NACS Video: Fight Swipe Fees!

April 26, 2010

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

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

April 19, 2010

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

March 16, 2010

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

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PBS Frontline: The Card Game

November 24, 2009

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

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

    October 30, 2009

    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

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    Credit Card Gas Fee Rally (repost)

    October 25, 2009

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

    October 8, 2009

    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.

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    Consumers Petition for Lower Credit Card Swipe

    August 22, 2009

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    Video: Credit Card Bill of Rights WUPW

    August 21, 2009

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    More Scheming by Visa and MasterCard

    August 16, 2009

    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.

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    Why Credit Card Companies Full of Hot Air

    April 13, 2009

     

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

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

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

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    Where are the Pro-Interchange Fee Bloggers and Tweets?

    April 9, 2009

    In baseball, it is easy to keep score – look at the scoreboard.  In politics – read the polls.  But, for interchange fees, run by the banking cartel, there is little notice, other than those bi-annual fee “adjustment” letters.   As retailers continue battling against MasterCard and Visa – the two leading credit card associations with 80% market power and its member banks, it is also easy to keep score.

    With nearly 1,300 postings on WayTooHigh.com– The Credit Card Interchange Report, we have yet to read any pro-interchange fee blogs that weren’t connected with the banking industry and their paid advocacy firms.  

    Well, there is always that one “pro consumer,” “pro competition” group that “enjoys the financial support of Visa,” but that really shouldn’t count.  Where are the merchants championing 1.7% interchange fee rates, and challenging WayTooHigh.com?

    Where are the U.S. retailers thanking Visa® and MasterCard® for charging among the highest rates in the world, while abroad, the interchange fees are 0.7%, 0.5% and even 0.0% – there are no interchange fee for debit PIN-based cards in Canada.

    The reason for such silence?

    Merchants understand they are being taken on a ride when cardholders present their affinity frequent flyer cards. The merchants, and thus the consumers are paying for these perks and the nearly $40 billion a year in interchange fees. Since we were the first to launch the merchant interchange litigation back in mid-2005, there have been no pro-interchange fee blogs that we are familiar with. That speaks volumes about our cause and the unfair fees.

    Edited by Mitch Goldstone, president and CEO – ScanMyPhotos.com

    Follow along on Twitter – Twitter.com/WayTooHigh

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    Watch What Congress Needs to Know About Interchange Fees

    April 1, 2009

    From UnfairCreditCardFees.com

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

    February 4, 2009

    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.

    Leave a Comment » | antitrust, bank of america, banking, banking crisis, Chase, citigroup, credit card antitrust, Credit Card Fair Fee Act, credit cards, debit cards, interchange fee, JPMorgan Chase, Las Vegas, mastercard, merchant interchange, price-fixing, scanmyphotos.com, visa | Permalink
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    “A Quiet Windfall For U.S. Banks” (via Washington Post)

    November 10, 2008

    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]

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    Visa and MasterCard’s Roadmap to Bankruptcy?

    October 10, 2008
    A strange event played out after Visa and MasterCard collectively warned in their respective SEC IPO filings that if the merchant interchange litigation was successful, both credit card associations risked “insolvency.”Who would have thought?To protect themselves from bankruptcy, banks are facing shotgun mergers with other named defendants. The financial institutions spent millions, not just on lavish parties, but in protecting their credit card pricing schemes (with today’s ultra tech-advanced efficiencies, these fees are largely unnecessary). Law firms are making millions representing the banks. Some are growing their entire operation, hiring staff and enjoying the benefits of their representation. Are their shareholders watching?  During the past year, $8.3 trillion in shareholder wealth has been lost, so the once huge interchange fee boondoggle isn’t looking nearly as grand as before.  However, it is still something that much be addressed, especially now as we face a global crisis of confidence in the banking system. 

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

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

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

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

    —————————

    News Alert: Paulson gives new detail of bank ownership plan

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

     

     

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

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

    Leave a Comment » | antitrust, Arnold & Porter LLP, banking, banking crisis, Chase, citigroup, credit card antitrust, Credit Card Fair Fee Act, credit cards, debit cards, gas prices, interchange, interchange fee, JPMorgan Chase, mastercard, merchant interchange, paymentech, price-fixing, scanmyphotos.com, sherman antitrust act, visa, wachovia, waytoohigh.com | Permalink
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    “Every 6 months, Visa/Mastercard raise their rates by 4-8 basis points”: Nova

    September 12, 2008

    I just received a call from a Nova sales rep with an interesting pitch. He explained that every six months, Visa and MasterCard raise their rates.  In Nova’s own words is the email followup I just received.

    Mitch,

    Thank you for your time on the phone today!  As you know, I am a representative of Nova, one of the largest credit card processors in the industry.  In addition to a very competitive rate, some of the other benefits of doing business with us are as follows:

    Local Customer Support

    • Next Day Funding
    • FREE Supplies
    • No Term Commitment
    • Can Work with Existing Equipment
    • Seamless Transition
    • 1 Year Rate Guarantee
    • Paid Cancellation / Software Fees (based on volume)

    As we discussed, there was just a rate increase that occurred in April and there is another one coming up in October. Every 6 months, Visa/Mastercard raise their rates by 4-8 basis points.  Many businesses take the time during these periods to reevaluate their situation. I would like the opportunity to prepare a formal credit card comparison for ScanMyPhotos.com.  If you are able to fax a current statement to my attention, I am confident that I can secure you a competitive rate.  Once received, it would only take me a day or so to get back to you.  If you have any questions/concerns, please feel free to contact me.  Thanks again Mitch and have a great weekend!

    Kind Regards,

    Jeff ……
    Account Executive
    NOVA / MPS

    Leave a Comment » | 30 minute photos etc, antitrust, Arnold & Porter LLP, bank of america, Chase, citigroup, credit card antitrust, Credit Card Fair Fee Act, credit cards, debit cards, interchange, interchange fee, JPMorgan Chase, mastercard, merchant payment, national retail federation, payment news, paymentech, price-fixing, scanmyphotos.com, sherman antitrust act, visa, waytoohigh.com | Tagged: , , | Permalink
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    “Hidden Credit Card Fees Are Costing You” (via CNN Money)

    August 1, 2008

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

    By Jessica Dickler, CNNMoney.com staff writer
    Last Updated: July 31, 2008: 5:20 PM EDT

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

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

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

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

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

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

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

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

    Congress takes action

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

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

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

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

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

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

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

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

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

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

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

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

    [Source: CNN Money]

    Leave a Comment » | banking, banking crisis, Chase, citigroup, credit card antitrust, Credit Card Fair Fee Act, credit cards, debit cards, mastercard, price-fixing, visa | Tagged: , , , | Permalink
    Posted by waytoohigh

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

    May 12, 2008

    WayTooHigh.com – The Credit Card Interchange Report Comments:

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

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

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

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

     

     

    This is the “perfect storm.” 

    We are ready to explain why interchange fees are obsolete, illegal and anti-competitive. Even the banking industry’s shareholders are in for another bombshell so audible and eclipsing that the impact from their executive’s round of previously misfortunate decisions and billions in prior writeoffs may be petite in comparison. A trial by jury allows fort trebled damages.
    When was the last time you heard the U.S. Federal Reserve explain that interchange fees “dampen innovation” for check writing? Never: there are no interchange fees to clear checks. Likewise, why hasn’t the Fed explained that merchants “derive huge benefits” from accepting paper checks for payment? Again, there are no fees to clear a check and if it is so significant a cost, why hasn’t the banking industry demanded interchange fees for that payment form?
    The banking lobbyists are ready and so are we, but our story is being told by regular shop owners to personalize the issue. After years of toil, merchants and consumers are at the cusp of forcing the demise of these unbridled and unnecessary interchange fees on American’s and our neighbors around the world. The American public is fed up with the banking industry’s mismanagement and audacity; the days of cartel-like price-fixing will vanish, just as did those bulky manual credit card imprinters also disappear.
    “Visa’s IPOIs Worth a Close Reading” (via WSJ)

    Understanding the Word “Insolvency” Is Crystal Clear

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

      

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

     

     

     

     

    Leave a Comment » | antitrust, bank of america, banking, banking crisis, Chase, citigroup, credit card antitrust, credit card interchange report, credit cards, debit cards, interchange, interchange fee, JP Morgan Chase, mastercard, merchant interchange, merchant payment, national retail federation, paymentech, price-fixing, scanmyphotos.com, visa, wachovia | Tagged: , , , , , , , , , , , , , , | Permalink
    Posted by waytoohigh

    Visa Inc. Makes Operating Regulations Available to the Public

    May 9, 2008

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

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

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

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

    ——————————–

    Visa Inc. Makes Operating Regulations Available to the Public

    Move Seeks to Increase Company’s Transparency

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

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

     

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

     

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

     

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

     

    Leave a Comment » | antitrust, banking, banking crisis, Chase, citigroup, credit card interchange report, credit cards, debit cards, gift cards, interchange, interchange fee, JPMorgan Chase, mastercard, merchant interchange, merchant payment, national retail federation, payment news, paymentech, price-fixing, profiteering, scanmyphotos.com, visa, wachovia, waytoohigh.com | Tagged: , , , | Permalink
    Posted by waytoohigh

    Payments and Banking Blogs

    April 30, 2008

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

    Leave a Comment » | bank of america, banking, banking crisis, Chase, citigroup, credit card antitrust, interchange, interchange fee, mastercard, merchant interchange, visa, wachovia, waytoohigh.com | Tagged: , , | Permalink
    Posted by waytoohigh

    “Congress Grills Oil Execs on High Prices” (via AP)

    April 1, 2008

    The joke was on American consumers today – April Fool’s Day – in Washington, D.C.

    Congress heard from oil industry executives to discuss the record-setting economic energy crisis and profiteering at the pumps.  The group that was not there were MasterCard, Visa and the major banks.  And, the question to them that was not asked was why they are able to demand a percent from every fill-up when electronic payment cards are used?  The banks reap about $2.00 in interchange fees from every fill-up when you use plastic to pay at the pumps.

    [news via AP]

    Leave a Comment » | Chase, citigroup, credit card antitrust, credit cards, debit cards, gas prices, interchange fee, JP Morgan Chase, mastercard, merchant interchange, merchant payment, price-fixing, profiteering, visa, wachovia, waytoohigh.com | Tagged: , , , , , | Permalink
    Posted by waytoohigh

    WayTooHigh.com: Influencing Opinions and Raising Awareness

    March 25, 2008

    Today marks the third year since ScanMyPhotos.com launched WayTooHigh.com – The Credit Card Interchange Report. It is also about the time we received that infamous rate increase letter from Chase Paymentech which was sent to millions of merchants just like us.

    Some rates have risen more than 300% in the past few years. The most recent rate “adjustment” letter arrived days ago, but does not identify the new fees until after they take effect. That sympathetic letter from our payment processing service announced a rate increase when cardholders had us process their affinity, frequent-flier signature cards; a quality causing retailers to effectively also be taken on a ride. That was the letter which led to The Wall Street Journal front-page Marketplace profile on our parent company [30 Minute Photos Etc.] and the beginning of our Federal class-action complaint against Visa, MasterCard and international major banks.

    Changes have occured over the years. Merchant interchange rates have continued to ascend, while our traditional photographic film business wallowed due to the same technological shifts which made digital more practical.  These are the efficiencies which also helped bring down many antiquated analog services.  Next to film, the yellow page directories, fax machines and thousands of other businesses, the changing times also drew attention to the $40 billion annual merchant interchange debacle which didn’t budge.

    But, unlike other businesses that were forced to change, the two giant credit card associations and their 80% market power kept trudging along.  Today, film, phone books and other once shining business models are historic vestiges from an antiquated past.  However, the electronic payment network, which today is super-fast, efficient and liberated from the days of manual credit card imprinters and carbon-copy receipts (that had to be mailed away for processing) remains.When you study the free interchange processing for checks, and international interchange rates that are a third and less the cost in the U.S., you quickly understand that Visa and MasterCard’s game – managed by thousands of member banks – is blemished.  Their anti-competitive price-fixing is illegal and drawing international attention and loud shouts from Washington D.C.

    While this website has been written in our voice, as a retailer who best understands the issues, we have also become the leading personality and fixture behind the interchange battle.  And, it continues to gaining traction.  Visa and MasterCard restructured their companies, but the issues and fees remain as do their potential liability.The mix of banks, public relations and legal firms which read our comments each day is shared with close scrutiny by Visa, MasterCard, and much more importantly by other business owners, governments and associations around the world.  From giant multi-national conglomerates to “mom-and-pop” shopkeepers, we have been reporting, sharing commentary and observations with the world community which is also causing grief to Visa and MasterCard.  WayTooHigh.com and the nearly fifty other class-actions suits after we filed the first are shining a knock-down message that time is running out on the cartel’s imposing might.

    Many of you have been following the shift in our business too – from film to digital and our extraordinary international media coverage for the new super-fast photo scanning business model we pioneered. From multiple articles in The New York Times, The Wall Street Journal, USA Today and scores of other media coverage, the entrepreneurial passions at ScanMyPhotos.com was successful in making the leap from analog to digital. So, why hasn’t Visa and MasterCard also transitioned from an ancient , cost-based interchange fee structure to one that represents today’s technological realities?

    In the late 1980’s technology evolved where transactions were processed electronically and paper records were not needed for most payment card transactions.  Since that time, the costs of various components of credit card transaction processing (phone, data processing and Internet services have decreased significantly.  These changes led to significant reductions in the costs of processing payment card transactions.

    As class-representatives, on behalf of the millions of merchants with shared dedicated to eradicating supra-competitive interchange fees, we will continue to engage and call attention to this multi-billion dollar injustice.

    News Update From ScanMyPhotos.com

    Leave a Comment » | 30 minute photos etc, antitrust, bank of america, banking, Chase, citigroup, credit card antitrust, credit card interchange report, credit cards, debit cards, interchange, interchange fee, JP Morgan Chase, mastercard, merchant interchange, merchant payment, national retail federation, price-fixing, profiteering, scanmyphotos.com, visa, wachovia, waytoohigh.com | Tagged: , , , , , , , , , , , , , , , , , | Permalink
    Posted by waytoohigh

    Visa Inc. $45 Billion Market Value Still $5 Billion Under Potential Liability

    March 19, 2008

    [Click here for March 19, AP story on Visa Inc. IPO by Michael Liedtke]

    Based on Visa Inc’s. closing stock price after its first day of trading (down by more than 12-points from its intra-day trading high of $69 a share), the giant credit card association’s market value is about $45 billion.  The stock was up just $1.50 a share from its trading-day low of fifty-five dollars.  Even so, the credit card cartel’s valuation is still $5 billion shy of the reported $50 billion potential  legal liability, according to Legal Times.  As with MasterCard, the antitrust liability could lead to the company’s insolvency, according to Visa’s SEC filing.

    While Visa might be somewhat insulated from credit problems facing the banks, which still own nearly half the company, they along with MasterCard are very much in the cross-hairs of the merchants who are forced to accept the card cartel’s dominant 80% market power. 

    Even as a new group of owners join the thousands of member banks by stepping onto the field, the years of antitrust price-fixing charges remains with the new and prior owners.

    Leave a Comment » | antitrust, bank of america, banking, Chase, citigroup, credit card antitrust, credit card interchange report, credit cards, debit cards, interchange, interchange fee, JP Morgan Chase, mastercard, merchant interchange, scanmyphotos.com, visa, wachovia | Tagged: , , , , , | Permalink
    Posted by waytoohigh

    “Why the Visa IPO is So Hot” (via MSN: MoneyBlog)

    March 19, 2008

    Click here to read Anthony Mirhaydari’s report in MSN’s MoneyBlog)

    Excerpt:

    • “…And there are some legal issues too: Since 2003, for every dollar of revenue Visa generated, 28 cents was paid out in settlements. Most of the litigation centers on the interchange rates Visa charges to merchants on each transaction and various other antitrust issues.”

    Leave a Comment » | antitrust, bank of america, banking, Chase, citigroup, credit card antitrust, credit cards, debit cards, interchange, interchange fee, JP Morgan Chase, JPMorgan Chase, mastercard, price-fixing, visa, waytoohigh.com | Tagged: , , , , | Permalink
    Posted by waytoohigh

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

    March 19, 2008

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

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

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

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

    Visa Inc. IPO Valuation – $74 a share?

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

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

    Twilight Zone: The Movie, Visa and MasterCard Style

    UnfairCreditCardFees.com

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

    “Significant Victory” Announced Against MasterCard by Class Plantiffs

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

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

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

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

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

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

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

    —————————————————————– 

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

    Leave a Comment » | antitrust, bank of america, banking, banking crisis, Chase, citigroup, credit card antitrust, credit card interchange report, credit cards, debit cards, interchange fee, JPMorgan Chase, mastercard, national retail federation, visa, wachovia, waytoohigh.com | Tagged: , , , , | Permalink
    Posted by waytoohigh

    It’s a Record!

    March 17, 2008

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

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

    —————————————————

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

    Leave a Comment » | antitrust, bank of america, banking, banking crisis, Chase, citigroup, credit card antitrust, credit card interchange report, credit cards, interchange, interchange fee, mastercard, paymentech, price-fixing, profiteering, visa, wachovia | Permalink
    Posted by waytoohigh

    Visa Inc. IPO Update

    March 17, 2008

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

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

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

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

    ——————————————————

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

    Leave a Comment » | banking, banking crisis, Chase, merchant interchange, visa, waytoohigh.com | Tagged: , , , , , , , , , , , , , | Permalink
    Posted by waytoohigh

    Visa IPO Derailed, Suggests Mitch Goldstone

    March 17, 2008

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

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

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

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

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

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

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

    Leave a Comment » | antitrust, bank of america, banking, banking crisis, Chase, citigroup, credit card donations, credit cards, interchange, interchange fee, JPMorgan Chase, mastercard, merchant interchange, price-fixing, visa, wachovia | Tagged: , , , , , , , | Permalink
    Posted by waytoohigh

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

    March 16, 2008

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

    Leave a Comment » | bank of america, banking, banking crisis, Chase, citigroup, JPMorgan Chase, wachovia | Permalink
    Posted by waytoohigh

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

    March 13, 2008

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

    Perhaps they can double-down.  

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

    Click here to read the Reuters article.

    Leave a Comment » | bank of america, banking, banking crisis, Chase, citigroup, mastercard, scanmyphotos.com, visa, wachovia | Tagged: , , , , , , , , , , , , , , , , , | Permalink
    Posted by waytoohigh

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

    March 10, 2008

    Click here to read the March 10th FW article by Carleen Hawn.

    Abstract, key Ppints from the Financial Week article:

    • Investment banks may collect about $480 million in underwriting fees from the Visa IPO
    • J.P. Morgan Chase, Bank of America and Citigroup, are among Visa’s largest shareholders, and stand to gain hundreds of millions of dollars—$1.1 billion in J.P. Morgan’s case—from unloading large portions of their stakes.
       
    • Visa may have a different motivation for going public now, suggests antitrust litigator K. Craig Wildfang of the Minneapolis law firm Robins Kaplan Miller & Ciresi. “The purpose of Visa’s IPO is solely to try to get more lenient treatment from the courts under the antitrust laws,” he said. The timing of the offering, Mr. Wildfang believes, is part of Visa’s attempt to limit “its legal exposure to the Sherman Act.”
    • Civil suits based on the same argument followed from American Express and Discover. Visa settled with American Express for $2 billion, and Discover’s case is scheduled to go to trial in September, though a person familiar with the matter told Financial Week it is likely to “be settled before it ever reaches a courtroom—probably for an amount in the B’s.”
    • Visa plans to set aside $3 billion of its IPO proceeds to pay for “settlements of, or judgments in, covered litigation.” But $3 billion may not be enough, considering the other suits coming down the pike.
    • The most pressing may be the case being argued by Mr. Wildfang on behalf of a group of retail merchants who accept Visa credit cards as a form of payment.
    • Visa does not issue credit cards or lend money. That’s the job of its member banks, such as B of A, Wells Fargo and Wachovia. Instead, Visa processes the credit card transactions on its electronic payment network, in return for which it charges a host of fees that generated more than $5 billion in revenue for the fiscal year ended Sept. 30.
    • The claim in the “merchant litigation,” filed in 2005 in the U.S. District Court for the Eastern District of New York, is that Visa and MasterCard regularly meet to agree on the interchange fees each will charge its merchants. “That is price-fixing, and it is a violation of the Sherman Act,” Mr. Wildfang alleged. “In any other industry, that would be illegal.”
    • Going public may help Visa defend itself against the charge by convincing courts that it is a single entity. Under the Sherman Act, the “concerted activities” of groups, or “trusts,” are subject to greater scrutiny than the activities of “single actors.”
    • But there is a last wrinkle in this theory: Despite MasterCard’s IPO, the European Commission recently said in a ruling that it still regards MasterCard to be a group, not a single entity. If U.S. courts use the EU as any guide, Visa may not have much more luck in court after its own IPO.
       

    Leave a Comment » | antitrust, bank of america, banking, Chase, citigroup, credit card interchange report, credit cards, debit cards, interchange fee, JPMorgan Chase, mastercard, visa | Tagged: , , , | Permalink
    Posted by waytoohigh

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

    March 8, 2008

    Click here to read the Reuters article by Eric Beech.

    Leave a Comment » | bank of america, banking, banking crisis, Chase, citigroup, JPMorgan Chase, wachovia | Tagged: , , | Permalink
    Posted by waytoohigh

    “As IPO Looms, Visa’s Outside Counsel [Arnold & Porter] See Litigation Bonanza” [Law.com]

    March 7, 2008

    Arnold & Porter.  

    With millions of merchants, the fresh eyes of Washington, the European Union, nation’s around the world, and entrepreneurs like us, the question is: how can Visa, MasterCard and its member banks explain the annual $40,000,000,000 hidden tax that (we assert) is based on illegal price-fixing by agreement and unbridled collusion? 

    Even more questions about Visa’s IPO-planned multi-billion dollar bank bailout are raised from the March 7th Legal Times article by reporter Attilla Berry.  Click here to view.

    Even the gigantic-sized billable hours for law firms like Arnold & Porter pale in the shadow of the potential liability, which was reported to be “more than $50 billion if the merchants are successful,” according to the article.

    ____________________________________________________

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

    Leave a Comment » | 30 minute photos etc, antitrust, bank of america, banking, Chase, citigroup, credit card antitrust, credit card interchange report, credit cards, interchange, interchange fee, JPMorgan Chase, mastercard, price-fixing, profiteering, scanmyphotos.com, visa, wachovia | Tagged: , , , , , , , , , , , | Permalink
    Posted by waytoohigh

    “Saving Billions for Consumers – Opening up and Reducing Interchange Fees” (via Chris Cannon Website)

    March 6, 2008

    [Via press release]

    WASHINGTON DC – Congressman Chris Cannon (R-UT), along with Judiciary Chairman John Conyers (D-MI), today introduced the “Credit Card Fair Fee Act” (HR 5546) to address the anti-competitive aspects of credit card interchange fees and save American consumers and American families billions every year. 

    Upon introducing this legislation, Congressman Cannon said, “Free market capitalism is the most successful economic system the world has ever witnessed.  Bedrock principles of that system include transparency and competition.  The current system of setting fees that merchants pay for credit card transactions is anti-competitive and secretive.  This bill does not set prices.  Instead, it would require that fees be set in a transparent manner so other companies can compete for business and consumers would not pay artificially high rates.” 

    Cannon continued, “In the end, credit card companies should set whatever fees the market will tolerate.  This bill is a win for consumers, for retailers, and for the credit card industry which will benefit from competition.” In closing, Congressman Cannon said, “This is a complicated issue.  This bill may not be the final answer, but society’s interest in this is so great that we hope all interested parties will come to the table.” 

    For more information, please visit: http://chriscannon.house.gov/ChrisCares/CreditCards.htm  

    For a graphical depiction of how this bill would mandate negotiations, please visit: http://chriscannon.house.gov/UploadedFiles/ccflow.pdf

    Each year, consumers pay billions of dollars in hidden fees that never appear on their monthly statements.   Those fees are called “Interchange fees.” Credit card companies and their banks charge them to store owners, businesses, or anyone else anytime a credit card is used to make a purchase.  As much as $2 of every $100 you spend goes to interchange companies or the banks behind the card.   Last year, more than $36 billion in interchange fees were collected, up 17 percent from 2005 and 117 percent since 2001.

     The average American family is now paying more than $300 a year in credit card interchange fees. Retailers are then pass along the credit card interchange fee to consumers in the form of higher prices. The credit card interchange fee increases the price of everything consumers buy, even those who don’t use plastic and choose instead to pay for their purchases in cash or by check because retailers are not allowed to offer lower prices for cash or debit transactions because of their agreements with Visa and Mastercard. 

    For example, with the price of gas at more than $3 a gallon, credit card companies and their banks are collecting as much as 8 cents a gallon in interchange fees.  Americans are paying the highest interchange fees in the world, an average of two percent, compared with less than one percent in most other industrialized countries.  Credit Card fees have a complex pricing structure, which depends on the card association, the type and size of the merchant, the type of credit card and the type of transaction.  

    Convenience stores, supermarkets, warehouse clubs and other merchants that sell low-margin items may have lower rates.  Hotels and car rental businesses have higher rates. Among transactions, those with a credit card have higher rates than those with a signature debit card, whose rates are in turn higher than PIN debit card transactions. Sales that are not conducted in person, such as over the phone or Internet, have higher interchange rates, apparently due to their increased risk of fraud.    What are Interchange Fees?Why are They Hidden?What Else Has Congressman Cannon Done to Put Money Back in My Pocket?Outside Information – Get Information From Organizations Dedicated to Encouraging Free Market Capitalism on This Issue

    Leave a Comment » | 30 minute photos etc, antitrust, bank of america, banking, Chase, citigroup, credit card antitrust, mastercard, visa, wachovia | Tagged: , , , | Permalink
    Posted by waytoohigh

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

    March 6, 2008

    [Via Businesswire, March 6, 2008]

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

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

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

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

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

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

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

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

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

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

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

    Leave a Comment » | 30 minute photos etc, antitrust, bank of america, banking crisis, Chase, citigroup, credit card antitrust, credit card contest, credit card interchange report, credit cards, debit cards, interchange, interchange fee, JPMorgan Chase, mastercard, national retail federation, payment news, paymentech, PIN, price-fixing, profiteering, scanmyphotos.com, sherman antitrust act, visa, wachovia, waytoohigh.com | Tagged: , , , , , , , , | Permalink
    Posted by waytoohigh

    Credit Card Price Fixing Suit Could Cost Industry Over $100 Billion, Experts Say (Banking Business Review)

    March 6, 2008

    [Repost, Jan 27, 2006]

    “According to a group of prominent bankers, a lawsuit brought by retailers in the US alleging a number of major credit card issuers and banks colluded to fix processing prices will have far reaching consequences for the industry at large if it is successful…”

    Click here to view the article in “Banking Business Review”

    ____________________________________________________

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

    Leave a Comment » | antitrust, banking, Chase, citigroup, credit card interchange report, credit cards, gift cards, mastercard, visa | Tagged: , , | Permalink
    Posted by waytoohigh

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

    March 6, 2008

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

    ____________________________________________________

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

    Leave a Comment » | 30 minute photos etc, antitrust, bank of america, banking, banking crisis, Chase, citigroup, credit card antitrust, credit card interchange report, credit cards, debit cards, gas prices, interchange, interchange fee, price-fixing, profiteering, visa | Tagged: , , , , | Permalink
    Posted by waytoohigh

    What is “Reason Code 96?”

    March 6, 2008

    From the National Association of Convenience Stores:

    Retailers also are hit with additional costs because of chargebacks, known as “Reason Code 96.” While retailers have not seen the specific rule (no retailer has seen the complete credit card operating rules that they are told to follow) they can be denied payment by the banks if they authorize a pay-at-the-pump transaction for more than $50 for Visa and more than $75 for MasterCard, even though the transaction is not challenged by the customer. As long as fuel prices remain high, “Reason Code 96” will substantially increase the cost of credit card acceptance.

    Debit Holds for Fuel Purchases

    Gas-buyers Fume at Credit Card Limits, ‘Blocks’

    Leave a Comment » | antitrust, bank of america, banking, Chase, citigroup, credit card antitrust, credit card interchange report, credit cards, debit cards, gas prices, interchange, interchange fee, JPMorgan Chase, mastercard, national retail federation, payment news, PIN, price-fixing, profiteering, visa, waytoohigh.com | Tagged: , , , , , , | Permalink
    Posted by waytoohigh

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

    March 3, 2008

    Repost from Nov 21, 2007.  Click here

    ____________________________________________________

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

    Leave a Comment » | 30 minute photos etc, American Express, antitrust, bank of america, banking, banking crisis, Chase, citigroup, credit card antitrust, credit card interchange report, credit cards, debit cards, interchange, interchange fee, JPMorgan Chase, mastercard, merchant interchange, PIN, price-fixing, profiteering, scanmyphotos.com, visa | Tagged: , , , , | Permalink
    Posted by waytoohigh

    Visa and MasterCard’s Member Banks’ Weak Assessment of Interchange Litigation

    March 1, 2008

    If you thought the thousands of member banks failed miserably in how they extended billions in risky housing loans, that could end up being an understatement on the leadership in their executive suites.

    Take a look at the banks plan to partly bail out from their Visa investment by using the expected IPO in an attempt to distance themselves from the merchant interchange litigation.  Should the Visa IPO occur this month as planned, and we still think it might not – or be delayed due to market conditions and other factors – the real fiscal liability is fully understated. 

    Visa’s SEC filing explains that they plan to set aside $3.0 billion for its legal liability, but you would think that the real hit to the banks’ would be far greater.

    Here is why:

    In our opinion, any merchant interchange settlement would include removing or substantially reducing their current $40 billion annual hidden tax on retailers and consumers.  Market analysts and several financial reporters have been explaining that the Visa Inc. IPO investment is solid if the legal liability  is diminished.  However, they all fail to equally assess the impact on the credit card association’s banking cartel to adjust for a diminished source of income from their anti-competitive and price-fixing interchange scheme.   

    Leave a Comment » | antitrust, bank of america, banking, Chase, citigroup, credit card antitrust, credit cards, debit cards, interchange, interchange fee, JPMorgan Chase, mastercard, merchant interchange, national retail federation, price-fixing, profiteering, sherman antitrust act, visa, wachovia, waytoohigh.com | Tagged: , , , , | Permalink
    Posted by waytoohigh

    What Do Visa and AT&T Have in Common?

    February 27, 2008

    While financial writers are explaining that the planned Visa Inc. IPO will be nearly double that previously all-time high public offering by AT&T.  There is also something much more ominous that the two have in common and should not be overlooked.  Our antitrust litigation against Visa, MasterCard and major banks is also the largest antitrust case since the AT&T breakup; not very good company to keep.

    Some talk by the financial media suggests that the thousands of banks which co-own Visa might be hoping for a multi-billion dollar settlement [they are planning to hold $3 billion in reserves].  But, the much larger payout is the $40 billion in annual merchant interchange fees that consumers and merchants are forced to pay.  We think any settlement will include either the termination of or significant reduction in these obsolete electronic payment fees, and thus even more billions in revenues that would no longer be sent to the banks, but rather retained by American consumers.

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

    Leave a Comment » | 30 minute photos etc, antitrust, Chase, citigroup, credit cards, debit cards, visa | Tagged: , , , , | Permalink
    Posted by waytoohigh

    A Look into Visa’s Trojan Horse IPO Scheme

    February 26, 2008

    Today, a reporter suggested we should be happy that Visa Inc. is setting aside a $3 billion reserve for our litigation. No, not really.

    The credit card giant is playing an unfriendly game in its pursuit of detachment from their legal liability for illegal price-fixing by agreement.  If you step back and read several of our preceding comments, you will notice that when first announced, many hinted that Visa Inc. could anticipate raising $5 billion, then it was $10 billion. Now, it is nearly $19 billion. 

    Was this caused by unearthly market conditions, inflation or because they were simply padding the amount of money they hope to raise to cover their legal liabilities?The worry is that they could simply use investor proceeds to fund settlement of our litigation and then continue raising merchant interchange rates to more than cover the lost revenues. To us, that is as unfair as are their interchange fees.A review of the earlier credit card litigation identifies that for merchants and consumers, the fair market economy is still broken and there still is no real electronic payment competition. Visa and MasterCard’s cartel-like pricing structure still precludes a real resolution to interchange fees. From the preceding resolution, Visa and MasterCard simply raised other rates to adjust for their penalties, thus more than paying for their fines.

      

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

    Leave a Comment » | 30 minute photos etc, antitrust, banking, Chase, citigroup, credit card antitrust, credit cards, debit cards, interchange, interchange fee, JPMorgan Chase, mastercard, sherman antitrust act, visa, wachovia | Tagged: , , , | Permalink
    Posted by waytoohigh

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

    February 26, 2008

    Click here to read Floyd Norris, chief financial correspondent for The New York Times’ comments on the Visa IPO and where the use of proceeds would be going. [Read the Visa prospectus]

    As entrepreneurs, if we were to seek funding, our investors would require that the proceeds be used to invest in the future expansion of ScanMyPhotos.com, not pay off debt and cover legal bills.  They will also dilute the banks’ ownership if the legal liability is greater than $3 billion; this suggests that Visa is understanding that our liability will be greater than $3 billion.   

    If you thought the banks were mismanaged before, due to their mortgage meltdown, the Visa IPO is a study in supra-competitive greed – which is exactly what their interchange fees are all about. 

    As with MasterCard, a proportionally large amount of capital will be placed in escrow to cover their legal liability to us.  And, just as with MasterCard, the proceeds will also be used to contribute fresh cash to the banks.   Mr. Norris covered many of the strange maneuvers that Visa Inc is preparing and hoping the public overlooks, due to their intoxication with the MasterCard valuations.  Perhaps the most significant concern is their SEC-filed Risk Factors, and identifying that if our litigation is successful, the giant credit card association risks insolvency.  Insolvency!

    We think the reason for the IPO is to demonstrate that Visa is not owned and controlled by the banks; that’s part of our assertion in the antitrust litigation.  So, just as with MasterCard, they paint the appearance that now shareholders are running the show.  Unlike regular publicly held corporations, see what happens if a business tries to acquire a majority of its stock.  See what happens if a company wanted to start from the top floor and buy their own electronic payment card network by acquiring Visa.  They cannot.

    As identified in the New York Times article, this is a giant conflict of interest shell game.  JP Morgan Chase is a lead defendant and co-owner of Visa.  They also own Chase and Chase Paymentech Solutions – the credit card processing behemoth.  Yet, the bank is a lead underwriter and we guess already have their track shoes on to make this deal happen super-fast, while the red paint from their impending liabilities are still wet.  Other lead defendants are poised to also cash out in the hundreds of millions of dollars, just as they did (to a lesser level) with MasterCard.  But, not so fast, read this posting about the impending troubles facing MasterCard’s IPO.

    “Significant Victory” Announced Against MasterCard by Class Plantiffs

      

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

    1 Comment | Chase, citigroup, credit card antitrust, life takes visa, merchant interchange, visa, waytoohigh.com | Tagged: , , , , , | Permalink
    Posted by waytoohigh

    Record Visits to WayTooHigh.com – The Credit Card Interchange Report

    February 25, 2008

    Beyond the Visa IPO news, today marked the largest number of unique visitors to WayTooHigh.com – The Credit Card Interchange Report.

    Among the leading pages that were visited today included:

    Stock Market Meltdown… Visa’s IPO Mess
    Win One For MasterCard’s “Priceless.com”
    Visa Inc. Files 10-K Annual Report,
    Visa’s Inc.’s Planned IPO & MasterCard
    Visa Inc. IPO Largest in US History;
    Visa IPO – Blogs, Updates, Commentary
    Credit Card Interchange Fees Article
    The Credit Card Nightmare (via Wired)
    “Interchange Regulation Coming to the US
    Visa’s International Merchant Discount
    Did Visa and MasterCard’s Greed Force…
      

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

    Leave a Comment » | 30 minute photos etc, American Express, antitrust, Chase, citigroup, credit card antitrust, credit card contest, credit cards, debit cards, life takes visa, mastercard, merchant interchange, merchant payment, payment news, price-fixing, scanmyphotos.com, visa | Tagged: , , , , , | Permalink
    Posted by waytoohigh

    “MasterCard Spends $680,000 on Lobbying,” (AP)

    February 15, 2008

    According to a Feb 15th AP article, “MasterCard International Inc. paid Sidley Austin LLP $680,000 in 2007 to lobby on a variety of Internet-related issues.”

    Leave a Comment » | 30 minute photos etc, antitrust, banking, Chase, citigroup, credit card antitrust, mastercard | Tagged: , , | Permalink
    Posted by waytoohigh

    “EU’s McCreevy Pushes for New Payment Card Schemes” (via Reuters)

    January 28, 2008

    Click here to read entire (Jan 28) article by Reuter’s Huw Jones.

      

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

    Leave a Comment » | 30 minute photos etc, antitrust, bank of america, banking, Chase, citigroup, credit card antitrust, credit card interchange report, credit cards, debit cards, interchange, interchange fee, JPMorgan Chase, mastercard, paymentech, price-fixing, profiteering, visa, wachovia, waytoohigh.com | Tagged: , , , , , , | Permalink
    Posted by waytoohigh

    More Interchange Revenue Centers

    January 23, 2008

    Merchants already are forced to pay from upwards of one-hundred separate interchange fees.  Few understand how these charges work, and even we didn’t know of one of the added chargeback programs.

    Even though we are the lead plaintiff in the merchant interchange litigation and co-editors of WayTooHigh.com – The Credit Card Interchange Report, we didn’t know about the “chargeback fees.”

    30 Minute Photos Etc and our ecommerce business, ScanMyPhotos.com might have had under a dozen chargeback requests over the past 17-years.  These are generated when a customer questions a specific electronic payment charge.

    Just today, we received a multi-page chargeback notification from Visa USA domestic. The customer disputed a charge from early December and reported that it was a duplicate processing charge for the same order. The fact was this customer placed two separate orders for differing amounts over the span of a few days.

    As a merchant, our account was immediately dinged for the full amount. A financial adjustment was made to our account as a result of the chargeback initiation.  While were were offered to dispute the charge, which we did, Chase Bank USA already took the money back.  Can you imagine that?  Ok, we are the lead plaintiff, suing JPMorgan Chase and the other member banks, along with Visa and MasterCard for what could be multiple billions of dollars, but did they have to be so petty?

    What happens when other merchants overlook those chargeback notifications?  Funds could also be automatically withdrawn and if not challenged, lost.  Also, what happens to the interchange fee that we initially paid?  Would a disputed charge still have to incur an interchange fee?

    Leave a Comment » | 30 minute photos etc, antitrust, banking, Chase, credit card antitrust, credit card interchange report, credit cards, interchange, interchange fee, visa | Tagged: , , , | Permalink
    Posted by waytoohigh

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

    January 22, 2008

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

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

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

    Leave a Comment » | 30 minute photos etc, bank of america, banking, banking crisis, Chase, citigroup, credit card antitrust, credit card donations, credit cards, debit cards, interchange, interchange fee, mastercard, merchant interchange, merchant payment, national retail federation, payment news, price-fixing, profiteering, scanmyphotos.com, visa | Tagged: , , , , | Permalink
    Posted by waytoohigh

    Riddle: What’s The Difference Between The Cost To Send An Email And An Electronic Payment? $40 billion each year!

    January 21, 2008

    repost.

    As our company continues to make news for the super-fast photo scanning business we built that is transforming the photo imaging industry and using technology to slash prices for preserving generations of photo snapshots, we wondered why technology has not also led to rock-bottom and tumbled-down interchange fees?

    To be more transparent and divulge just how ghoulish this hidden tax is, Visa® and MasterCard® should post the exact interchange fee for each transaction as a separate item on every debit and credit card receipt. We first raised this issue in January, 2006, but they seem too busy figuring out how to go public to distance the banks from our alleged antitrust violations. If they would only pause from what we assert is their attempt to pass along the liability from this litigation onto the public, and instead, agree to post the exact interchange fees on every receipt, then, all merchants and cardholders would understand why we are so passionate about this issue. There would no longer be a hidden tax, but, rather a very vocal cascade of resistance against the peddlers of these unfair fees.    Why are the merchant interchange fees about 1.7% in the U.S. and as low as zero in other nations? And, as other electronic transactions have been slashed too rock-bottom, why have some of their rates [ex. debit cards] tripled in the past 8-years?

    Let us pause for a brief study break and review the historical way of sending [”transmitting”] a traditional letter and the processing of a charge slip. In the previous decade, if you wanted to send a letter, you generally bought stationary, an envelope, postage and drove to the Post Office to mail it; days later it was received. Also about ten years ago, merchants, like us, had to stock up on thick, multi-page, carbon-copy charge card receipts, swipe the payment cards through a manual imprinter, mail it to the processing company on the other coast [Florida]. Then, days later, the transaction – less a substantially lower interchange fee than today – was credited to your bank account. As technology advanced, instead of lowering interchange fees, it has actually leaped ahead.

    Today, we all use email, and essentially, it is free. Could you imagine if the two leading credit card associations and its thousands of member banks were also involved with the exploration of the Internet? Using their surreptitious market power and pricing domination, every electronic [email] “letter” would come with a beefed-up fee. But, the actual cost to use the Internet network to transmit an electronic message, must be about the same as the cost to transmit an electronic payment on its network, so why are the banks still granted the potency to exert such immense multi-billion-dollar hidden taxes on merchants, cardholders and our economy?

    [Commentary: WayTooHigh.com]

    Leave a Comment » | 30 minute photos etc, bank of america, Chase, citigroup, credit card antitrust, credit card contest, interchange, interchange fee, mastercard, visa | Tagged: , , | Permalink
    Posted by waytoohigh

    Another Reason Why The Banks Interchange Fee Should Be Zero

    January 21, 2008

    repost.

    The National Association of Convenience Stores magazine (July 2005) reported that “interchange fees arguably are meant to cover the technology cost of account processing and the risk taken by the issuing bank that the credit will not be repaid. It is no secret that technology costs continue to fall while processing power increases dramatically.”

    The previous posting addresses the risk factor, this column focuses on technology.

    As well-known entrepreneurs, Mitch Goldstone and Carl Berman, lead plaintiffs in the antitrust litigation against Visa, MasterCard and member banks also co-edit The Credit Card Interchange Report – WayTooHigh.com. This column provides a real-life experience to understand why Visa and MasterCard may be forced to disband its merchant interchange charges.

    The nationally recognized business leaders operate an online boutique photo service (30minphotos.com) which recently created an entirely new business model for preserving generations of photos.  The company previously charged $5.00 to produce one high-resolution digital scan from a single photo; the process would take several minutes. Today, their ScanMyPhotos.com service scans 150 photos of any size — from wallets to 11×17 enlargements in just one minute. The charge is $49.95 for 1,000 photos; an entire shoe box of pictures is scanned within minutes and mailed back the same day for under 5-cents per print.  They even launched “15-Minute Photo Scanning, or it’s free. see link.

    This same math applies to the credit card associations. With technology advancing at lighting-fast speed, each few months yields entirely new cost-saving techniques, yet for banking card transactions the fees keep rising?

    Just one decade ago when merchants used bulky non-electronic credit card imprinters, the multi-page carbon forms cost a great deal and had to be mailed for processing. This took several days and incurred costly clearing and processing fees, which was why the interchange fees were initially established; it was cost-based.

    Today, just as how the cost for digitally preserving photos was cut by Goldstone and Berman from $5 to 5-cents, so too have the costs for banks to process merchant payments. Yet, the latter service continues to face huge, unjustified fee increases.

    Visa and MasterCard can learn a great deal from their customers like Goldstone and Berman. Many business services and products share similar cost-savings to lower rates while enhancing the benefits.

    [source: WayTooHigh.com]

    Leave a Comment » | 30 minute photos etc, antitrust, Chase, citigroup, credit cards, debit cards, mastercard, visa | Tagged: , , | Permalink
    Posted by waytoohigh

    “Credit or Debit? It Depends Upon Whom You Ask” (The Patriot-News)

    January 13, 2008

    Reporter Sharon Smith, from The Patriot-News, has a comprehensive article in the Sunday, Jan 13th edition about the difference between debit and credit cards. She mentions the contests and games banks (Visa and MasterCard) play to entice cardholders to use their debit cards as signature credit cards, so retailers are forced to pay more.  What is missing is the explanation that ultimately consumers end up paying more, as someone has to cover the higher signature-based interchange fee. More to the point, the larger question is why is there such a significant spread between the two services? 

    We have dozens of previous commentaries on this scheme and how it impacts retailers and consumers. 

    [Click here to view the article]

    Leave a Comment » | 30 minute photos etc, banking, Chase, citigroup, credit card contest, credit card interchange report, credit cards, debit cards, feedburner, interchange, interchange fee, JPMorgan Chase, life takes visa, mastercard, national retail federation, payment news, scanmyphotos.com, sherman antitrust act, visa | Tagged: , , , , , | Permalink
    Posted by waytoohigh

    MasterCard Inc. Update I

    January 10, 2008

    We see that the Wall Street Journal (Jan 10, page A-13) ran the “Merchants Must Submit to MasterCard’s Power” letter to the editor today by Mitch Goldstone

     Reprinted in its entirety.

    Merchants Must Submit To MasterCard’s Power

    January 10, 2008; Page A13

    The European Union has found, again, that interchange fees charged by MasterCard to merchants are fixed at anticompetitive levels. Instead of recognizing that the nearly $40 billion annual hidden tax on merchants and consumers is based on illegal price-fixing, Joshua Peirez of MasterCard Worldwide hauls out the usual replies (“EU Killing of Interchange Fees Won’t Help Customers1,” Letters, Dec. 28).

    The fact is that consumers, the marketplace and technology, not interchange fees, are what force innovations within the electronic-payment network. The actual cost of an electronic payment is a tiny fraction of the total fees collected, yet Mr. Peirez suggests that “interchange fees are necessary to fairly share the cost of an electronic payment system.”

    Merchants are unable to pay a fair price for using MasterCard’s (and Visa’s) payment network; we are all forced to submit to their market power and their member banks’ ability to collectively fix interchange fees at noncompetitive levels. MasterCard’s long history of anticompetitive price-fixing corrupts its understanding of Economics 101, where the marketplace controls competition, not a board of directors who stand accused of illegal price-fixing.

    Mitch Goldstone
    President and Chief Executive
    ScanMyPhotos.com
    Irvine, Calif.

    (Mr. Goldstone is the lead plaintiff in merchant-interchange litigation against Visa, MasterCard and leading member banks.)

    Leave a Comment » | 30 minute photos etc, American Express, Chase, citigroup, credit card antitrust, credit card contest, credit card interchange report, debit cards, interchange, interchange fee, JPMorgan Chase, mastercard, merchant interchange, price-fixing, profiteering, scanmyphotos.com, visa | Tagged: , , , , | Permalink
    Posted by waytoohigh

    What Other “Networks” Charge $40 Billion Each Year?

    January 2, 2008

    We couldn’t help but take note that if the thousands of banks which own Visa and own a large amount of MasterCard (prior to the IPO it was total control), are operating on an antiquated network strategy.  Because it is no longer cost-based, could you imagine if the banks owned the Internet network or broadcast television networks, like ABC, CBS or NBC?

    Fortunately, there isn’t an anticompetitive cartel which controls those and other networks which also use technology to disseminate information.  But, in the case of the credit card associations, the network they control is impenetrable and their 80% market dominance is overpowering.

    Their argument is the electronic payment network would not be efficient and of value if they (the banks) did not charge their myriad of overwhelming interchange fees. 

    Just imagine if the banks also owned the free Internet network.

    [Commentary: WayTooHigh.com]

    Leave a Comment » | 30 minute photos etc, antitrust, bank of america, banking, Chase, citigroup, credit card antitrust, credit card interchange report, credit cards, debit cards, interchange, interchange fee, JPMorgan Chase, mastercard, scanmyphotos.com, sherman antitrust act, visa | Tagged: , , , | Permalink
    Posted by waytoohigh

    Overview: Popular WayTooHigh.com Interchange Commentaries

    December 18, 2007

    Interchange Fees Should Have Gone the Way of the IBM Selectric Typerwriters (WayTooHigh.com)

    An Extraodinarily Fictional Read: MasterCard® Explains the Value of Interchange Fees (WayTooHigh.com)

    Sixty-percent Rate Cut in 2008 by MasterCard Europe (Commentary, WayTooHigh.com, via WSJ)

    Seventy-two pages, five-pages or one line? (WayTooHigh.com)

    Every Credit and Debit Card Receipt Should Include Interchange Charge (WayTooHigh.com)

    Merchants sue MasterCard, Visa over ‘exorbitant’ interchange rates

    Four-million “pay-pass” cards are another four-million more reasons to end Interchange fees (Commentary: WayTooHigh.com)

    British Regulator “Slams Mastercard Fees” (BBC NEWS)

    Summary: Briefing on Interchange Issues (WayTooHigh.com)

    Leave a Comment » | 30 minute photos etc, banking, Chase, credit card antitrust, credit cards, debit cards, price-fixing, scanmyphotos.com, visa | Tagged: , , , , , | Permalink
    Posted by waytoohigh

    Citigroup’s New CEO: Encouraging

    December 11, 2007

    As a retailer and ecommerce business, we are encouraged that Citigroup Inc. has appointed Vikram Pandit as chief executive, because he doesn’t come with the hefty baggage that other, more well-known insiders have. Because he has never led a public company, let alone one facing billions in antitrust violations, this might be the turning point that merchants are seeking to regain credibility and question the bank’s (alleged) price-fixing allegations by setting merchant interchange fees by agreement.  According to Reuters, Mr. Pandit has “no experience leading a consumer business,” so we hope his first lesson will be to study WayTooHigh.com and the millions of other merchants’ disdain for the supracompetitive electronic payment fees. Citigroup is a member bank of both MasterCard and Visa’s shared cartel and as we assert, has conspired to collectively fix credit card interchange fees.

    We wonder whether Mr. Pandit will shift direction and take responsibility for the bank’s violations?  Certainly, this would be a smart and prudent way to restore confidence in Citigroup.

    [commentary: WayTooHigh.com]

    Leave a Comment » | 30 minute photos etc, antitrust, bank of america, banking, charles prince, Chase, citigroup, credit card antitrust, credit card contest, interchange, interchange fee, mastercard, merchant interchange, scanmyphotos.com, sherman antitrust act, visa | Tagged: , , , , , , | Permalink
    Posted by waytoohigh

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