practice. The Durbin-Bond amendment would add debit cards to cash and checks on the list of payments for which a discount can be offered, and would prohibit credit card companies from penalizing merchants for offering a discount, for the way in which they display discounts or for directing customers toward a discount payment option. The legislation would also direct the Federal Reserve to gather and publish information on credit card interchange fees, other credit card fees and rules governing them. “These rules are essentially hidden today,” Pfister said. “Both retailers and the public have a right to more complete information given the billions of dollars involved and the impact these fees have on the cost of everyday goods.” The amendment is aimed at credit card interchange, a fee averaging close to 2 percent that Visa and MasterCard banks charge merchants to process the transaction each time a credit card is used to pay for a purchase. Visa and MasterCard rules effectively require the fees to be built into the price of merchandise, driving up costs for all consumers regardless of whether they pay by cash, check or plastic. The fees totaled $48 billion in 2008 and cost the average household $427, according to NRF estimates. Both numbers are three times the levels seen when NRF began tracking interchange in 2001. The interchange fee varies from as little as about 1.5 percent to as high as about 3 percent, with “premium” cards offering rewards programs to the users carrying the highest fees. In addition to adding debit cards to the list of payments for which discounts can be offered, the Durbin-Bond amendment would allow merchants to offer discounts to customers who use low-fee credit cards rather than high-fee cards. 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 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. www.nrf.com.  [source: NRF]

CREDIT CARD INTERCHANGE FEE, MERCHANT-DISCOUNT ANTITRUST LITIGATION CLASS ACTION COMPLAINT

Click here to view the consolidated complaint.

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Watch What Congress Needs to Know About Interchange Fees

From UnfairCreditCardFees.com

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

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

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

Click here to read more

How Visa and MasterCard Can Help Stimulate the Economy

A solution to immediately create bank-funded stimulus package that instantly gets capital into the hands of small businesses and consumers – end Visa and MasterCard’s and its member banks credit card interchange fees.

Now that we own the banks, end merchant credit card interchange fees

During this unprecedented global financial meltdown , the United States and its citizens now own a sizable  share of major financial institutions.  The question is, why aren’t we demanding that our ownership stake in the banks force them to eliminate those unfair and anticompetitive merchant interchange fees?

To help win over credibility among merchants and consumers, the banks, along with MasterCard and Visa should be forced to move forward and reevaluate their long standing unbridled market power – every time a consumer uses an electronic payment credit or debit card.  We own the banks and we should be running them too.   

The crippled banking institution has achieved what MasterCard and Visa warned (about themselves) in their SEC IPO filings – they are becoming insolvent. The nearly $60 billion in annual merchant interchange fees and Visa and MasterCard’s merchant discount money grab must end and now is the time.

Think of what these billions in erroneous fees could do if put back in the hands of retailers and consumers, rather than funneled to Visa, MasterCard and its mismanaged member banks? 

The banks are failing us.  The government bailout proceeds are being blanketed to many far reaching overflowing pockets, like the scores of law firms that are battling millions of retailers over the merchant interchange fee antitrust litigation. It has now been about four years since launching the class-action antitrust litigation; millions of dollars have been spent to defend this unfair fee on Americans, but now that we are paying the bank’s legal fees and effectively suing ourselves, it’s time to draw more attention to and ask more questions.

[The U.S. government injected 45 billion taxpayer dollars into Bank of America and Citigroup, two of the named defendants in the merchant interchange litigation.  And, more than $400 billion to cover the banks’ losses – $60 billion would go a long way to cover these fees].

Nationalized Banks Shouldn’t Be Taking Junkets to Vegas

Calling it like it is, the banks should be Twittering and emailing their employees, rather than treating them to junkets to Las Vegas.

Today’s Las Vegas Review-Journal has an article [Obama draws ire over Vegas junket criticism, Feb 11] by reporter Benjamin Spillman that quotes Phil Cooper, CEO of Encore Productions, Chuck Bowling, executive vice president at Mandalay Bay, Las Vegas Mayor Oscar Goodman, Andrew Pascal, president of Wynn Las Vegas and Mitch Goldstone, president and CEO of ScanMyPhotos.com.

Excerpt:

Mitch Goldstone of the firm ScanMyPhotos agrees.  Goldstone annually holds several business events in Las Vegas and says he gets great deals for his Irvine, Calif.-based company.  “It is a brilliant location,” Goldstone said.   But he added his remarks don’t apply to bailout-taking banks.  “The only ones who should not be in Las Vegas are those with taxpayer dollars” he said. “They should not be anywhere.”   The decision to move the Goldman Sachs event from Las Vegas to San Francisco is even more laughable than just holding it at the original destination.  “They should be Twittering and e-mailing and using the Internet and not going to San Francisco,” Goldstone said.

25 Issues Affecting Credit Card Interchange Fees

1) Merchants’ interchange fees have risen even though network fees are decreasing.

2) The credit card companies have an unbridled ability to raise fees at will. Member banks of the credit card associations are in our opinion, co-conspirators.

3) From 1999 – 2005, the PIN debit fees rose 267 percent.

4) In the early 1990s there were about a dozen separate interchange fees, today there are nearly one hundred. These interchange fees seemingly always increase and have not decreased.

5) Visa and MasterCard fix uniform credit card interchange fees, which are agreed to and used by all Visa and MasterCard banks.

6) This collective horizontal price fixing violates Section 1 of the Sherman Act.

7) Even the cost for paying out reward benefits to affinity card holders has declined and is getting more stingy. Ex: American Airlines now charges a fee of $250 each- way to cash in frequent flier mileage to upgrade from coach to business-class on international flights. This is an audacious game few understand.

8) The credit card associations are extending loyalty and kick-back programs to consumers which few can actually figure out the value of. If merchants could even figure their actual cost – from nearly one-hundred separate rates – and listed the actual Interchange fee as a separate item on the customers’ receipt, people would be less likely to want frequent flier mileage rewards once they understood how much more they are actually paying for those perks.

9) This is a hidden tax on consumers and merchants.

10) With today’s technologies, the interchange structure is now inefficient. In our opinion, consumers don’t benefit and merchants don’t benefit.

11) Part of this inefficiency relates to credit card companies where only 1 in 2000 of their mail solicitations lead to signing up just one new cardholder. Credit card companies mailed out about 5.24 billion mail solicitations in 2005 yet only 4-10ths of 1% reply. This means 5 billion pieces of mail are garbage. What other industry has such huge profits that they can afford to throw away 5 billion pieces of junk mail every year?

12) Why does it cost so much to use a credit and debit card, rather than with writing a check? There is a zero interchange fee for checks, the money goes directly from the consumer to the retailer. Example: The checking system works without any of these fees. The difference between credit card and check fees are also a study in competition; banks impose various fees on account holders and on merchants for writing and processing checks, from zero to a variety of rates in order to stay competitive.

13) Today, the card associations have lower costs and even no float expense when debit cards are used. With technology, there is less fraud and no need for paper receipts. Processing and telecommunication fees are lower and now automated. With interest rates so low for so long, even the cost of the the regular float has declined.

14) Merchants shouldn’t have to cover the cost for card holder credit risks. Defaults by card holders should not be paid by merchants, but rather, issuers should be more careful who they extend credit to.

15) There is no ability to bypass the credit card network. For instance, ScanMyPhotos.com(a lead defendant in the merchant interchange litigation) operates an international online photo scanning and digital imaging service where all online orders require transactions to be completed with credit cards, this parallels the entire online retail segment.

16) Part of the proof that the card association and their interchange fees are a monopoly is that even though rates continue to rise, merchants are forced to use their products.

17) Trickery and confusion. Even though there are lower interchange rates for debit cards, it is increasingly more difficult to distinguish debit cards. It’s difficult to see the “debit” or “check card” reference and retail clerks can easily ring up the sale as a charge card, thus paying higher rates.

18) When consumers present merchants with faulty magnetic strips on their cards it cannot be swiped by the card reader. This causes merchants to then manually enter the number, which costs more even though there is an identical risk to the card association. But, the charge for manually entering a card is excessively higher, and even higher if the address and zip code are not entered.

19) In 1994, the Visa and MasterCard interchange fees on a $100 transaction for the largest non-supermarkets was about 1% and 1.33%, today it is about 1.70% and higher. For the smallest non-supermarket merchants, the charge was about 1% and 1.31% in 1994; today it is higher too.

20) There is no added direct value or benefit to the merchant by accepting an affinity card or any other card, such as the Visa Signature card.

21) Australia, the European Union and the United Kingdom are samples where interchange regulations work. The U.S. is the only market where interchange fees are increasing. Canada, for example, has a zero interchange fee for debit cards and their PIN Network is the most popular way to transaction business. U.S. Interchange fees are 3-times higher than in Australia and two-times higher than in the UK. Australia is a great example – since the nation regulated these rates, merchants paid $500 million less. This translates into lower costs to consumers. The Australian CPI actually declined and there was an increase in card usage.

22) The only leverage merchants have is in choosing their payment processor. Those fees are highly competitive, yet the Interchange fees cannot be negotiated.

23) Because banks are now permitted to issue Amex and Discover cards, MBNA and Citibank plan to issue Amex cards, which means, merchants will be flooded with the higher costing premium cards (this translates into a 50% increase in costs from about 140 bp [basis points] to 210 bp. I anticipate they will then convert their classic cards to higher priced “signature” “affinity” and “business” cards.

24) The argument by Amex was that their card holders spend more money. Perhaps this is based on buying diamonds and luxury items, but when you are at a convenience store, the amount charged from a Visa card is typically the same as for Amex. As MBNA and Citibank switch from Visa to Amex, they are appealing to the same group of cardholders with the same spending patterns.

25) How can groups like “Americans for Consumer Education and Competition” be expected to be objective? [(ACEC was financially supported by VISA USA]. They suggest merchants want to pass along the interchange fees to consumers. The fact is that this litigation has nothing to do with “shifting’ costs from merchants to consumers, but rather it is about reforming the system so that competition works and will drive total costs down so that both merchants and cardholders have lower costs.

[source: WayTooHigh.com, originally posted Nov, 2005]

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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.

“MasterCard Paper Dispels Myths and Highlights Benefits of Electronic Payment Networks” (via MasterCard Press Release)

I couldn’t even invent this journey through a mythological  abstraction from reality, so here it is in MasterCard’s® own words.  To counter these assertions, see the below more than 1,200 unique WayTooHigh.com postings over the past nearly four years.

MasterCard Worldwide Press Release

MasterCard’s Fictional Journey Around Intrechange fees

Benefits of Open Payment Systems and the Role of Interchange

Tell Us It Ain’t So?

With all the unprecedented mismanagement by the nation’s banks, including thousands of Visa and MasterCard member banks which collectively owned both giant credit card associations, are TARP government funds being used to bailout Visa Inc?  From today’s press release, we learn that Visa Inc. “has deposited $1.1 billion into the litigation escrow account…”   Where did this enormous capitalization come from?  With little oversight, is it possible that the government’s TARP bailout funds helped pad Visa’s litigation account?

Visa Inc. Funds Escrow Account (via corporate press release)

Transaction has the effect of a $1.1 billion Class B share repurchase

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

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

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

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

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

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

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

 

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

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

[source, Visa Inc. press release]

If You Thought Visa and MasterCard’s Fees Were Unfair…

Visa and MasterCard’s member banks have unfairly forced millions of merchants and America consumers to spend nearly $60 billion during the past year in unjustified and unfair credit card merchant fees.   In today’s highly advanced technological society, the interchange fees are as antiquated as were those manual credit card receipt imprinters.  

But, this is only the beginning.  Take a look at how easy the banks (which owned Visa and MasterCard – the two giant credit card associations with 80% market power) have it when securing billions more from us, the citizens who authorized the TARP $750 billion bailout. 

Click here to see if you too can get in on this extraordinary boondoggle.  Just rename your business as a bank holding company, or, add the name “Wall Street” as we did in parody.

The following is the actual application.   If you thought it was easy for Visa and MasterCard’s member banks to wield their monopolistic power and force retailers and consumers to pay about 1.7% for most electronic payment transactions, look at this.  It seems that applying for a charge card with your local retailer demands more questions and due diligence than this.   It will take you longer to fill out this standard auto lease areement, than the below application, unless you have an “authorized designee” who can do it as your proxy.

Application for TARP Capital Purchase Program (CPP)

Please complete the following information and follow the submission instructions as described

on your Federal banking agency’s website. In addition to completing the information on this

form, please provide a description of any mergers, acquisitions, or other capital raisings that are

currently pending or are under negotiation and the expected consummation date (no longer than

1 page).

In the event the applicant files an application with the appropriate Federal banking agency

prior to the availability of the investment agreement, the applicant must file an amended

application which includes updated responses to any items in the application that required prior

review of the investment agreement.

Institution Name:

Address of Institution:

Primary Contact Name:

Primary Contact Phone Number:

Primary Contact Fax Number:

Primary Contact Email Address:

Secondary Contact Name:

Secondary Contact Phone Number:

Secondary Contact Fax Number:

Secondary Contact Email Address:

RSSD, Holding Company Docket

Number and / or FDIC Certificate

Number, As Relevant:

Amount of Preferred Shares

Requested:

Amount Of Institution’s Authorized

But Unissued Preferred Stock

Available For Purchase:

Amount Of Institution’s Authorized

But Unissued Common Stock:

Amount Of Total Risk-Weighted

Assets As Reported On The

Holding Company’s Or Applicable

Institution’s Most Recent FR-Y9,

Call Report, Or TFR, As Relevant:

Institution Has Reviewed The

Investment Agreements And

Related Documentation On

Treasury’s Website (Yes/No):

Describe Any Condition, Including

A Representation Or Warranty,

Contained In The Investment

Agreements And Related

Documentation, The Institution

Believes it Cannot ComplyWith By

November 14, 2008 And Provide A

Timeline For Reaching

Compliance

 

Type of Company:

 

Signature of Chief Executive

Officer (or Authorized Designee):

Date of Signature:

 

 

“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.

“Culture Shock for IPOs: Pay Disclosures ” (via WSJ)

From The Wall Street Journal on Dec 8th, by reporter Lynn Cowan  [see link], is an article about executive pay.  The executive excesses at MasterCard and Visa could be further signs that the two giant credit card cartels are generating massive revenues from its discount interchange fee and other monopoly-generated charges. 

Excerpt:

MasterCard’s final prospectus in May 2006 contained 15 pages describing how much and what types of  compensation executives were paid, but wasn’t very specific about how bonuses or incentives were determined, listing 18 possible goals, from stock price to revenue, that could be used.

Two years later, rival Visa’s March 2008 IPO documents contained an executive compensation section that totaled 28 pages, and included how its executives’ pay compared to peer companies; the names of those peers; and what measurements, such as net income, that are used to determine executives’ bonuses.

MasterCard wasn’t spared forever. After the rule took effect, its next proxy statement’s executive-pay section had doubled in size to 30 pages, and contained much of the same level of detail that Visa provided.

For example, instead of listing 18 possible goals, it specified that net income and return on equity targets would be the basis of cash bonuses.

Visa declined to comment.

MasterCard spokesman Chris Monteiro said the disclosure process “certainly took time and effort” but resulted in a “transparent and detailed view” of the company’s compensation structure.

“Rein in the credit card games” (via editorial Detroit Free Press)

repost.

 

BY ADAM J. LEVITIN • November 28, 2008, Detriot Free Press

As every sector of the American economy lines up to sit on Congress’ lap and ask for an early Christmas present, things aren’t looking so good for American consumers. The visions dancing in their heads are not of sugar plums, but of unemployment, debt, and foreclosures. They’re wondering how they are going to pay for Christmas presents.

Now we learn that Treasury Secretary Henry Paulson wants 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 ignore delinquencies. Card issuers make money on every credit card transaction, regardless of whether the consumer ultimately pays a finance charge. The issuer 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 fee is called the interchange fee. Card issuers 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. By creating a huge revenue stream unrelated to credit risk, interchange encourages card issuers to engage in reckless lending – and virtually every credit card loan is a “liar loan” with no income verification.

Banks have compounded this problem by shifting much of the loan risk to investors through securitization. When card issuers securitize credit card debt, they transform the credit card debt into a pool of assets used to pay off bonds. If the pool turns out not to be large enough, the bond investors take the loss. But if there’s a surplus, it goes to the card issuer.

While card issuers sell off most of the default risk, they keep any upside that comes from inflating their fees and rates. This is a heads I win, tails you lose situation and leads the banks to increase fees and interest rates on securitized debt. If the higher fees and rates cause more defaults, it is investors who bear the loss. If the higher fees result in more income, however, it is the card issuer, not the investors, who benefit.

In order to ensnare consumers in these fees, the card companies employ an ingenious system of billing tricks and traps. The hallmark of credit card pricing is obfuscation through disclosure. Card issuers have created enormously complex pricing structures, with multiple interest rates and fees. On top of this Byzantine structure, issuers then layer a filigree of abusive and deceptive billing practices, buried in reams of fine print.

Making the total cost of using a card utterly inscrutable allows issuers to play a game of three-card monte. Card issuers distract consumers from the total price of credit cards by emphasizing teaser interest rates and rewards programs. Meanwhile, issuers raise the back-end fees that consumers inevitably underestimate. Since the 1990s, overlimit fees have gone up over 115% and late fees over 160%. The rise of these fees has a 99% correlation with the growth of securitization. Because credit card pricing is opaque, the market cannot function efficiently, and consumers inevitably misuse credit cards to their detriment.

The tricks and traps in the fine print alone cost consumers over $12 billion last year, and this is only a fraction of the pain inflicted by the one-two punch of interchange fees and abusive interest rates

Most consumers spend responsibly and live within their means, but the banks have devised a system to encourage reckless overspending – and enrich themselves in the process. But it turns out the maze of tricks and traps even fooled the banks. As delinquencies rise, they are looking for a handout. Whether or not they get it, we need to learn something from this crisis and fix the credit card business model or we’ll all be in line for some special lumps of coal in a Christmas future.

ADAM J. LEVITIN teaches bankruptcy and commercial law at Georgetown Law

The Next Banking Crisis

Visa and MasterCard’s merchant interchange fees are more than a $60 billion annual hidden tax on Americans. Since early 2005, WayTooHigh.com has been chronicling the news and providing commentaries on this unfair fee.  The thousands of member banks used to own all of Visa and MasterCard – which are trade associations that operate the vast electronic paymentnetwork.  They still own about 50% after their IPOs.  Will they use these added billions to cash out and run from Visa and MasterCard?  Or, as the banks continue their downward spiral, watch as they use their cash cow interchange fee revenue stream as the next finger to stop the cascade of record losses.  Interchange fees will be the next tool to grab our attention.

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

UnfairCreditCardFees.com

Fight Unfair Credit Card Fees

The credit card interchange fee is the biggest credit card fee you’ve never heard of.  Nearly $2 of every $100 American consumers spend using credit cards go directly to the credit card industry through the interchange fee.

In 2007 alone, America consumers paid over $42 billion in credit card interchange fees.  Even consumers who don’t use plastic pay more through higher prices.

And the credit card interchange fee is set in secret – consumers don’t know they’re paying it through higher retail prices.  Interchange fees have risen a staggering 133% since 2001.

A rare bi-partisan consensus has emerged:  HR 5546/S 3086, The Credit Card Fair Fee Act which stops the price-fixing by the credit card industry and uses a transparent market-based process.

New On UnfairCreditCardFees.com

• Australian authorities find interchange fee reforms improve competition and benefit consumers
• Congressman Welch Supports Credit Card Reform; Encourages Congress to Act on Credit Card Interchange Fees that Hurt Both Merchants and Consumers

• Merchants and Consumers Welcome Judiciary Committee Passage of Bipartisan Legislation to Crack Down on the Hidden and Excessive Credit Card Fees
  Credit Card Fair Fee Act Would Mean Free Market Transparency, End Card Price Fixing
• Three in Four Americans Support Credit Card Fair Fee Act
  National Poll Finds Voters Want To Rein In Hidden Credit Card Fees That Inflate Prices; Legislation Would End Credit Card Secret Price Fixing (Poll Results)
• Merchants Say that Visa Fee Cut is Less Than Meets the Eye
  Credit Card Fees on Gasoline Might Actually Be Higher, Not Lower, Under New Visa Program
• Credit Card Fair Fee Act Picks Up Bi-Partisan Support
  Legislation will address credit card industry practices that hurt small business and their customers
• Merchants Welcome Senate Legislation to Fix the Problem of Hidden Credit Card Interchange Fees
  Senator Richard Durbin (D-IL) introduced the “Credit Card Fair Fee Act of 2008,” legislation that addresses the biggest credit card fee of all – the interchange fee, which cost Americans $42 billion last year.

[source: UnfairCreditCardFees.com]

“Citigroup, U.S. in Talks to Create ‘Bad Bank'” (via WSJ)

“Citigroup Inc. is nearing agreement with U.S. government officials to create a structure that would house some of the financial giant’s risky assets, according to people familiar with the situation.” (source: WSJ)

Commentary: Wouldn’t it be nice if all businesses could restructure their bad assets to create a phony holding company to pretty up their books?  Will the government also be acquiring the bank’s legal liabilities, including the multi billion dollar merchant interchange antitrust class-action for which Citigroup is a named defendant?  As a part owner, will the U.S. demand that Citigroup’s ownership in Visa and MasterCard be used to leverage away the unfair credit card interchange fees?

Embattled Banks Still Planning Big Bonuses…

(CBS) It’s no secret that investment bankers are well-compensated, mostly through year-end bonuses, especially during bull markets.

But can they still count on those big bonuses this year, in the midst of the financial crisis and market freefall?

Read more

View video

[source: CBS The Early Show]

What Aren’t Visa and MasterCard Merchant Interchange Fees Falling?

Seemingly, everything is tumbling due to the global economic gloom.

The average cost for a gallon of regular gasoline in southern California is about $2.35, more than a $2.00 decline in just five months when it peeked at $4.60.  What’s happening?  The trend is to lower prices, yet another cartel – the banks and Visa and MasterCard are hard pressed to send out a notice that they too are reducing their anti competitive fees.

“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]

$61,560,000,000 Annual Credit Card Fees

According to Jane Birnbaum’s The New York Times (Nov 6) “Small-Business Owners Lobby to Cut Credit Card Fees,” [i]n 2007, merchants paid $61.56 billion in electronic payment fees, up from $48.58 billion in 2005, according to the Nilson Report, a payment systems industry newsletter.”

This annual hidden tax on American consumers has skyrocketed from $25 billion to $50 billion and now is nearly $62 billion in only a few years. This at a time when General Motors’ sales plunged 45%, when families are cutting back on expenses, when the global economy is marred in a deep recession, where stock markets have lost nearly half its value and the market capitalization for many companies have been decimated.  Technological efficiencies should be bringing down the cost to transact electronic payments, yet the Visa and MasterCard payment networks are bringing in record fees for its member banks which own about a 50% interest in both companies.  Visa andMasterCard also profit from a portion of the fee that they get, which is comically called the “discount” fee.  I don’t see any discount here.

“Small-Business Owners Lobby to Cut Credit Card Fees” (via NY Times)

Click here for link to the November 6, 2008 “Small-Business Owners Lobby to Cut Credit Card Fees” New York Times article by JANE BIRNBAUM

Excerpt:

Small business owners are lobbying for new legislation in hopes to cut mandatory fees owed to banks each time a consumer uses a credit or debit card, reports The New York Times.

The legislation would urge banks to negotiate fees with merchants. Some business owners are seeking class-action status for litigation claiming antitrust violations by banks and the MasterCard and Visa card networks, says the article.

 

 

A merchant card payment has two parts: an interchange fee, which includes an average 1.7 percent of the sale price and a flat per-transaction fee, and a separate fee that goes to the merchant’s bank, explains the article. In 2007, merchants paid $61.56 billion in electronic payment fees, up from $48.58 billion in 2005, according to the Nilson Report, a payment systems industry newsletter. The report estimated that lenders took in 82.5 percent of those dollars.

Mitch Goldstone, owner ScanMyPhotos.com,Irvine, Calif., who blogs about interchange fees at www.WayTooHigh.com, decided to challenge the fees in 2005 after learning that fees on reward cards were going up, says the article. Those representing the credit card industry believe merchants ultimately benefit from the fees.

 

 

 

In July, the House Judiciary Committee, with bipartisan support, passed legislation that requires banks and merchants to negotiate interchange fees, says the article. Small banks and credit unions argued that fee reductions would take away needed income.

 

Ronald Mann, a law professor at Columbia University and a credit specialist, said he expected that there would be “a tremendous push in Congress in 2009 to adopt important credit card reforms” because of the increased sensitivity to banks’ lending practices.”

[source: NYTimes, Thursday, Nov 6]

StopStickingItToUs Coalition Backed by 120,000 Canadian Companies

StopStickingItToUs.Com

 Click here to listen to the StopStickingItToUs radio ad running this week in several cities across Canada.

The StopStickingItToUs Coalition is a group of Canadian associations, led by Retail Council of Canada and backed by over 120,000 businesses from coast-to-coast, that is standing up to the Big Credit Card Companies to put a stop to skyrocketing fees. Join the fight and take action by writing your MP and sounding the alarm about these fees.

The coalition will also be actively involved in the proposed re-structuring of Interac. Interac, Canada’s efficient and cost-effectve debit system has applied to the Competition Bureau to re-structure and join the Big Credit Card companies in charging higher fees. Coalition members intend to act as interveners in the process and fight to keep Interac from moving ahead with this change as it will be detrimental to merchants and all Canadians.

StopStickingItToUs Coalition Members
Retail Council of Canada, Alberta Liquor Store Association, Canadian Booksellers Association, Canadian Convenience Stores Association, Canadian Council of Grocery Distributors, Canadian Federation of Independent Grocers,

Canadian Jewellers Association, Canadian Restaurant and Foodservices Association, Hotel Association of Canada, Ontario Accommodation Association, Ontario Restaurant Hotel and Motel Association, Retail B.C, The Canadian Independent Petroleum Marketers Association, The British Columbia Restaurant and Food Services Association, The Retail Merchant’s Association of Canada (Ontario). Wine Council of Ontario, Mega Group Inc. Bicycle Trade Association of Canada.

Do you know what you pay to Big Credit Card companies in hidden fees everytime you shop?

Canadian consumers paid over $4.5 billion in hidden credit card fees last year alone – fees we all pay at the checkout to cover the cost of lavish incentive programs and corporate credit card benefits, even if you don’t have one!

Now these companies want to raise these skyrocketing hidden fees. With their plan, you pay more, your local retailer pays more and the only ones getting rich are the Big Credit Card companies. If they get their way, seniors, students and low-income Canadians will spend even more subsidizing corporate airfare points and luxury discounts every time they shop.

Retailers are at the heart of every Canadian community. There are over 227,000 retail stores in Canada – roughly 1 in 10 businesses is a retail establishment – an 95% of all retail stores in Canada are small or independent. They provide jobs for over 2.1 million Canadians and support local charities, sporting and cultural events from coast to coast.

Local retailers and businesses are taking action to stand up for consumers and put an end to these skyrocketing hidden fees.

Big Credit Card companies need to stop sticking it to us!

MEDIA

Plastic cuts both ways

Most small businesses couldn’t survive without accepting credit cards. But a new fee structure is making it difficult for merchants to predict what they’ll pay for the privilege.Read more

Hidden fees

Re: Retail council is wrong, Sept. 29.Letter-writer Tony Maraschiello of MasterCard Canada suggests a disinformation campaign by retailers, but he doesn’t dispute that Visa and MasterCard control 80 per cent of the market in Canada and they are unregulated. These foreign-owned credit card companies collected more than $4.5 billion in interchange fees from Canadians last year.

Read more

No disputing the facts over credit card fees

Tony Maraschiello of MasterCard Canada accuses retailers of a “cash grab” simply because we are asking for some control of the credit card companies’ “cash cow.”He suggests a disinformation campaign by retailers, but he doesn’t dispute the facts: Visa and MasterCard control 80 per cent of the market in Canada and they are unregulated.

These foreign-owned credit card companies collected over $4.5 billion in interchange fees from Canadians last year.

Read more

Is MasterCard circumventing the EU decision by implementing new card fees?

EuroCommerce has today strongly warned against increases in payment Card Schemes fees being introduced from 1 October 2008. From this date, card scheme MasterCard intends to significantly increase its Card Schemes fees to merchant acquirers (and therefore ultimately on to the merchant) for both MasterCard credit and Maestro debit cards across Europe. In some markets, MasterCard have indicated that the domestic card scheme fee will increase by up to 161%.

Read more

Chamber CEO slams hike on credit card transactions

The CEO of Fredericton’s Chamber of Commerce is adding his voice to leaders of other retail and business groups in condemning Visa and MasterCard for launching merchant fee hikes.

Read more

Candidates slam credit card companies

Federal Conservative candidate Keith Ashfield says he supports small-business owners in Fredericton who are upset about hikes to Visa and MasterCard merchant fees.Read more

Big Help for US Small Business: House passes Credit Cardholders’ Bill of Rights Act

The U.S. House of Representatives on Tuesday passed the Credit Cardholders’ Bill of Rights Act (H.R. 5244), legislation to rein in unfair and deceptive credit-card company practices, on a vote of 312 to 112, said the Merchants Payments Coalition (MPC), a group of retailers, including convenience stores and gas stations, fighting against unfair credit-card fees.

Read more

Credit Card Fees on CTV Consumer Alert

Credit card costs
Pat Foran of CTV Toronto on how the rising cost to retailers of accepting major credit cards could be passed on to consumers.

Click here to view

Retail council leads charge against mounting credit card fees

A shop-owner forwarded an e-mail from the Retail Council of Canada the other day. It appears the council, which represents 40,000 storefronts across Canada, is attempting to organize opposition to ongoing increases in credit card fees, the “interchange fees” card companies charge retailers for the right to conduct business though Visa, MasterCard, American Express or any of the other major credit cards.

Read more

Retail council wants credit card fees examined

The Retail Council of Canada wants to make hidden credit card fees an election issue. The group, which represents more than 40,000 storefronts across the country and calls itself ‘the voice of retail in Canada,’ is targeting interchange fees, what card companies charge retailers for their service.

Read more

Click here to learn more.

[source: StopStickingItToUs.Com]

 

 

 
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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.