CardLine’s PaymentSource quoted Henry Helgeson, CEO of a processing company called Merchant Warehouse, Inc. where he spouted the same old invalid argument that giant banks want American’s, Congress and the Federal Reserve to believe merchants will not pass on to their customers the billions in savings from the new Durbin lower debit fees.
Surprisingly, Mr. Helgeson acknowledges that his company WILL
pass on to its merchant customers the lower debit fees, even though they
are not required to. As a merchant (retail and eCommerce business owner) I am perplexed that Mr. Helgeson would risk his entire company, his merchant customers and perhaps soon-to-be former customers by taking sides with the giant banks by spouting their propaganda. MasterCard and Visa’s member banks reap nearly $62 billion dollars a year from these merchant interchange swipe fees, which were designed forty years ago to cover antiquated carbon copy analog payment network.
Unlike the electronic payment network member banks which are without real competition (MasterCard and Visa wield 80% market power), merchants will all be compelled to rebate all saved interchange fees. Merchants will not JUST lower prices, but we will hire more employees, invest in infrastructure and transparently benefit the economy rather than just the banks’ vaults. Even so, the legal argument is being clouded by the bank’s multi-million dollar advocacy campaign. The last thing Citigroup, JPMorgan Chase, Bank of America, Wells Fargo and thousands of other banks want you to know is that the argument is not about refunding savings to consumers, but rather it is all about anticompetitive illegal price-fixing.
As a lead plaintiff, suing MasterCard, Visa and major banks in what could be the largest anti-trust litigation in our nation’s history, I have been leading the battle against them for half a decade. For news and commentary updates follow WayTooHigh.com and Twitter
The Federal Reserve Board on Thursday requested comment on a proposed rule that would establish debit card interchange fee standards and prohibit network exclusivity arrangements and routing restrictions.
The Board’s proposal would implement the debit card interchange fee and routing provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Debit card interchange fees are established by payment card networks and paid by merchants to card issuers for each transaction.
The proposed new Regulation II, Debit-Card Interchange Fees and Routing, would establish standards for determining whether a debit card interchange fee received by a card issuer is reasonable and proportional to the cost incurred by the issuer for the transaction. These standards would apply to issuers that, together with their affiliates, have assets of $10 billion or more. Certain government-administered payment programs and reloadable general-use prepaid cards would be exempt from the interchange fee limitations.
The Board is requesting comment on two alternative interchange fee standards that would apply to all covered issuers: one based on each issuer’s costs, with a safe harbor (initially set at 7 cents per transaction) and a cap (initially set at 12 cents per transaction); and the other a stand-alone cap (initially set at 12 cents per transaction). Under both alternatives, circumvention or evasion of the interchange fee limitations would be prohibited. The Board also is requesting comment on possible frameworks for an adjustment to the interchange fees to reflect certain issuer costs associated with fraud prevention.
If the Board adopts either of these proposed standards in the final rule, the maximum allowable interchange fee received by covered issuers for debit card transactions would be more than 70 percent lower than the 2009 average, once the new rule takes effect on July 21, 2011.
The proposed rule would also prohibit all issuers and networks from restricting the number of networks over which debit card transactions may be processed. The Board is requesting comment on two alternative approaches: one alternative would require at least two unaffiliated networks per debit card, and the other would require at least two unaffiliated networks per debit card for each type of cardholder authorization method (such as signature or PIN). Under both alternatives, the issuers and networks would be prohibited from inhibiting a merchant’s ability to direct the routing of debit card transactions over any network that the issuer enabled to process them.
According to the recently released 2010 Federal Reserve payment study, debit card use in the United States now exceeds all other forms of noncash payments and, by number of payments, represents approximately 35 percent of total noncash payments.
Comments on the proposal are due by February 22, 2011.
Today, Atlantapost.com wrote that Mitch Goldstone, president and CEO of ScanMyPhotos.com has called for Kim Kardasian and her terminated “Kim Kard” prepaid MasterCard to use the lesson learned to demand an end to all unfair credit and debit card fees from MasterCard and Visa.
In the Economy | Stocks in Red on Big Earnings Day – U.S. stocks got off to a weak start Friday after Bank of Americ… http://ht.ly/18a4Dh
Financial Blog Alert Don’t click on that FDIC’ link – The Federal Deposit Insurance Corp., or FDIC, has issued a war… http://ht.ly/18a4DR
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Last time VISA, MasterCard lost suit, paid ~$3B settlement then RAISED fees to more than cover, not this time! END #swipefees
Thanks @NACSOnline and your members for helping to pass financial reform & limit debit card #swipefees
Mitch Goldstone, Pres & CEO of ScanMyPhotos.com calls MasterCard/Visa #SwipeFees “a vulgar statement of credit card greed.”
MNRetailersAsso NRF Calls Passage of Landmark Swipe Fee Fix a Major Victory for Retailers and Consumers over Debit and Credit Card Fees http://bit.ly/9sihKO
National Restaurant Association Praises Senate Passage of Interchange Fee Reform http://bit.ly/d1eeIe
Crafty credit card issuers aren’t going to let a little thing like the law get in the way of their profits. Nope, they’re finding creative ways to get around the pro-consumer CARD act and maintain their grip on your pocketbook.
There is also uncertainty, for example, as to whether an amendment pushed by Senator Richard Durbin on credit-card interchange fees was intended to also extend regulatory oversight to other card fees. A spokesman for the senator said that wasn’t his intention. But if that isn’t spelled out, investors will be concerned about the potential impact on card processors like Visa and MasterCard and card issuers like American Express.
WASHINGTON—A total of 775 banks, or one-tenth of all U.S. banks, were on the Federal Deposit Insurance Corp.’s list of “problem” institutions in the first quarter, as bad loans in the commercial real-estate market weighed on bank balance sheets.
VISA using children, firefighters and seniors to justify fleecing small employers and consumers
WASHINGTON , May 21 /PRNewswire-USNewswire/ — Dennis Lane, single store 7-Eleven Franchise owner and national spokesman for the campaign to Reform Swipe Fees NOW!, released the following statement regarding VISA’s response to the U.S. Senate’s passage of sweeping financial regulatory reform.
“The credit card industry has officially hit a new low in their campaign to block financial reform. To justify fleecing small business owners like me, they are now hiding behind seniors, veterans, firefighters and even children to justify their business practices. Their unprecedented multi-million dollar lobbying having failed, they have now resorted to using human shields in a last-ditch effort to scuttle reform that will benefit millions of small businesses and their customers.”
From VISA’s statement upon passage of the Senate financial reform bill (S. 3217)
“Those who rely on prepaid cards for government disbursement, such as child support, could be particularly hard hit.”
“…could especially harm community banks and credit unions that depend on interchange to offer competitive banking services to firefighters, police officers, teachers, veterans, congressional staffers and other customers.
“This could be especially devastating for those on a fixed income who rely on prepaid cards for government disbursements such as social security.”
“Each of these suggestions is ridiculous, and VISA knows it. Rather than hurt workers and families, swipe fee reform will help small businesses grow, improve wages and benefits, and lower prices for consumers. But with its lobbying efforts failed, it’s become increasingly clear that the card industry is willing to say just about anything to protect the billions they are making exploiting small business.
“We need Congress to finish what it has started. For reform to be complete, it must include interchange reform. For our economy to grow again, we cannot allow VISA and the nation’s largest financial institutions to continue siphoning away billions each year from hardworking small business owners.”
About Reform Swipe Fees NOW: Reform Swipe Fees NOW is a project by the Retail Industry Leaders Association (RILA). The project unites U.S. business owners, small and large, in a campaign for fair credit card swipe fees.
WASHINGTON, May 21 /PRNewswire-USNewswire/ —The following is a statement from Michael Calhoun, President of Center for Responsible Lending:
“The economic crisis in our country has been deep and its impact devastating. Today, the U.S. Senate responded boldly by passing the Restoring American Financial Stability Act of 2010 (S.3217), which protects families and small businesses from unfair financial practices and guards against regulatory lapses like those that led to the largest taxpayer-funded bailout in U.S. history.
“Before the President can sign final legislation into law, the Senate must now reconcile its bill with similar legislation the House passed in December. We look forward to working with members of both chambers as they do that.
“But concerns remain. In this final stretch we hope lawmakers will resist Wall Street’s efforts to water down the bills’ strong provisions. First among these is the creation of a strong consumer financial protection agency with power to establish common-sense lending rules. Additionally, we urge Congress to ensure these rules are applied to all lenders – including auto dealers – and to resist attempts to give firms ‘veto power’ over proposed rules before a full public debate.
“As a result of the economic meltdown, millions of Americans have lost a great deal, including their jobs, their homes, their savings, and their confidence in our financial system. The reforms proposed by Congress will go far to helping restore trust. We call on them to act without delay.”
About the Center for Responsible Lending
The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help, one of the nation’s largest community development financial institutions.
SAN FRANCISCO, May 20, 2010 (BUSINESS WIRE) — The following is a statement from Visa Inc. in response to Senate passage of S. 3217:
“We are disappointed that legislation intended to make our financial system safer and fairer for consumers includes an irresponsible and anti-consumer amendment offered by Senator Durbin. Adopted with no debate or review of facts, the amendment allows retailers’ to shift their cost for accepting debit cards onto the backs of consumers while they continue to receive the value of electronic payments — including faster check-outs, ticket lift and guaranteed payment.
“Written and backed by lobbyists representing the nation’s largest retailers, the Durbin amendment could significantly harm consumers. Consumers could have less choice, higher costs and could experience an increase in costs for checking accounts and online banking fees and reduced debit card benefits like fraud protection and rewards. Those who rely on prepaid cards for government disbursement, such as child support, could be particularly hard hit.
“For financial institutions, this amendment could force them to reduce or eliminate valuable debit and checking account services and could especially harm community banks and credit unions that depend on interchange to offer competitive banking services to firefighters, police officers, teachers, veterans, congressional staffers and other customers.
“The Durbin amendment also gives retailers the power to set arbitrary, minimum purchase requirements for consumers choosing to pay with plastic. This means that customers who want to buy a gallon of milk or loaf of bread could be forced to buy more unnecessarily if they use electronic payments at the register. This could be especially devastating for those on a fixed income who rely on prepaid cards for government disbursements such as social security.
“The Durbin amendment is not germane to the overall Financial Reform bill legislation. We hope Congress sees the amendment for what it is — an attempt by retailers to increase their profits at the expense of consumers.”
SOURCE: Visa Inc. via Businesswire
For Visa Inc.
Steve Burke, 703-683-5004, ext. 108
sburke@crcpublicrelations.com
Provision Will Help Restaurateurs By Ensuring More Reasonable Costs to Processing Transactions
(Washington, D.C.) – The National Restaurant Association today praised U.S. Senate passage of an amendment sponsored by Sen. Dick Durbin (D-Ill.) that will give restaurants and other merchants a break on some payment card-processing fees set by banks and credit card companies. The Senate voted 64 to 33 to include the proposal in the financial reform bill, which is expected to pass the Senate sometime next week.
“Interchange fees are often restaurants’ third greatest operating expense, behind labor and food costs. Merchants pay about $48 billion in interchange fees every year,” said Scott DeFife, Executive Vice President for Policy and Government Affairs for the Association. “We are grateful to Senator Durbin for his leadership on this important issue, and appreciate the bipartisan support for addressing the problem of interchange fee practices that provide zero transparency or negotiation with merchants.”
Interchange fees, also known as “swipe fees,” and related contractual restrictions benefit credit card companies and card-issuing banks at the expense of merchants and consumers. The amendment would authorize the Federal Reserve to issue regulations that ensure interchange fees imposed on debit card transactions are “reasonable and proportional” to the costs of processing transactions. Debit transactions come directly from consumers’ checking accounts and are not credit, yet the interchange rate on debit transactions continues to increase.
The proposal would also permit merchants to set minimum and maximum transaction levels for credit cards. As a result, retailers would be free to choose their payment methods. Under current rules, merchants that accept credit or debit cards cannot set minimum transaction levels, although they sometimes lose money on small charge or debit transactions. Additionally, the amendment would increase competition and allow businesses to offer discounts to customers who pay with cash, checks, PIN debit, etc., which carry lower rates than credit cards.
The Association has long advocated for fairer transaction fees and is a member of the Merchants Payment Coalition, a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees. The coalition recently launched a new ad campaign to educate Congress and the public about interchange fees.
San Francisco-based Visa instituted an acquirer price increase last year (Digital Transactions News, March 17, 2009). In a conference call with analysts, Visa chief financial officer Byron H. Pollitt Jr. attributed the data-processing revenue growth to VisaNet’s 14% transaction increase and “the continuing effect of previously enacted pricing actions,” according to the Seeking Alpha transcript service.
It looks like another “pricing action” is on the way. Referring to an April price increase by MasterCard Inc., an analyst asked Visa executives if “you have raised merchant assessment pricing as well?” According to Seeking Alpha, chief executive Joseph W. Saunders responded, “Well, we’ve already announced an increase in our acquirers fees similar to the one that MasterCard did and ours is effective in July.” A Visa spokesperson declined further comment. As they do with interchange, acquirers are likely to pass on such network fee increases to their merchant clients.
Repost: National Retail Federation Senior Vice President and General Counsel Mallory Duncan Duncan discusses his October 8, 2009, testimony before the House Financial Services Committee and explains how the credit card industry is in an “arms race” to raise “swipe” fees.
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
What are swipe fees? A swipe fee is a fee collected from retailers by the credit card companies and their member banks every time a credit or debit card is used to pay for a purchase. This fee is also known as “interchange.” This fee varies with type of card, size of merchant and other factors, but as much as $2 of every $100 you spend on plastic goes to card issuers. Credit and debit card interchange collected by Visa and MasterCard banks totaled about $48 billion in 2008, triple what it was in 2001. These fees raise prices for consumers. In 2008, the average American family paid about $427 in interchange fees.
How much do hidden swipe fees cost consumers?
Swipe fees add to the price of everything we buy, even if we choose not to use a credit or debit card. Americans paid about $48 billion in credit card swipe fees in 2008 alone, more than all other credit card fees combined.
How are swipe rates determined?
Visa and MasterCard each separately work with their member banks to set swipe fees. The agreement between these banks, which should compete for business, is illegal price fixing and it hurts consumers and merchants.
How fast are swipe fees increasing?
Visa and MasterCard collected about $48 billion in swipe fees in 2008, triple what was collected in 2001. In 2008, the average American family paid about $427 in swipe fees. Swipe fees are rising the fastest on gasoline purchases; payouts to the credit card industry have more than doubled since 2004. Credit card companies and their member banks have increased the amount of swipe fees collected by both increasing rates and encouraging more people to pay by plastic instead of cash.
Don’t these fees just cover the cost of processing the transactions?
Even though advances in technology continue to bring down the cost of transaction processing, swipe fees keep going up. A recent study concluded that only 13 percent of the swipe fees that the big credit card companies collect actually goes for transaction processing. Most of the money goes toward profits for the banks, rewards programs that benefit mostly affluent cardholders and direct mail marketing campaigns that clog mailboxes with nine billion unsolicited credit card offers every year. Many of those unsolicited mailings include so-called “convenience checks”that can be stolen and cashed by someone other than the authorized card holder. Yet the card companies and their banks spend only four percent of the swipe fees they collect on measures to protect consumers from this and other forms of credit card fraud.
How do swipe fee rates in the U.S. compare to fees in other countries?
U.S. swipe fees average close to two percent, while in other industrialized countries like Australia the rate is one-half of one percent and in Europe the rate for cross border transactions is less than one-third of one percent.
Why are swipe fees so high in the U.S.? Visa and MasterCard each separately work with their member banks collectively to set the price of swipe fees. This is illegal price fixing and hurts Americans. Credit card swipe fees have tripled since 2001 and there’s no end in sight, even though the actual cost of transaction processing continues to go down.
Do consumers who pay with cash also pay hidden swipe fees?
American consumers pay the hidden credit card swipe fee on virtually every purchase they make, whether they use a credit card or not because the credit card companies require merchants to spread the cost of these fees to all of their customers. The system is structured so that credit card companies make more money on each transaction when the price of retail goods increases. For example, even though the cost of processing a $1 transaction is virtually the same as processing a $100 transaction, the swipe fee paid on that $100 sale is higher because the swipe fee is calculated as a percentage of the total sale. The higher the sale, the higher the fee.
What is being done about it
What are merchants doing to change unfair swipe fees?
A group of retailers, supermarkets, drug stores, convenience stores, fuel stations, and other businesses are fighting against unfair credit card fees. They want a more competitive and transparent card system that works better for consumers and merchants alike and have formed the Merchants Payments Coalition and launched the website unfaircreditcardfees.com. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees. Convenience stores across the nation, who are among the hardest hit by unfair swipe fees because of the fees assessed to gasoline sales, have taken action to alert their customers about these fees and are collecting millions of signatures urging Congress to reform the system. In addition, this website you are visiting (fightswipefees.com) makes it easy for consumers to sign an online petition to Congress or even send a letter directly to their representatives urging action to reform unfair swipe fees.
What are consumers doing to change unfair swipe fees?
Individual consumers are beginning to take action to urge Congress to reform unfair swipe fees. In the summer of 2009, nearly 1.7 million consumers signed petitions at 7-Eleven stores urging such action. This winter, millions more are signing similar petitions in convenience stores across the country or via this website (fightswipefees.com).
In addition, several national consumer organizations are urging Congress to take action. These include:
U.S. PIRG (Public Interest Research Group). In testimony before the House Financial Services Committee, Edmund Mierzwinski (PDF), PIRG’s consumer program director, supported legislation to reform unfair swipe fees and said:
Interchange fees are hidden charges paid by all Americans, regardless of whether they use credit, debit, checks or cash. These fees impose the greatest hardship on the most vulnerable consumers – the millions of American consumers without credit cards or banking relationships. These consumers basically subsidize credit and debit card usage by paying inflated prices – prices inflated by the billions of dollars of anticompetitive interchange fees. And unfortunately, those interchange fees continue to accelerate, because there is nothing to restrain Visa and MasterCard from charging consumers and merchants more.
Americans for Financial Reform. This is a coalition of 200 national, state and local consumer, labor, retiree, investor, community, and civil rights organizations who have come together to spearhead a campaign for real reform in our banking and financial system. In an official policy paper endorsing swipe fee reformt, the group said:
Markets don’t work when there are hidden fees and rules – and no one hides fees and rules better than the credit card companies. Credit card markets lack the information necessary for both consumers and merchants to make informed choices. For merchants, the markets lack adequate information because the associations prevent merchants from accurately informing consumers of the costs of credit card acceptance or attempting to direct them to more efficient and lower priced payment mechanisms. In fact, merchants have no alternative but to accept the card associations’ cards even when the associations significantly increase prices.
[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.
NEW YORK–(BUSINESS WIRE)–Citigroup Inc. today reported first quarter 2010 net income of $4.4 billion or $0.15 per diluted share, and revenues of $25.4 billion.
Revenues2 grew $7.5 billion and net income increased $5.8 billion, excluding the $10.1 billion pre-tax loss from the TARP repayment and exit of the loss-sharing agreement with the U.S. government in the fourth quarter of 2009. Provisions for credit losses and for benefits and claims2 declined $2.4 billion sequentially to $8.6 billion, the lowest level since the first quarter of 2008. Expenses were down 6% sequentially to $11.5 billion.
The obvious question is whether financial reform of the kind now being contemplated would have prevented some or all of the fraud that now seems to have flourished over the past decade. And the answer is yes.
For one thing, an independent consumer protection bureau could have helped limit predatory lending. Another provision in the proposed Senate bill, requiring that lenders retain 5 percent of the value of loans they make, would have limited the practice of making bad loans and quickly selling them off to unwary investors.
Legislation unveiled by Senate Banking Committee Chairman Chris Dodd omits credit card interchange fee reform.
WASHINGTON – This week Senate Banking Committee Chairman Chris Dodd (D-CT) unveiled a financial regulation overhaul bill that omits an important issue to convenience and petroleum retailers, consumers and small businesses in general: credit and debit card interchange (or “swipe”) fee reform.
Last year, Dodd announced his intention to draft legislation addressing the country’s outrageous interchange fees. It seemed to many that the broad financial overhaul bill would be a natural home for the swipe fee fix.
Retail groups in Washington, while disappointed that this issue was left out of the legislation, expressed a strong desire to work with Dodd and members of the Senate Banking Committee to address swipe fee reform.
“What we are seeing is merely the first draft of the legislation,” according to Lyle Beckwith, NACS senior vice president of government relations. “This bill is far from complete and we can expect to see more iterations and many amendments offered as it moves through the Senate process. All of this tweaking could allow for swipe fee language to be included.”
“Financial services reform isn’t complete without swipe fee reform,” said Mallory Duncan, general counsel for the National Retail Federation. “Chairman Dodd has acknowledged the impact of these fees on consumers in the past, and we hope to see them addressed in the final version of this legislation.”
Dodd’s legislation faces a tough road ahead — no Republicans are backing the bill yet, and numerous interest groups from the financial services industry are crying foul over provisions that either have been included or excluded. Dodd, however, is confident the bill will pass, although he recognizes some issues remain. “Over the last few months, Banking Committee members have worked together to try and produce a consensus package,” Dodd said. “Together we have made significant progress and resolved many of the items, but a few outstanding issues remain.”
The Hill reports that a full Senate Banking Committee markup is scheduled the week of March 22 and Senate Democrats are hoping to pass the bill before the Memorial Day recess.
Above content from NACSOnline; For more on card fees and what NACS is doing, visit the NACS Issue Page.
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.
Hearing provided a critical opportunity to address the impact of hidden swipe fees and review possible solutions.
SACRAMENTO – Monday afternoon, California Assemblyman Pedro Nava, chair of the Assembly Banking and Finance Committee, held an investigative hearing on the impact of hidden credit card swipe fees on California consumers and small businesses. Californians paid nearly $5 billion in swipe fees in 2008.
Small-business owners and advocates know that these hidden fees — which total more than credit card annual fees, cash advance fees, over-the-limit fees, and late fees combined – are crippling Main Street businesses and hurting their customers at a time when they can least afford it.
This hearing provided a critical opportunity to address the impact of hidden swipe fees and review possible solutions. The hearing is particularly notable both because of the size and impact of the California economy in the United States and because Visa’s headquarters are located in the state.
“This hearing is important, because it shows that Assemblyman Nava is listening to his constituents and that he recognizes, at a time when the economy is already so bad, that we can’t afford to let Visa, MasterCard, and the big banks rake in billions of dollars in hidden fees on the backs of small businesses and consumers,” said Mitch Goldstone, president and CEO of ScanMyPhotos.com, an Irvine, Calif.-based retail and online business that feels the impact of ever-increasing swipe fees every day.
“It’s also important that it’s happening in California. First, because we have such a large economy on our own, and reforms that start here often get picked up across the country. And second, because Visa is headquartered in California, this represents a dramatic signal to them that lawmakers are joining small businesses and our customers in saying ‘enough is enough,’” said Goldstone in a press release.
“Reforms are needed to create a transparent process for businesses to negotiate rates and enhance public awareness of interchange fees, which continue to increase,” testified Liz Garner of the Food Marketing Institute the hearing.
“Card companies and banks collect an interchange fee averaging about 2 percent on every credit and debit card transaction, and can raise the rates at any time by any amount,” she said. “We are working for a more competitive and transparent card system that works better for consumers and merchants alike, and hearings like this one are a critical step in that process.”
Credit card interchange fees squeezed American consumers and businesses to the tune of $48 billion in 2008. These hidden fees are set in secret by the banks and credit card companies and charged to store owners every time they run a customer’s credit card.
Americans pay the highest swipe fee rates in the industrialized world. On average, two dollars of every $100 a consumer spends using a credit card goes directly to the credit card industry. That adds up to $427 a year for every American household. Since 2001, the amount Americans pay in swipe fees has tripled.
Since 1990, I have owned and operated a photo imaging business in Irvine called 30 Minute Photos Etc. and now ScanMyPhoto.com. Times are tough for a lot of retailers just like they are for a lot of our customers. But it’s not just the economy that make times tough for retailers and our customers. It’s the credit card industry.
The credit card business is designed to do better when Americans are doing worse. Visa, MasterCard and their bank partners are arbitrarily raising interest rates on existing credit and debit card, raising credit card late fees, and even charging interest on credit card debt that is paid on time.
But what actually cost consumers more is the huge, hidden fees on every credit card transaction known as interchange that is passed through to customers in the form of higher prices. Two dollars out of every $100 spent in the U.S. in stores and gas stations goes to pay interchange also known as swipe fees whether the customer uses plastic or not.
But it’s not just credit card hidden fees that are skyrocketing, debit card fees are also rising. As Andrew Martin wrote in “The Card Game – How Visa, Using Card Fees, Dominates a Market” in the New York Times on January 5, 2010, Visa pushed signature debit over PIN debit starting in the early 1990s because they could charge 13 times the fee for signature debit than they could for PIN debit – even though PIN debit is the more secure choice for the customer and less prone to ID theft.
That’s right. Visa decided to push signature debit even though it compromises cardholder security compared to PIN debit just to make more money for its member banks. Visa and MasterCard also have rules that prohibit merchants from telling customers that they are paying inflated fees at point of purchase due to swipe fees. Visa and MasterCard partner banks won’t disclose on their customer’s monthly card statements how much these fees cost them either. And merchants are prohibited from discounting the price for customers who pay by cash, checks, or lower cost debit, such as PIN.
It’s outrageous behavior like this by Visa, MasterCard, and their partner banks that led me to become the lead plaintiff in what may be the largest class-action antitrust litigation in U.S. history, one designed to help rein in the credit card industry.
Interchange fees were designed 40 years ago to cover the costs for manual credit card imprinting (remember carbon copy receipts?). Today, technology and other efficiencies have made credit card swipe fees all but unnecessary. There are no interchange fees when using store gift cards or writing checks – but due to unbridled market power of Visa, MasterCard and their partner banks there are still interchange swipe fees.
Ten years ago, when my company first started using digital scanning, it cost $5 dollars per photo because the process was so expensive. Today I charge 5 cents because the process has never been cheaper. Unlike the credit card industry, I operate in a free market. Even if I tried to charge $5 for digital scanning like ten years ago no one would pay it – they just go down the street to the next guy with a digital scanner.
It has never been cheaper to swipe a credit or debit card. But unlike the market for digital scanning – or for that matter gas, groceries, and all other retail goods and services — there is no competition down the street to lower the cost of card transactions. Visa and MasterCard control 80% of the card market and their respectively card networks set the price. That’s why credit card swipe fees, unlike retail prices, are the same in all fifty states. No wonder the cost of swipe to consumers has tripled since 2001 to $427 per average household.
Every other economically advanced country has either reformed interchange or is in the process of doing so. But largely because of the power of the credit card industry in Congress, Americans pay the highest credit and debit card swipe fees in the world. We pay four times what Australians pay for the exact same set of credit card goods and services. So write your congressperson, write your senator, and tell them that you want them to put out the fire that is burning a hole in your pocket.
CNN national political correspondent Jessica Yellin filed a report on Saturday on Your Bottom Line, hosted by Gerri Willis, examining credit-card interchange fees, “a hidden cost store owners say is crippling business.”
Estimates show that in 2008 banks collected $38 billion to $46 billion in swipe fees alone, and some in Congress say that’s way too much and a sign that too few banks control the credit-card business, said the report.
Here is a transcript of the report:
Gerri Willis, host of CNN’s Your Bottom Line: While consumers are outraged about sky-high credit-card fees, businesses across the country are feeling the crunch, too. CNN national political correspondent Jessica Yellin joins us now to break down interchange fees.
Yellin: Gerri, I didn’t know these fees existed until I reported this story. Banks make money every time you or I use a credit card. They charge merchants a fee just for accepting the card and, no surprise, businesses pass that cost on to you and me.
According to the National Retail Federation, in 2008 the average household spent $427 on these interchange fees alone. And some in Congress are finding it hard to change that.
Yellin: It’s a hidden cost store owners say is crippling business; it’s called a swipe fee. Each time a customer uses a Visa or MasterCard, business owners like Keith Lipert have to pay a fee and that’s passed on to consumers. [This item costs] $125?
Keith Lipert, Gallery Owner: That’s $125. So the interchange on $125 would be about $2.
Yellin: The fee can be as much as 3% of your purchase, and it adds up. Lipert says swipe fees cost him as much as rent and health care.
Lipert: As a shopkeeper, I’m getting a service or a convenience for the credit-card companies, and that is fair. My objection is that I’m not allowed to negotiate.
Yellin: Credit-card companies say it’s the cost of processing transactions. What are they really getting for that fee? What’s the service that’s being provided?
Trish Wexler, Electronic Payments Coalition: So they’ll get almost instant payment and guaranteed payment for it. Whereas my card issuer, I won’t pay them for another 30 days, so there’s the float on the funds, which is a big component.
Yellin: Estimates show that in 2008 banks collected $38 billion to $46 billion in swipe fees alone. Some in Congress say that’s way too much and a sign that too few banks control the credit-card business.
Rep. Peter Welch (D-Vt.): What we’ve seen, really, is that the financial services industry is starting to make its money not so much by providing reasonable service, but by manipulating price by having a lot of hidden fees, by having a lot of extra transaction costs in running up their profits by doing that in taking advantage of monopoly power.
Yellin: Several bills before Congress would reduce these rates by allowing businesses to negotiate with card companies, but don’t expect those bills to pass any time soon. The industry, which is spending big on lobbyists, insists lowering swipe fees would end up costing consumers in other ways.
Wexler: If interchange rates are forced down below what is sustainable for a card program, then rates are going to have to go up or rewards are going to have to go away. Those are the facts.
Yellin: But Lipert says that Washington should stand up to the banks.
Lipert: We need, as a country, to address this.
Yellin: Now, there’s another reform some in Congress are pushing for now—they want to let retailers charge a lower price if you pay cash. And in a different slightly higher you use your credit card. That way at least only credit-card users are paying these swipe fees, but Gerri, no surprise, so far banks and credit-card companies are fighting that reform, too.
Willis: All right, so obviously we’re seeing yet another fee being passed on to us through retailers. But, what can you do as a consumer?
Yellin: There are two things you can do. If you have to use your credit card, use your debit card, the swipe fee on that is lower than actually using a credit card. And the other is, if you choose a card that doesn’t have as many rewards on it, the swipe fee is lower, the banks are actually charging you for those rewards with that swipe fee.
Willis: All right, and you can always pay cash, there’s always cash. What other reforms might happen?
Yellin: Well, they’re talking about, first of all, disclosing these fees, so that you know what you’re paying. They’re talking about also reducing the cost of…fixing the cost of rewards charges so that you know what you’re paying on rewards cards and they can’t charge you more for that.
But here’s the really important one. There’s a discussion of allowing the Federal Trade Commission to determine if these practices are anti-competitive. That’s because these big banks are getting all together and deciding what the swipe fees should be and some say that’s colluding, that’s monopoly and it should change.
Click here to listen to NPR Mallory Duncan, Mitch Goldstone radio interview.
Few consumers know, or care, what the difference is between signing their name and using their PIN number when they make a purchase using their debit card. Ah, but merchants do. That simple choice you make can add up to hundreds of millions, if not billions, of dollars in annual fees for merchants. If you sign (and 61% of us do), it can cost a merchant twice as much as using a PIN (which is less vulnerable to fraud). Costco won’t allow their customers to sign for transactions because of the higher fee. Visa and MasterCard dominate the market and they set the fees, which banks collect. Those fees (the ones mentioned above and others including something called an “interchange fee”) have some merchants outraged. So outraged that some have banned together to file the largest antitrust class-action lawsuit in US history.
Watch this Andrew Martin reported New York Times produced video about Visa and MasterCard merchant interchange fees. Profile and article includes Mitch Goldstone, president & CEO, ScanMyPhotos.com
Credit card swipe fees have gone up by 300% in the last decade. Every time you use your credit card at small business, the small business owner must give a significant portion of that sales price to the credit card companies — simply for the privilege of accepting their card!
High credit card swipe fees mean:
Small businesses put billions of dollars in the pockets of credit card companies and banks and can’t grow and create jobs for Americans.
Consumers feel an extra pinch in their wallet as they face higher prices for everything from food and gasoline to consumer electronics and clothing.
You can fight back. Together we can call on policymakers to set rules to hold credit card companies accountable and reduce the unfair fees they charge consumers and small businesses.
J.D. Power & Associates found overall satisfaction among credit card customers to be the lowest in the financial services industry – even though banks and investment firms failed and insurance companies became wards of government.
(J.D. Power and Associates, “Fees and Rates Drive Decline in Overall Credit Card Customer Satisfaction,” www.jdpower.com, 9/1/09)
A swipe fee is a fee collected from retailers by the credit card companies and their member banks every time a credit or debit card is used to pay for a purchase. This fee is also known as “interchange.” This fee varies with type of card, size of merchant and other factors, but as much as $2 of every $100 you spend on plastic goes to card issuers. Credit and debit card interchange collected by Visa and MasterCard banks totaled about $48 billion in 2008, triple what it was in 2001. These fees raise prices for consumers. In 2008, the average American family paid about $427 in interchange fees.
Swipe fees add to the price of everything we buy, even if we choose not to use a credit or debit card. Americans paid about $48 billion in credit card swipe fees in 2008 alone, more than all other credit card fees combined.
Visa and MasterCard each separately work with their member banks to set swipe fees. The agreement between these banks, which should compete for business, is illegal price fixing and it hurts consumers and merchants.
Visa and MasterCard collected about $48 billion in swipe fees in 2008, triple what was collected in 2001. In 2008, the average American family paid about $427 in swipe fees.
Swipe fees are rising the fastest on gasoline purchases; payouts to the credit card industry have more than doubled since 2004.
Credit card companies and their member banks have increased the amount of swipe fees collected by both increasing rates and encouraging more people to pay by plastic instead of cash.
Even though advances in technology continue to bring down the cost of transaction processing, swipe fees keep going up. A recent study concluded that only 13 percent of the swipe fees that the big credit card companies collect actually goes for transaction processing. Most of the money goes toward profits for the banks, rewards programs that benefit mostly affluent cardholders and direct mail marketing campaigns that clog mailboxes with nine billion unsolicited credit card offers every year.
Many of those unsolicited mailings include so-called “convenience checks”that can be stolen and cashed by someone other than the authorized card holder. Yet the card companies and their banks spend only four percent of the swipe fees they collect on measures to protect consumers from this and other forms of credit card fraud.
U.S. swipe fees average close to two percent, while in other industrialized countries like Australia the rate is one-half of one percent and in Europe the rate for cross border transactions is less than one-third of one percent.
Visa and MasterCard each separately work with their member banks collectively to set the price of swipe fees. This is illegal price fixing and hurts Americans. Credit card swipe fees have tripled since 2001 and there’s no end in sight, even though the actual cost of transaction processing continues to go down.
American consumers pay the hidden credit card swipe fee on virtually every purchase they make, whether they use a credit card or not because the credit card companies require merchants to spread the cost of these fees to all of their customers. The system is structured so that credit card companies make more money on each transaction when the price of retail goods increases. For example, even though the cost of processing a $1 transaction is virtually the same as processing a $100 transaction, the swipe fee paid on that $100 sale is higher because the swipe fee is calculated as a percentage of the total sale. The higher the sale, the higher the fee.
A group of retailers, supermarkets, drug stores, convenience stores, fuel stations, and other businesses are fighting against unfair credit card fees. They want a more competitive and transparent card system that works better for consumers and merchants alike and have formed the Merchants Payments Coalition and launched the website unfaircreditcardfees.com. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees.
Convenience stores across the nation, who are among the hardest hit by unfair swipe fees because of the fees assessed to gasoline sales, have taken action to alert their customers about these fees and are collecting millions of signatures urging Congress to reform the system. In addition, this website you are visiting (fightswipefees.com) makes it easy for consumers to sign an online petition to Congress or even send a letter directly to their representatives urging action to reform unfair swipe fees.
Individual consumers are beginning to take action to urge Congress to reform unfair swipe fees. In the summer of 2009, nearly 1.7 million consumers signed petitions at 7-Eleven stores urging such action. This winter, millions more are signing similar petitions in convenience stores across the country or via this website (fightswipefees.com).
A rare bi-partisan consensus has emerged that the forces that drive free enterprise should also drive how swipe fees get set. Currently, Congress is considering legislation specifically focused on this issue as well as other bills that are expected to address reform. The following are key actions taken or expected to be taken in the near future:
H.R. 2965, the Credit Card Fair Fee Act and S. 1212, the Credit Card Fair Fee Act. These bills are very similar and each will allow merchants to come together and negotiate with the credit card companies and their banks swipe fee rates and acceptance terms. Similar legislation was passed by the House Judiciary Committee in 2008.
H.R. 2382, the Credit Card Interchange Fees Act. This bill will repeal some of the rules imposed by credit card companies on merchants that are anti-competitive, empower the Federal Trade Commission to take further action if necessary and will require disclosure of swipe fee rates and rules.
Government Accountability Office report on Rising Interchange Fees (PDF). This report confirms many of the most harmful aspects of unfair, hidden swipe fees. The report shows that the credit card companies and their issuing banks have been misleading the public about their increasing rates and about the benefits of credit cards to businesses. The report also outlines an unfair, anti-competitive system that hurts Main Street businesses and their customers in order to pad the banks’ bottom lines, with little relation to the actual costs of processing payments.
In addition, several national consumer organizations are urging Congress to take action. These include: U.S. PIRG (Public Interest Research Group). In testimony before the House Financial Services Committee, Edmund Mierzwinski (PDF), PIRG’s consumer program director, supported legislation to reform unfair swipe fees and said:
Interchange fees are hidden charges paid by all Americans, regardless of whether they use credit, debit, checks or cash. These fees impose the greatest hardship on the most vulnerable consumers – the millions of American consumers without credit cards or banking relationships. These consumers basically subsidize credit and debit card usage by paying inflated prices – prices inflated by the billions of dollars of anticompetitive interchange fees. And unfortunately, those interchange fees continue to accelerate, because there is nothing to restrain Visa and MasterCard from charging consumers and merchants more.
Americans for Financial Reform. This is a coalition of 200 national, state and local consumer, labor, retiree, investor, community, and civil rights organizations who have come together to spearhead a campaign for real reform in our banking and financial system. In an official policy paper endorsing swipe fee reformt, the group said:
Markets don’t work when there are hidden fees and rules – and no one hides fees and rules better than the credit card companies. Credit card markets lack the information necessary for both consumers and merchants to make informed choices. For merchants, the markets lack adequate information because the associations prevent merchants from accurately informing consumers of the costs of credit card acceptance or attempting to direct them to more efficient and lower priced payment mechanisms. In fact, merchants have no alternative but to accept the card associations’ cards even when the associations significantly increase prices.
NACS launches phase two of a consumer petition campaign to tell Congress, ‘’Stop unfair credit card fees.’
ALEXANDRIA, VA – More than 8,000 retail stores have signed up as part of the biggest consumer petition drive in American history. These retailers and their customers are telling Congress, “It’s time to reform unfair credit/debit card swipe fees.” Now, NACS is empowering other retailers to join the campaign by visiting www.nacsonline.com/fightswipefees.This fall, 7-Eleven franchisees delivered nearly 1.7 million customer signatures to Congress — the largest number of signatures collected for a public policy issue in history — urging members to “Stop unfair credit card fees.”
Beginning December 15, NACS is coordinating an unprecedented campaign to generate millions more signatures from convenience customers, encouraging Congress to reform unfair credit and debit card interchange, or “swipe,” fees.
The campaign, the second phase of the industry’s consumer petition campaign, was announced on October 21 at the NACS Show in Las Vegas and immediately generated the participation of thousands of stores throughout the country,.
Both 7-Eleven CEO Joe DePinto and Alimentation Couche-Tard CEO Alain Bouchard, who led his company’s credit card interchange petition drive that collected 400,000-plus customer signatures at its Circle K stores, urged retailers to launch their own petition drive in their stores in a video introduced at the NACS Show.
NACS has made joining this effort easy. All the materials retailers need to participate in the latest petition campaign are available free of charge at http://www.nacsonline.com/fightswipefees. These materials can be downloaded and sent to a local printer and then displayed in stores.
“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.”
As credit card companies face rising public anger, new regulation from Washington and staggering new rates of default and bankruptcy, FRONTLINE correspondent Lowell Bergman investigates the future of the massive consumer loan industry and its impact on a fragile national economy.
In The Card Game, a follow-up to the Secret History of the Credit Card and a joint project with The New York Times airing Tuesday, Nov. 24, 2009, at 9 P.M. ET on PBS (check local listings), Bergman and the Times talk to industry insiders, lobbyists, politicians and consumer advocates as they square off over attempts to reform the way the industry has done business for decades.
“The card issuers could do anything they want,” Robert McKinley, CEO of CardWeb.com, tells FRONTLINE of the industry’s unchecked power over consumers. “They could change your interest rate. They could impose an annual fee. They could close your account.” High interest rates along with more and more penalty fees drove up profits for the industry, Bergman finds, as the banks followed the lead of an aggressive upstart: Providian Bank. In an exclusive interview with FRONTLINE, former Providian CEO Shailesh Mehta tells Bergman how his company successfully targeted vulnerable low-income customers whom Providian called “the unbanked.”
“They’re lower-income people-bad credits, bankrupts, young credits, no credits,” Mehta says. Providian also innovated by offering “free” credit cards that carried heavy hidden fees. “I used to use the word ‘penalty pricing’ or ‘stealth pricing,'” Mehta tells FRONTLINE. “When people make the buying decision, they don’t look at the penalty fees because they never believe they’ll be late. They never believe they’ll be over limit, right? … Our business took off. … We were making a billion dollars a year.”
It took the economic collapse in the fall of 2008 to set the stage for potentially historic change in the consumer credit business. President Obama and his team pushed through a credit card reform bill in May, and they’re now looking to establish a new Consumer Finance Protection Agency. But the banking and financial services industries contribute huge amounts of money to Congress — and the jury is still out on whether the new regulations can pass. “It’s a step in the right direction, but it’s a modest step,” says Harvard law professor Elizabeth Warren. “It’s a set of very discrete new laws. And the credit industry instantly set to work on how they could run around them. By itself, that set of rules won’t change the game.”
“It’s hard for them to get a bill through the U.S. Senate when the industry is pouring money into Washington,” says Martin Eakes of the Center for Responsible Lending of the banks’ political clout. “As Sen. [Dick] Durbin from Chicago recently said, ‘The banks, even as unpopular as they are right now in this crisis, still own this place.'”
The Card Game is a FRONTLINE co-production with Cam Bay Productions and The New York Times. The film is written and produced by Lowell Bergman and Oriana Zill de Granados. The correspondent is Lowell Bergman. FRONTLINE is produced by WGBH Boston and is broadcast nationwide on PBS. Funding for FRONTLINE is provided through the support of PBS viewers. Major funding for FRONTLINE is provided by The John D. and Catherine T. MacArthur Foundation. Additional funding is provided by the Park Foundation. FRONTLINE is closed-captioned for deaf and hard-of-hearing viewers and described for people who are blind or visually impaired by the Media Access Group at WGBH. FRONTLINE is a registered trademark of the WGBH Educational Foundation. The executive producer of FRONTLINE is David Fanning.
Recommend: retailers and merchants urged to ask Sen Dodd to include interchange fee reform in banking bill, here is how:
The voice from actual constituents for each Banking Committee member can make a difference. Explain and personalize why merchant interchange “swipe” fees are an unfair and a hidden tax. Ask why the rates in the U.S. are three-time that of other industrialized nations and urge that among any credit card reform is that interchange fees be included. Write letters to the editor. Make sure your lawmakers and local media know the facts about interchange fees and how much they are costing retailers and consumers [unfaircreditcardfees.com].
Stop Unfair Credit Card Fees
Tell Your Elected Representatives To Act On Interchange Fees
Credit card fees known as interchange are hidden in the cost of nearly everything consumers buy. In 2008 alone, American consumers paid over $48 billion in credit card interchange fees. Even consumers who don’t use plastic pay more through higher prices. Visa issuers collectively set credit card interchange fees in secret and MasterCard issuers separately do the same. The fees can’t be negotiated and are not adequately disclosed to merchants or consumers.
Tell your elected representatives to stop the price-fixing by the credit card industry by providing an open and transparent process to negotiate credit card interchange fees.
Send your message now.
Who to reach on the Banking Committee:
Majority Members
Chris Dodd (D-Conn); Hartford Office: 30 Lewis Street, Suite 101, Hartford, CT 06103; Tel: (860) 258-6940 Fax: (860) 258-6958
Tim Johnson (D-SD); Banking Legislative Assistant (LA) Laura Swanson, Email: laura_swanson@johnson.senate.gov, Sioux Falls Office: 5015 South Bur Oak Place, Sioux Falls, SD 57108; Tel: (605) 332-8896 Fax: (605) 332-2824
Jack Reed (D-RI); Banking LA: Kara Stein
Email: kara_stein@reed.senate.gov; Providence Office: U.S. Federal Court House, One West Exchange Street, Room 408, Providence, RI 02903; Tel: (401) 528-5200 Fax: (401) 528-5242
Evan Bayh (D-IN); Banking LA: Ellen Chube, Email: Ellen_Chube@Bayh.senate.gov, Indianapolis Office: West Market Tower, 10 West Market Street, Suite 1650, Indianapolis, IN 46204; Tel: (317) 554-0750 Fax: (317) 554-0760
Bob Menendez (D-NJ), Banking LA: Michael Passante, Email: Michael_passante@menendez.senate.gov; Newark Office: One Gateway Center, 11th Floor, Newark, NJ 07102-5257; Tel: (973) 645-3030 Fax: (973) 645-0502
Daniel Akaka (D-HI), Banking LA: Matt Pippin
Email:matt_pippin@akaka.senate.gov; Honolulu Office: Prince Kuhio Federal Building, 300 Ala Moana Boulevard, Room 3-106, Honolulu, HI 96850 P.O. Box 50144, Honolulu, HI 96850; Tel: (808) 522-8970 Fax: (808) 545-4683
Sherrod Brown (D-OH), Banking LA: Patrick Johnson, Email: patrick_johnson@brown.senate.gov; Cleveland Office: 1301 East Ninth Street, Suite 1710, Cleveland, OH 44114, Tel: (216) 522-7272 Fax: (216) 522-2239
Jon Tester (D-MT), Banking LA: Jason Rosenberg, Email: Jason_rosenberg@tester.senate.gov; Helena Office: Capital One Center, 208 North Montana Avenue, Suite 202, Helena, MT 59601; Tel: (406) 449-5401 Fax: (406) 449-5462
Herb Kohl (D-WI), Banking LA: Hilary Swav
Email: Hilary_swav@kohl.senate.gov, Madison Office: 14 West Mifflin Street, Suite 207, Madison, WI 53703; Tel: (608) 264-5338 Fax: (608) 264-5473,
Mark Warner (D-VA), Banking LA: Nathan Steinwald, Email: Nathan_steinwald@warner.senate.gov; Richmond Office: 919 East Main Street, Suite 630, Richmond, VA 23112, Tel: (804) 775-2314 Fax: (804) 775-2319
Jeff Merkley (D-OR), Banking LA: Andrew Green, Email: Andrew_green@merkley.senate.gov; Portland Office: One World Trade Center, 121 SW Salmon Street, Suite 1400, Portland, OR 97204 P.O. Box 29136, Portland, OR 97296, Tel: (503) 326-3386 Fax: (503) 326-2900
Michael Bennet (D-CO), Banking LA: Brian Appel, Email: brian_appel@bennet.senate.gov, Denver Office: 2300 15th Street, Suite 450, Denver, CO 80202, Tel: (303) 455-7600 Fax: (303) 455-8851
Minority Members
Richard C. Shelby (R-AL), Banking LA: Graham Smith, Email: graham_smith@shelby.senate.gov; Birmingham Office: Robert S. Vance Federal Building, 1800 Fifth Avenue North, Room 321,
Birmingham, AL 35203, Tel: (205) 731-1384 Fax: (205) 731-1386
Bob Corker (R-TN), Banking LA: Courtney Geduldig, Email:courtney_geduldig@corker.senate.gov; Memphis Office: 100 Peabody Place, Suite 1125, Memphis, TN 38103, Tel: (901) 683-1910 Fax: (901) 575-3528
Jim DeMint (R-SC), Banking LA: Hap Rigby
Email: hap_rigby@demint.senate.gov; Columbia Office: 1901 Main Street, Suite 1475, Columbia, SC 29201, Tel: (803) 771-6112 Fax: (803) 771-6455
Kay Bailey Hutchison (R-TX), Austin Office:Federal Building, 300 East Eighth Street, Suite 961, Austin, TX 78701; Tel: (512) 916-5834 Fax: (512) 916-5839
Mike Crapo (R-ID), Banking LA: Gregg Richard
Email: Gregg_richard@crapo.senate.gov, Boise Office: 251 E. Front St., Suite 205, Boise, ID 83702; Tel: (208) 334-1776 Fax: (208) 334-9044
Others: Re-election in 2010
Democrates Byron Dorgan (D-ND), Banking LA: Allen Huffman, Email: Allen_huffman@dorgan.senate.gov; Bismark Office: 312 Federal Building PO Box 2579, Bismarck, ND 58502; Tel: (701) 250-4618 Fax (701) 250-4484
Russ Feingold (D-WI), Milwaukee Office: 517 East Wisconsin Ave., Room 408, Milwaukee, WI 53202-4504; Tel: (414) 276-7282 Fax (414) 276-7284
Kristen Gillibrand (D-NY), Banking LA: Kevin Fink, Email: Kevin_fink@gillibrand.senate.gov; New York City Office: 780 Third Avenue, Suite 2601, New York, New York 10017;
Tel. (212) 688-6262, Fax (212) 688-7444
Blanche Lincoln (D-AR), Banking LA: Anna Taylor, Email: anna_taylor@lincoln.senate.gov; Little Rock Office: 912 West Fourth Street Little Rock, AR 72201, Tel: (501) 375-2993 Fax (501) 375-7064
Harry Reid (D-NV), Banking LA: Mark Wetjen
Email: mark_wetjen@reid.senate.gov; Las Vegas Office: Lloyd D. George Building 333 Las Vegas Boulevard South, Suite 801 Las Vegas, NV 89101; Tel: (702)388-5020, Fax: 702-388-5030
Republicans
Chuck Grassley (R-IA), Banking LA:Kathy Nuebel Kovarik, Email: Kathy_nuebel@grassley.senate.gov; Des Moines Office: 721 Federal Building 210 Walnut Street Des Moines, IA 50309; Tel: (515) 288-1145 Fax: (515) 288-5097
Johnny Isakson (R-GA), Banking LA: Chris Cook; Email: chris_cook@isakson@senate.gov; Atlanta Office: One Overton Park, Suite 970 3625 Cumberland Blvd, Atlanta, GA 30339; Tel: (770) 661-0999, Fax: (770) 661-0768
Dick Lugar (R-IN), Banking LA: Kylin McCardle
Email: kylin_mccardle@lugar.senate.gov; Indianapolis Office: 10 West Market St Suite 1180, Indianapolis,IN 46204, Tel: (317) 226-5555, Fax: (317) 226-5508
Olympia Snowe (R-ME), Banking LA: Matthew Berger, Email: matthew_berger@sbc.senate.gov; Portland Office: 3 Canal Plaza Suite 601 Portland, ME 04101, Tel: (207) 874-0883, Fax: (207) 874-7631
Susan Collins (R-ME), Banking LA: Mark LeDuc, Email: mark_leduc@hsgac.senate.gov; Portland Office: One Canal Plaza Suite 802 Portland, ME 04101; Tel: (207) 780-3575
George Voinovich (R-OH), Banking LA: Jan Elizabeth Fowler, Email: Jan¬_fowler@voinovich.senate.gov; Cleveland Office: 1240 East 9th Street Room 3061 Cleveland, OH 44199, Tel: (216) 522-7095, Fax: 522-7097
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.
Americans for Financial Reform adopts official position to reform deceptive credit card interchange practices.
[repost from NACSOnline]
WASHINGTON – Americans for Financial Reform, a group of about 200 national and state organizations that support reform to our nation’s current financial sector, announced its support this week to reform credit card industry practices.
The group released a position paper that outlines its members concerns and support for legislative action that would bring transparency and fairness to a broken system — particularly hidden “swipe fees” (interchange fees) “paid by all Americans, regardless of whether they use credit, debit, checks or cash.”
The group writes:
“Swipe fees have grown at a staggering pace — from about $16 billion in 2001 to about $48 billion in 2008. This is a clear sign of a broken market. Not only do these huge fees injure consumers by inflating the cost of goods and services, they create incentives for banks to view credit and debit cards as fee engines. It is not coincidence that consumer-side fees such as late fees, over-limit fees, overdraft fees and others have seen rapid increases during the last several years, just as swipe fees have exploded. Seeing the potential income from fees has made banks’ business models develop such that they often view their customers as fee-generating machines. These business models have dictated the proliferation of cards and incentives for increased card use without appropriate attention to the risks that consumers might not have the ability to repay the debts they incur on these cards.
“And unfortunately, those credit card swipe fees continue to accelerate, because there is nothing — no marketplace or competitive force — to restrain Visa and MasterCard from charging consumers and merchants more, even though technological advances should have reduced the cost of providing the services. So, not surprisingly, these fees have been skyrocketing.
“There are two essential elements to a competitive marketplace: information and choice. Accurate and transparent information is necessary for consumers to make accurate choices. When information is readily available consumers can make choices, effectively compelling firms to compete for their purchases. And choice is a necessary element too. Absent choice, the discipline of the market will be lost. The credit card market lacks both choice and adequate information. From a consumer’s perspective, it lacks choice because it is an oligopolistic market in which a small set of card issuers dominate the market and establish a set of hidden practices that increase consumer costs.
“Markets don’t work when there are hidden fees and rules — and no one hides fees and rules better than the credit card companies. Credit card markets lack the information necessary for both consumers and merchants to make informed choices. For merchants, the markets lack adequate information because the associations prevent merchants from accurately informing consumers of the costs of credit card acceptance or attempting to direct them to more efficient and lower priced payment mechanisms. In fact, merchants have no alternative but to accept the card associations’ cards even when the associations significantly increase prices.
“Credit card industry practices must be reformed in order to deal with these market failures and the resulting injury to consumers. Transparency and market forces are needed to check the growth of unjustifiably high swipe fees. Consumers have a right to know the amount of the swipe fees charged in conjunction with their transactions. Merchants too must be given information about the type of card that they are receiving at the point of sale and the corresponding interchange fees. In addition, the Visa and MasterCard operating rules that dictate how the credit and debit card systems operate must be provided to a regulator that, in turn, makes those materials public for everyone to see and analyze.
“Visa and MasterCard rules that are unfair, deceptive, or anticompetitive must also be abolished. These practices harm consumers by increasing the cost of goods and services and by preventing retailers from offering or encouraging the use of lower cost payment options. This process should start with providing a strong regulatory agency, such as the Federal Trade Commission (or Consumer Financial Protection Agency) the power to review the Visa and MasterCard rules and prohibit any it finds to violate these tenets that govern transactions throughout our economy. Additionally, specific, anticompetitive rules must be overturned immediately to allow merchants to do the following:
Provide consumers with discounts for using cheaper credit or debit cards or other forms of payment that are cheaper such as cash and checks. The credit card networks and banks should not be able to limit how these discounts are displayed or advertised by merchants. Ensuring that merchant pricing is accurate and clear is the role of state consumer protection laws. Banks do not limit merchant pricing displays to protect consumers — they do it to prevent competition in the market and prevent transparency in their fees.
Communicate merchant preferences among payment types to consumers. The “honor all cards” rule that requires merchants to accept every card Visa or MasterCard creates — no matter how high they set the fees for that card — should not stand.
Accept certain cards at some merchant sites, rather than at all locations, and set minimum or maximum purchase size limits for transactions involving a card.
“A large set of organizations are working together to advance our common interest in an accountable, transparent and secure financial system, and to accomplish our shared policy goals. Because the organizations involved and the issues addressed are diverse, not every organization works on or has a policy position on every specific issue. We are unanimous in our call for change to repair our nation’s broken financial system, establish integrity in the financial markets, and facilitate productive economic activity that benefits all segments of our communities.”
Electronic Payments Coalition, the group funded by Visa Inc., MasterCard Worldwide and the major banks and credit card issuers (payment card networks and financial services companies) just issued this press release. Click here.
We disagree with it, including this key point: The problem with cash discounts is that they don’t allow for different prices depending on the type of payment card used. There are about one-hundred separate merchant interchange fees and it is nearly impossible to know what the cost is for each transaction. In other words, they prevent Visa and MasterCard from competing over the cost of acceptance. The same principle applies to the honor-all-cards rules, which prevent merchants from exercising a preference for lower-cost cards, thereby preventing competitive forces from placing downward pressure on interchange fees. Not to mention the condescending, patronizing attitude that credit card companies know better than merchants how to treat a merchant’s customers.
—————-
PRNewswire release
Merchants Can Already Discount for Cash, But Don’t – So What Would H.R. 2382 Really Do?
Electronic Payments Coalition Unveils the Truth About Rep. Peter Welch’s Interchange Bill
WASHINGTON, Oct. 7 /PRNewswire/ — In advance of the October 8th hearing in the House Financial Services Committee on H.R. 2382, “The Credit Card Interchange Fees Act,” sponsored by Rep. Peter Welch (D-VT), the Electronic Payments Coalition has issued the following statement:
“H.R. 2382 is one of the most egregious assaults on consumer protection that this country has seen in some time. Disguised as a measure to allow for cash discounts – something that is already allowed by federal law and by all card network contracts – the bill would instead open up the door for bait-and-switch advertising schemes, charging additional checkout fees at the register, and discrimination against certain card holders. The bill is chock full of provisions that mean one thing: consumers will pay more so merchants can pay less. Bottom line – retailers don’t want to pay their fair share for a service that brings them more sales and higher profits – and want their customers to pick up the tab instead.”
The Electronic Payments Coalition released today a document detailing the anti-consumer protection measures detailed in H.R. 2382. This document follows this statement.
Rep. Peter Welch’s H.R. 2382 – “The Credit Card Interchange Fees Act” – would…
Leave consumers vulnerable and unprotected against deceptive, bait-and-switch advertising.
Rep. Welch’s legislation would eliminate important consumer protections on how merchants are allowed to advertise their prices – restrictions that are in place expressly to protect consumers. This would allow retailers to promise one low price, then charge more – potentially a lot more – when the customer reaches the cash register. Consumers would be left unprotected, forced to pay the demanded price regardless of what was advertised – and retailers would profit unjustly from their dishonest schemes.
Leave consumers stranded at the checkout counter.
Imagine getting to the front of a long line at the grocery store, only to discover that the store doesn’t accept your alma mater’s credit card. Or they won’t accept the card that donates a few cents of every purchase to your favorite charity. This legislation allows merchants to pick and choose which cards they will accept – and which cards they won’t – with no advance warning to their customers.
Dramatically reduce – or eliminate – the card rewards programs that are used by 80% of American households.
H.R. 2382 would prohibit a slightly higher interchange rate for rewards cards – cards that are traditionally used by customers who are proven to spend more when they shop, in turn providing greater value to merchants. Unfortunately, merchants don’t want to pay for this benefit – and the result would be far fewer rewards for American consumers who value such programs. In fact, similar regulation in Australia has resulted in a 23% reduction in the value of rewards programs for consumers.”
Force businesses to disclose highly confidential financial information to the public and to their competitors.
H.R. 2382 would require every contract, rate agreement, and rule on merchant discount rates to be submitted to the Federal Reserve, which would then be responsible for publishing every bit of it. This would involve literally millions of documents, most containing highly sensitive financial information. The chaos that would result from the sheer volume of contracts – not to mention the compromised financial information – would be incredibly harmful to retailers and to financial institutions.
Falsely characterize interchange as a consumer fee, by requiring that it be disclosed on consumer statements.
It’s simple: consumers don’t pay for the cost of card acceptance. It’s a cost of doing business for merchants that accept cards. Despite this clear distinction, H.R. 2382 would force card issuers to print the amount of interchange, as well as the total amount various merchants paid for each charge – an amount that varies depending on what each merchant negotiated – on consumer’s credit or debit card statements. This is nonsensical, unrealistic, and would ultimately confuse consumers and the financial decisions they make.
About Electronic Payments Coalition
The Electronic Payments Coalition (EPC) includes credit unions, banks, and payment card networks that move electronic payments quickly and securely between millions of merchants and millions of consumers across the globe. EPC’s goal is to protect the value, innovation, convenience and competition in today’s growing electronic payments system. EPC educates policymakers, consumers, and the media on the system’s role economic growth, and the importance of protecting consumer choice and stability for the continued growth of global commerce. http://electronicpaymentscoalition.org/
Andrew Martin at The New York Times wrote (p. 1 Oct 6th) about the latest credit card prepaid pricing tricks. Of extra interest is the photo showing several prepaid “debit” cards and all challenge the results of the earlier MasterCard and Visa settlement; the “debit” cards are indistinuishable from traditional credit cards, other than the cleverly hidden word “debit.”
The MiCash Prepaid MasterCard docks cardholders a $9.95 activation fee. Like many competitors, it then charges numerous recurring fees, including $1.75 for each A.T.M. withdrawal, $1 for each A.T.M. balance inquiry, 50 cents for each purchase, $4 for monthly maintenance, $2 for inactivity after 60 days and $1 for a call to customer service.
The Millennium Advantage Prepaid MasterCard goes further, listing an application fee of up to $99. The Silver Prepaid MasterCard advertises that it does not charge for overdrafts as many debit cards do, but it gives itself the option of charging a $25 shortage fee if customers exceed their balance.
WASHINGTON – On Thursday, the U.S. House Financial Services Committee will hold a hearing on a financial bill that limits fees credit card companies charge merchants, TheHill reports. In recent weeks, both retailers and card companies have been lobbying Congress about interchange fees.
Reps. Peter Welch (D-VT) and Zoe Lofgren (D-CA) sponsored a bill that would clamp down on interchange fees. On Wednesday, Welch came to a rally with NACS and 7-Eleven store operators, which had collected 1.6 million signatures on petitions supporting the new restrictions.
On the flip side, card companies argue that the measure is not at all about protecting small retailers. “The big-box retailers, hiding behind some of the convenience-store folks, want to use the electronic payment system for free, which is ridiculous when they get higher sales, convenience from having to deal with cash, guaranteed payment for their services and products, and all the risk associated with credit cards gets passed onto the financial institutions,” said Dan Berger, executive vice president of the National Association of Federal Credit Unions.
NACS urges retailers to contact Committee members and plead their case before the hearing.
The House Financial Services Committee has scheduled a hearing for Oct. 8 to receive testimony on the Credit Card Interchange Fees Act (H.R. 2382), NACS reported.
This legislation, introduced by Reps. Peter Welch (D-VT) and Bill Shuster (R-PA), would begin to change many of rules imposed on merchants by the credit card companies.
In preparation for the hearing, NACS is stressing that it is important for members of the Committee to understand the effect credit card company policies and rates have on your business and is urging retailers with operations in districts represented by House members serving on this Committee to contact these legislators and ensure they understand the importance of this legislation to your business.
Visit the Financial Services Committee’s Web site to see which representatives serve on this Committee. You can contact these members by calling the Capitol Switchboard at (202) 224-3121.
H.R. 2382 aims to prohibit anti-competitive practices, which are banned through contracts merchants sign with Visa and MasterCard.
“NACS believes that these are fundamental rights that ensure an open, competitive market and should not be able to be limited by the credit card companies. These include, but are not limited to, additional charges for premium cards or access devices, pricing display restrictions, ‘honor all cards’ rule, and reason code 96 chargebacks,” the association noted.
In addition the legislation aims to disclose rules that provide the FTC authority to eliminate anti-competitive rules, requiring the credit card companies to disclose all terms, rates and conditions to the FTC and allows the FTC review and determine if practices are anti-competitive; requires full disclosure of interchange and other fees collected from merchants to the fed and the public; and requires the full disclosure of interchange or other merchant-paid fees to customers.
Follow @WayTooHigh on Twitter. Archive of rently posted Tweets.
WayTooHigh
American consumers and merchants pay more for credit card interchange fees than consumers and retailers in other industrialized economies6 minutes ago from HootSuite
Merchants don’t mind paying fair share of credit card interchange fees, that amount is ~13% of the fee we (consumers) are FORCED to payabout 6 hours ago from HootSuite
Chase and Wells Fargo cut debit card overdraft fees overdrawn by JUST $5 or less. Not very pro-consumerabout 8 hours ago from HootSuite
O.C. 7-Eleven franchisee takes credit-card fee battle to D.C. http://ow.ly/r9VUabout 18 hours ago from HootSuite
Priceless: The Case That Brought Down The Visa/MasterCard Bank Cartel Book Review & Giveaway http://ow.ly/r8bT4:31 PM Sep 25th from HootSuite
Shares of Visa (NYSE: $V) and Mastercard (NYSE: $MA) are both down over 4% today on concerns regarding potential government legislation4:29 PM Sep 25th from HootSuite
Our most clicked on Tweet today: U.S. Sen. Dodd Pushes for Interchange Fee Reform (NACSOnline) http://ow.ly/r8424:12 PM Sep 25th from HootSuite
Banks and MasterCard and Visa are feeling the heat, but they are masters in manipulating Congress4:01 PM Sep 25th from HootSuite
MUST SEE: Michael Moore’s “Capitalism: A Love Story” banks created virtual casino. http://ow.ly/r7YJ4:00 PM Sep 25th from HootSuite
Credit card companies reached tipping point for excessive fees. Happy 5-year legal battle is being noticed.3:59 PM Sep 25th from HootSuite
Scam to swindle merchants out of ~2% sales payable for antiquated credit card processing fees out of control 6X other nation’s fees.3:58 PM Sep 25th from HootSuite
Banks will be hit hardest from loss of interchange fees, but, remember member banks (1000s) co-own ~50% of $V $MA #Visa#MasterCard3:50 PM Sep 25th from HootSuite
Credit Card shares FALL; Gov’t talks on merchant interchange fees. MasterCard fell 4.8% ( $204.70), Visa dropped 3.9% ($70.66)3:47 PM Sep 25th from HootSuite
No surprise. In the $V and $MA IPO SEC filings, but warned “insolvency” possible if our merchant interchange suit is successful3:45 PM Sep 25th from HootSuite
Bank of America urges federal judge to dismiss the U.S. SEC’s complaint accusing it of misleading shareholders about bonuses [why?]3:38 PM Sep 25th from HootSuite
Credit Card Fees Have Retailers Ready for War – http://bit.ly/WBVub2:24 PM Sep 25th from web
“Credit Card Fees Have Retailers Ready for War” [Agree, I’ve been at war, suing MasterCard, Visa and banks for 5 yrs]. http://ow.ly/r7fB2:22 PM Sep 25th from HootSuite
The Electronic Payments Coalition issued the following statement: (funded by banks, who trusts banks anymore?!) http://ow.ly/qcBf10:50 AM Sep 25th from HootSuite
RT @miaminewsnow: Major Banks Changing Overdraft Fee Rules: When Congress began to debate and credit card reform .. http://bit.ly/IxXQS10:16 AM Sep 25th from HootSuite
Frank backs Rep. Ron Paul’s Fed audit bill – MarketWatch – http://bit.ly/iMH6h6:56 AM Sep 25th from web
RT @glcspdn: CSP Daily News: 7-Eleven taking 1.6 million “Stop Unfair Credit Card Fees” consumer signatures to D.C. http://bit.ly/10HTxQ6:39 AM Sep 25th from HootSuite
As Washington remedies unfair credit card interchange fees, the hundreds of billions in prior years’ charges need to be returned too6:38 AM Sep 25th from HootSuite
“Dodd Will Push To Control Bank Fees For Merchants” (via Kenneth R. Gosselin, Hartford Courant): http://ow.ly/r1Q86:17 AM Sep 25th from HootSuite
U.S. Sen. Dodd Pushes for Interchange Fee Reform (NACSOnline) http://ow.ly/r1MT6:12 AM Sep 25th from HootSuite
Will those banks changing the debit card overdraft fees make it retroactive and REFUND the billions in unfair overcharges?4:54 PM Sep 24th from HootSuite
Senator Chris Dodd is right: “the [credit card] system has gotten completely out of wack.”11:26 AM Sep 24th from HootSuite
Phony consumer-friendly banking overdraft rules. will get fees from other services [interchange raises?], or end when heat is off?10:26 AM Sep 24th from HootSuite
Credit card co’s charging GIANT hidden tax on consumers. Overdraft a debit card = PAY BIG BUCKS: http://ow.ly/kJHb10:15 AM Sep 24th from HootSuite
Report: Nine Scientifically Proven Ways to Get Retweeted on Twitter [via Fast Company] http://ow.ly/qS879:35 AM Sep 24th from HootSuite
U.S. credit card interchange fees ~2X rates in UK, New Zealand. ~4X rates in Australia. ~6X cross border MasterCard rates in the EU9:20 AM Sep 24th from HootSuite
The bank’s “overdraft protection” policy is to PROTECT their balance sheets with unbridled greed at expense of consumers9:19 AM Sep 24th from HootSuite
credit card issuers curbing usurious overdraft policies raises larger question. Where’s the refund for decades of abuse?9:17 AM Sep 24th from HootSuite
Exactly as we said. The banks will use the shift in debit card overdraft fees as marketing tool; See FULL PAGE NYT’s (9/24 p A5) Chase ad.9:13 AM Sep 24th from HootSuite
Way to go JPMorgan Chase – 1 day after heat from usurious ~3500% annualized overdraft fee rates, they advertise a change9:12 AM Sep 24th from HootSuite
Cavalcade of credit card company tricks continues. Wells Fargo cuts overdraft debit card fees due to criticism9:08 AM Sep 24th from HootSuite
How to INSTANTLY save $125,000,000,000 ($125 billion) – take control of credit card interchange “swipe” fees7:15 AM Sep 24th from HootSuite
Citigroup Inc. and Bank of America Corp. each received $45 billion in U.S. Gov’t TARP funds and have yet to repay it10:22 PM Sep 23rd from HootSuite
NICE REACTION TO OUR EARLIER TWEET: BofA refunds 1 person’s debit card overdraft fees AFTER NBCNews how about for EVERYONE http://ow.ly/qNLD7:50 PM Sep 23rd from HootSuite
RT @jordancrowder: @BofA_help Now BOfA charging me overdraft protection on my CC for a service that didnt protect me in the first place!3:32 PM Sep 23rd from HootSuite
WATCH OUT. curtailing debit card overdraft fees is nothing more than a marketing gimmick, look out for higher fees elsewhere3:22 PM Sep 23rd from HootSuite
Nice to see that people are catching onto how the credit card issuers play their game, lower one fee, RAISE OTHERS3:21 PM Sep 23rd from HootSuite
Candice Choi at AP wrote: “Where will banks make up lost overdraft fees?” [Answer: INTERCHANGE FEES] – http://ow.ly/qLIM2:34 PM Sep 23rd from HootSuite
The Mirror Image: Health Insurance and Credit Card Companies (video) http://ow.ly/qLCH2:23 PM Sep 23rd from HootSuite
Think the $38,000,000,000 in bank overdraft fees last year was high? Merchange interchange change credit card fees ~DOUBLE THAT!2:15 PM Sep 23rd from HootSuite
Ron Lieber wrote in the NYT’s that JPMorgan Chase and Bank of America have overhauled their debit card overdraft fees. http://ow.ly/qHmG11:06 AM Sep 23rd from HootSuite
Rulings against Visa and MasterCard in New Zealand are foreshadow of how deeply both credit card associations may fall in U.S.11:00 AM Sep 23rd from HootSuite
Priceless: The Case that Brought Down the Visa/MasterCard Bank Cartel by Lloyd Constantine http://ow.ly/peWk10:55 AM Sep 23rd from HootSuite
@ronlieber – Thanks for your NYT’s article on overdraft fees. I added commentary here: http://ow.ly/qHka. Mitch Goldstone 949-474-765410:09 AM Sep 23rd from HootSuite
Banks Revise Overdraft Debit Card Fees, Why Not Interchange Fees Too? http://ow.ly/qHka8:54 AM Sep 23rd from HootSuite
Bank of America refunds all debit card overdraft fees AFTER NBC News segment for one person, how about for EVERYONE? http://ow.ly/pnK77:55 AM Sep 23rd from HootSuite
When consumers say retailers should pay the cost of accepting credit and debit cards, don’t they know THEY ultimately ARE!7:40 AM Sep 23rd from HootSuite
Credit card companies once looked for reasons to keep account balances high are reshaping images as proponents of responsible money mgmt7:05 PM Sep 22nd from HootSuite
Charge-offs+delinquencies are rising as unemployed credit-card holders are falling behind. Interchange revenues declining http://ow.ly/qAHQ4:41 PM Sep 22nd from HootSuite
The press release FLUFF announcing the $$$ “Chase Sapphire” credit card FAILS to mention HIGHER interchange fee costs – http://ow.ly/kH0G10:20 AM Sep 22nd from HootSuite
MORE UNFAIR CREDIT CARD FEES: Banks charging $35 for a cup of coffee (via NYT’s editorial 8/20) http://ow.ly/kJC510:05 AM Sep 22nd from HootSuite
Join Mitch Goldstone (ScanMyPhotos.com) and other photo imaging industry execs in Cologne, Germany (Oct 21-22) http://ow.ly/q6Hi8:20 AM Sep 22nd from HootSuite
Q: Why should retailers be taken on a ride when affinity reward credit cards R used? A: Consumers ultimately pay = NO FREE REWARDS7:35 AM Sep 22nd from HootSuite
FEES charged by airlines to process credit card payments are excessive, disproportionate to the cost of the transactions http://ow.ly/quFJ7:34 AM Sep 22nd from HootSuite
Credit card surcharges disproportionate to true costs, airlines hitting passengers with hefty credit card booking fees http://ow.ly/qsDF4:49 AM Sep 22nd from HootSuite
“battle is brewing over the processing fees that banks charge merchants each time a customer uses a credit or debit card” http://ow.ly/pLYP10:40 AM Sep 21st from HootSuite
hidden cost of credit cards should be studied by Gov Accountability Office re effects of interchange fees on consumers7:38 AM Sep 21st from HootSuite
How to INSTANTLY save $125,000,000,000 ($125 billion) – take control of credit card interchange “swipe” fees7:15 AM Sep 21st from HootSuite
What Is “Interchange” [video: Electronic Payments Coalition] http://ow.ly/qcFw10:53 AM Sep 20th from HootSuite
Merchants don’t mind paying fair share of credit card interchange fees, that amount is ~13% of the fee we (consumers) are FORCED to pay10:39 AM Sep 20th from HootSuite
The Electronic Payments Coalition issued the following statement: (funded by banks, who trusts banks anymore?!) http://ow.ly/qcB910:36 AM Sep 20th from HootSuite
Think of how cool it would have been if Erin Brocovich had Twitter; used it as we are against nation’s lgst antitrust case in U.S. history10:33 AM Sep 20th from HootSuite
Fact: Visa and MasterCard STILL charge interchange fees, but they call that portion “Discount Fees” Where’s the Discount???10:31 AM Sep 20th from HootSuite
Visa and MasterCard say banks charge the interchange fees, but WHO OWNED 100% of Visa and MasterCard pre IPOs? BANKS!10:30 AM Sep 20th from HootSuite
Sen Chris Dodd, head of the Senate Banking Committee, plans to propose merger of 4 bank agencies into one super-regulator.6:35 AM Sep 20th from HootSuite
The issue with credit card interchange “swipe” fees is a ~$48 bln annual price-fixing overcharge. My Ecommerce biz FORCED to accept CCs5:35 PM Sep 19th from HootSuite
Emotional radio brodcast just after WWII from Germany – The Jewish Service Heard Round the World; YouTube: http://ow.ly/pZLf9:20 AM Sep 19th from HootSuite
When consumers say retailers should pay the cost of accepting credit and debit cards, don’t they know THEY ultimately ARE!7:28 AM Sep 19th from HootSuite
RT @BoycottBanks: Retail Credit Card Fees Much Higher in the USA….: Americans are being forced to pay significant.. http://bit.ly/1BJK2j7:24 AM Sep 19th from HootSuite
U.S. retailers pay credit-card fees up to six times greater than those paid by retailers in other countries, (MPC)7:21 AM Sep 19th from HootSuite
Electronic Payments Coalition (funded by MasterCard, Visa and credit card issuers) attacking its customers! http://ow.ly/pc3H4:30 PM Sep 18th from HootSuite
Other than illegal price-fixing, technology should have significantly led to MUCH lower merchant interchange credit card swipe fees1:05 PM Sep 18th from HootSuite
The U.S. pays approximately 60% of swipe fees globally – about double the U.S. percentage share of global GDP11:20 AM Sep 18th from HootSuite
Banks raked in an estimated $48 billion in swipe fees in 2008 – an average of $427 per American household in just one year.11:05 AM Sep 18th from HootSuite
Attorney Lloyd Constantine of Constantine Cannon has book coming out: “Priceless: The Case that Brought Down the Visa/MasterCard Bank Cartel10:55 AM Sep 18th from HootSuite
Hidden swipe fees cost Americans more than all credit card annual fees, cash advance fees, over-the-limit fees, and late fees combined10:20 AM Sep 18th from HootSuite
Interchange fees started out in the 1960s as a way for banks to cover the cost of processing credit card transactions10:02 AM Sep 18th from HootSuite
U.S. credit card interchange fees ~2X rates in UK, New Zealand. ~4X rates in Australia. ~6X cross border MasterCard rates in the EU8:20 AM Sep 18th from HootSuite
How to INSTANTLY save $125,000,000,000 ($125 billion) – take control of credit card interchange “swipe” fees7:02 AM Sep 18th from HootSuite
“battle is brewing over the processing fees that banks charge merchants each time a customer uses a credit or debit card” http://ow.ly/pLYB6:40 AM Sep 18th from HootSuite
Credit Card interchange fees around the world, why is the U.S. among the highest? (Merchants Payments Coalition) http://ow.ly/pWJa6:05 AM Sep 18th from HootSuite
Credit card interchange fees have more than TRIPLED in the amount collected in the past 8 years!5:05 AM Sep 18th from HootSuite
The same reckless, predatory lending practices that led to the sub-prime mortgage meltdown still prevail with credit cards (MPC)5:45 PM Sep 17th from HootSuite
@DebitPrepaid – We get retail customers insisiting debit cards be processed as credit cards to get benefits1:49 PM Sep 17th from web in reply to DebitPrepaid
Visa and MasterCard JUST aren’t getting the message. Other businesses are lowering costs, but them. Just got the bi annual increase letter1:40 PM Sep 17th from HootSuite
Bank of America “Keep The Change” Round-Up credit card program; another scheme to get more interchange fees? http://ow.ly/pS8p1:28 PM Sep 17th from HootSuite
Merchants Payments Coalition 2 release study today: European countries, Canada & New Zealand handle interchange fees http://ow.ly/pM0o10:45 AM Sep 17th from HootSuite
About 90% of all business in U.S. from sm biz, not giant chain stores. Ending merchant credit card fees benefit us little guys too.10:45 AM Sep 17th from HootSuite
All About the Visa and MasterCard Promotional Gift Card Scheme (repost) http://ow.ly/kdYg10:00 AM Sep 17th from HootSuite
More consumers using debit cards (50.4%) over all noncash sales (AP), but ScanMyPhotos.com and many merchants process it at higher CC rates9:55 AM Sep 17th from HootSuite
MasterCard Europe has promoted UK head of marketing Rita Broe to the position of group head of European marketing9:40 AM Sep 17th from HootSuite
“The Stimulus Didn’t Work” (WSJ John F. Cogan Opinion); Really? Why then is stock market at intra level HIGHS?!8:25 AM Sep 17th from HootSuite
Merchants also launched antitrust suit against the banks and credit cards in connection with interchange fees. [that’s us] http://ow.ly/pOir7:50 AM Sep 17th from HootSuite
Janet Morrissey at TIME Mag writes that retailers ready to fight credit cards fees. We’re 5 yrs in already! http://ow.ly/pOgV7:48 AM Sep 17th from HootSuite
Visa Inc survey claims consumers want retailers to pay interchange fees, but THEY are ultimately the ones paying it! http://ow.ly/pO5r7:34 AM Sep 17th from HootSuite
Better question from Visa Inc funded survey is: “how do you feel about illegal, anticompetitive price-fixing?” http://ow.ly/pO3S7:31 AM Sep 17th from HootSuite
Not to laugh too loud, but you gotta read this Visa inc. commissioned survey – http://ow.ly/pO287:30 AM Sep 17th from HootSuite
SHAME on Visa, MasterCard, credit card companies for misguided effort to shift message from BANK GREED to chain store profiteering.7:00 AM Sep 17th from HootSuite
Merchants seek public’s support in fight with credit card issuers http://ow.ly/pMSt6:00 AM Sep 17th from HootSuite
Merchants Payments Coalition 2 release study today: European countries, Canada & New Zealand handle interchange fees http://ow.ly/pLZY3:33 AM Sep 17th from HootSuite
Retailers Battle Credit Card Fees – http://bit.ly/CwXD23:22 AM Sep 17th from web
Improved processing technology and the weak economy should be driving card-acceptance prices down6:54 PM Sep 16th from HootSuite
Gold Rises to 18-Month High on Inflation Concern, Weaker Dollar9:25 AM Sep 16th from HootSuite
ScanMyPhotos.com lowered rates over the years from $5 to under 5-cents, yet technology isn’t playing role in record credit card fees9:10 AM Sep 16th from HootSuite
More credit card merchant interchange fee INCREASES in the works for early fall. NO JUSTIFICATION other than greed, exploiting new laws.7:50 AM Sep 16th from HootSuite
Every time you charge your Big Gulp at 7-Eleven, a credit card company swallows part of the profit. http://ow.ly/ifsX6:05 PM Sep 15th from HootSuite
Buy a restaurant gift card and ZERO added fees; buy a Visa or MasterCard gift card and $$$ extra.11:40 AM Sep 15th from HootSuite
the cost of accepting PIN-debit cards rose 305% between 1996 and 2007 http://ow.ly/k8mq10:05 AM Sep 15th from HootSuite
Other than illegal pirce-fixing, technology should have sigtnificantly led to MUCH lower merchant interchange credit card swipe fees8:57 AM Sep 15th from HootSuite
American Bankers Assn say merchants get enormous benefit from credit cards; WRONG, HUGE $48+ billion hidden COST8:40 AM Sep 15th from HootSuite
Bank of America refunds all debit card overdraft fees AFTER NBC News segment for one person, how about for EVERYONE? http://ow.ly/pnJV7:44 PM Sep 14th from HootSuite
looking forward to reading, Priceless: The Case that Brought Down the Visa/MasterCard Bank Cartel by Lloyd Constantine http://ow.ly/peWO11:55 AM Sep 14th from HootSuite
Officially called “Credit Card Fair Fee Act,†ought to be called: “Illegal Price-Fixing Swindle Act by Visa, MasterCard and the Banks”10:30 AM Sep 14th from HootSuite
Network Rivalry Sparks 10-Year Quadrupling of PIN-Debit Pricing (via Digital Tracations) http://ow.ly/k8mf10:05 AM Sep 14th from HootSuite
in 2001, Sonta Sotomeyer ruled on prior class-action in Visa Check, 280 F.3d 124 by merchants challenging Visa and MasterCard fees7:11 AM Sep 14th from HootSuite
Attorney Lloyd Constantine of Constantine Cannon has book coming out: “Priceless: The Case that Brought Down the Visa/MasterCard Bank Cartel4:43 AM Sep 14th from HootSuite
Electronic Payments Coalition (funded by MasterCard, Visa and credit card issuers) attacking its customers! http://ow.ly/pc3E4:30 PM Sep 13th from HootSuite
credit card assn ad SHOULD show receipt listing ADDED credit card interchange fee as extra line item: http://ow.ly/pc3Z4:20 PM Sep 13th from HootSuite
When I sued Visa, MasterCard + its member banks for illegal price-fixing of credit card fees back in ’05, never imaginged power of Twitter9:55 AM Sep 13th from HootSuite
RT @timharold: Learning about credit card processing fees this morning, bottom line i’m paying way too much, any ideas?9:33 AM Sep 13th from HootSuite
Just returned from three-weeks in Europe. Off again in October to address photo conf in Germany, than New Zealand and Australia6:30 AM Sep 13th from web
Seems a last thread of profitability for banks are their monopoly over merchant credit card interchange fees10:40 AM Sep 12th from HootSuite
Other than illegal anticompetitive price-fixing, how can Visa, MasterCard, 1000s of member banks justify soaring interchange fees?2:45 PM Sep 11th from HootSuite
Competition – what Visa, MasterCard, banks know little about, is why 0 interchange fees will benefit consumers = lower costs10:35 AM Sep 11th from HootSuite
Congress must support “Credit Card Fair Fee Act,” especially in a recession. Takes ~$60 bln out of banks unfair rev into consumers pockets10:15 AM Sep 11th from HootSuite
Improved processing technology and the weak economy should be driving card-acceptance prices down http://ow.ly/k8lT (Digital Transactions)10:00 AM Sep 11th from HootSuite
NBC Nightly News (Aug 16) segment: credit card co’s raising fees, lowering benefits, yet interchange fees record high http://ow.ly/kn4c9:05 AM Sep 11th from HootSuite
Consumers Petition for Lower Credit Card Swipe (interchange swipe fees TRIPLED since 2002) http://ow.ly/kXqu8:40 AM Sep 11th from HootSuite
Think $38,000,000,000 in bank overdraft fees last year was high? Merchange interchange change credit card fees ~DOUBLE THAT!5:15 PM Sep 10th from HootSuite
The Commerce Commission and Mastercard have signed an agreement settling the commission’s claim that the credit card company fixed fees.12:55 PM Sep 10th from HootSuite
Circle K: Interchange fees are their 2nd largest cost after payroll. http://ow.ly/kFNy11:15 AM Sep 10th from HootSuite
Electronic Payments Coalition (EPC) [funding by banks, Visa, MasterCard] misinformation – http://twit.ac/EK2s.html10:35 AM Sep 10th from HootSuite
Officially called “Credit Card Fair Fee Act,” ought to be called: “Illegal Price-Fixing Swindle Act by Visa, MasterCard and the Banks”10:30 AM Sep 10th from HootSuite
only justification [for soaring interchange fees} is when you have an anti-competitive business model and you can illegally fix prices10:00 AM Sep 10th from HootSuite
Same banks reporting HUGE profits from “overdraft fees” often same ones that rec’d BILLION in U.S. bailout $’s8:30 AM Sep 10th from HootSuite
credit card issuers ADVERTISE to FORCE consumers to use plastic vs cash, then disassociate for taking responsibly for the surged in charges8:00 AM Sep 10th from HootSuite
Credit Card Follies: Abolish interchange fees altogether (via Kevin Drum, Mother Jones) http://ow.ly/hGsO #180007:25 AM Sep 10th from HootSuite
$2 trillion (~1/2 of all credit card lines of credit might be rescinded next year (CNBC, NEW News) http://ow.ly/kn8O4:20 PM Sep 9th from HootSuite
Bank of America drops arbitration requirement (via AP) – http://ow.ly/k7KW1:40 PM Sep 9th from HootSuite
JUST ONE MORE FOR THE ROAD: “Credit card issuers boost rates ahead of tougher rules” (LA Times) http://ow.ly/kHHR11:50 AM Sep 9th from HootSuite
Consumers have to pay additional fees or earn more credit card rewards for perks http://ow.ly/kdeX = WE ARE OVERPAYING INTERCHANGE FEES11:40 AM Sep 9th from HootSuite
The new JPMorgan Chase “Chase Sapphire” credit card harms merchants/consumers WE pay the rewards, higher interchange fees10:15 AM Sep 9th from HootSuite
More Scheming by Visa and MasterCard. Anatomy of How an Electronic Gift Card “Works:” http://ow.ly/kdWq9:50 AM Sep 9th from HootSuite
It’s not a privilege to accept Visa / MasterCard credit / debit cards. It”s a requirement for online co’s; they wield 80% market power.1:00 PM Sep 8th from HootSuite
Question isn’t extraordinary merchant value from credit cards, it’s about antitrust violations – illegal, anticompetitive price-fixing11:15 AM Sep 8th from HootSuite
credit card company merchant interchange swipe fees ARE wipings independent businesses off the map in neighborhoods across the U.S.10:30 AM Sep 8th from HootSuite
Credit card co’s NOW charging hidden tax on consumers. Overdraft a debit card = PAY BIG BUCKS: http://ow.ly/kJGB10:10 AM Sep 8th from HootSuite
Congress must support “Credit Card Fair Fee Act,” especially in a recession. Takes ~$60 bln out of banks unfair rev into consumers pockets9:15 AM Sep 8th from HootSuite
Mastercard agrees to let New Zealand banks issuing credit cards set interchange rates, merchants able to apply surcharges to payments8:55 AM Sep 8th from HootSuite
get rid of interchange fees AND credit card reward gimmicks, after all consumers end up paying for those “free” rewards7:20 AM Sep 8th from HootSuite
Twitter Finally Profitable: Think of all the billable hours from legal, advocacy firms charging Visa, MasterCard and the banks to read this!7:00 AM Sep 8th from HootSuite
SHAME on Visa, MasterCard, credit card companies for misguided effort to shift message from BANK GREED to chain store profiteering.7:00 AM Sep 8th from HootSuite
Why Won’t Visa Give U.S. Competition & Transparency Promised to New Zealand on Credit Card Fees? (via @NCASOnline) http://ow.ly/jVvB6:50 AM Sep 8th from HootSuite
ScanMyPhotos.com FORCED to accept Visa and MasterCard for our ecommerce business, as are most online companies, they wield 80% market power7:35 AM Sep 7th from HootSuite
Lawsuit against MasterCard. Visa over interchange fees NOT ABOUT “extraordinary value to merchants” but ILLEGAL PRICE FIXING8:05 AM Sep 6th from HootSuite
4-party credit card payment systems is broken; interchange fees no longer cost-based, floods banks with $ at expense of consumers10:55 AM Sep 4th from HootSuite
The press release FLUFF announcing the $$$ “Chase Sapphire” credit card FAILS to mention HIGHER interchange fee costs – http://ow.ly/kH0A10:20 AM Sep 4th from HootSuite
MORE UNFAIR CREDIT CARD FEES: Banks charging $35 for a cup of coffee (via NYT’s editorial 8/20) http://ow.ly/kJBS10:05 AM Sep 4th from HootSuite
As Citigroup and Bank of America Post Huge Profits, Why are Bank Fees Going up? (via Anthony Mason CBSNews) http://ow.ly/hzsx7:20 PM Sep 3rd from HootSuite
banks, credit card co’s protect key source of profits: credit card swipe fees (HuffPost) http://ow.ly/gVwv5:45 PM Sep 3rd from HootSuite
Q: Why should retailers be taking on a ride when affinity reward credit cards R used? A: Consumers ultimately pay = NO FREE REWARDS2:20 PM Sep 3rd from HootSuite
Competition – what Visa, MasterCard, banks know little about, is why 0 interchange fees will benefit consumers = lower costs11:35 AM Sep 3rd from HootSuite
Stop Unfair Credit Card Fees Tell Your Elected Representatives To Act On Interchange Fees http://ow.ly/iEOn10:45 AM Sep 3rd from HootSuite
Interchange fees antiquated as manual credit card imprinters and carbon copy receipts, no longer COST BASED, now GREED BASED10:25 AM Sep 3rd from HootSuite
About 90% of ALL overdraft bank fees HIT 10% of poorest Americans: http://ow.ly/kJLl10:20 AM Sep 3rd from HootSuite
GREAT TO HEAR: Circle K petition expects to deliver three-quarters of a million signatures protesting card fees.11:10 AM Sep 2nd from HootSuite
media spending for credit card ads PLUNGED 50% means LOWER interchange change fees as marketing was part of the cost, so why HIGHER fees?11:05 AM Sep 2nd from HootSuite
credit card companies cut ad spending 50% (Brandweek) = less risk and lower mkting costs, yet record interchange fees? http://ow.ly/k8UI8:05 AM Sep 2nd from HootSuite
Rulings against Visa and MasterCard in New Zealand are foreshadow of how deeply both credit card associations may fall in U.S.10:00 AM Sep 1st from HootSuite
Credit card companies are cancelling cards and reducing benefits even though merchant interchange are paying the costs, incl rewards.4:15 PM Aug 31st from HootSuite
Q: Why should retailers be taking on a ride when affinity reward credit cards R used? A: Consumers ultimately pay = NO FREE REWARDS2:20 PM Aug 31st from HootSuite
In Priceless, author and lead counsel Lloyd Constantine relates the dramatic account of backroom strategizing and courtroom conniving during the high-stakes litigation. Constantine, who led the team representing the plaintiffs, vividly describes how the case pitted retailers against credit card companies, and pries the lid off dodgy debit card practices. The plaintiffs, including Wal-Mart, Sears Roebuck, The Limited, Safeway, and a class of five million stores, pitted their financial futures against Visa and Mastercard in this war between giants.In the vein of breakout bestsellers like A Civil Action and A Confederacy of Fools, this fast-paced narrative, peppered with larger-than-life characters, tears open the case and shows readers how the more than $3-billion-dollar settlement came about. The riveting story features cameos by lawyers, judges, and businessmen, including then University of Arkansas law professor Bill Clinton and New York Attorney General Eliot Spitzer. The triumph is also a David and Goliath tale, in which a small boutique law firm beats four of the largest law firms in the world, including London-based law firm Clifford Chance
From The Hartford Courant (8/24). Click here to read more.
Excerpt:
U.S. Sen. Christopher Dodd is coming out swinging again at banking fees, saying he will push for more changes in credit card fees — this time those paid by merchants — even as he seeks to limit bank income from overdraft charges.
Dodd said Wednesday that he will propose legislation to “substantially modify” the fees that merchants pay so they can accept major credit cards and have those transactions processed through banks. Dodd, architect of credit card reform signed into law in May, previously indicated that he next intended to take aim at “interchange” or “swipe” fees.
“Every state you go to, you hear it from retailers,” Dodd said. “The fees are excessive.”
This has been a multi-billion dollar annual boondoggle for the banks at the expense of millions of consumers. The larger question is why haven’t the banks also addressed merchant interchange fees – which account for substantially more unfair costs to businesses and consumers?
It was the public outcry, an NBC Nightly News segment and extensive media coverage on debit card overdraft fees that helped cause this very rapid shift in policy. It is also being used as a marketing tool, as the credit card issuers can now promote they have waived and adjusted the terms of these overdraft fees to better compete. However, there is no competition when it comes to merchant interchange fees; retailers are still forced to accept Visa and MasterCard’s terms. Issuing banks can simply pass along any lost overdraft fees with higher merchant interchange fees, which simply means that ultimately the consumer still gets screwed.
My five-year legal battle as class-representative in an antitrust class-action against Visa, MasterCard and its member banks continues to reap unsubstantiated profits for the credit card companies with even greater costs.
Merchant interchange fees are an insult that is an atrocity and slap in the face of every consumer and merchant that accepts debit and credit cards. Along with the banks, which until Visa and MasterCard’s IPO’s controlled one-hundred percent of the two giant credit card associations, are continuing to wage a battle against its customers. If only they listened to their critics addressing these equally excessive charges.
You just have to watch this how-to video. The key facts about illegal antitrust price-fixing are omitted, as are the reasons why merchant interchange fees in the U.S. are upwards of six-times what other industrialized nations pay. Remember, this video and the organization promoting it is funded by the banks and Visa and MasterCard.
The problem is that few understand what these fees are; it is a hidden tax on consumers – amounting to upwards of $48 billion in anticompetitive charges each year. As proof, since this video was posted, only about 450 people viewed it, which my guess was largely from those who produced it.
A new study by the Merchants Payments Coalition finds that Americans pay a much higher percentage for interchange charges than the rest of the industrialized world.
WASHINGTON, DC – A new study by the Merchants Payments Coalition (MPC) found that if U.S. consumers paid the same low credit and debit card swipe fees as consumers in Australia pay, then the net benefit would have totaled $125 billion over the last four years.
Interchange fees, or “swipe fees,” cost Americans an average of $2 on every $100 they spend with credit cards — a higher percentage than anywhere else in the industrialized world. Why? Because other countries and their governments have been able to negotiate with the big banks and credit card companies for fair rates and transparency, the MPC notes. NACS is one of the founding members of the MPC.
But, in the United States merchants and their customers are still forced to pay sky-high interchange fees.
Interchange fees started out in the 1960s as a way for banks to cover the cost of processing credit card transactions. But even as technology has dropped that cost dramatically, the banks and credit card companies have pushed swipe fees higher and higher, turning it into a cash cow. For many businesses, credit card fees are now their single-highest non-labor operating cost.
With almost any other equipment, supplier or service, retailers can comparison-shop, negotiate or otherwise influence its final cost of doing business. Store owners can conserve on energy usage and seek out the most competitive prices for merchandise, just to cite a few examples.
Not so with credit card interchange fees. Visa and MasterCard control more than 80 percent of the marketplace. They set the fees in secret, give businesses no ability to negotiate and virtually insist they be buried in the price of merchandise. Unfortunately, the card companies’ hidden fees get passed on to all consumers in the form of higher prices and lower value for nearly everything they buy.
“It’s bad enough that the credit card companies force these hidden fees on us and our customers when we can least afford it,” noted NACS Vice Chairman of Government Relations Tom Robinson, president of Robinson Oil Corporation. “But when we are paying more than anywhere else in the world, and other countries have taken action to protect their citizens from abuse, it is inconceivable that our government would turn a blind eye to the issue. It is time for Congress to step up and defend the principles of the free-market economy by taking action on (interchange) fees.”
Though Congress and the White House have addressed other credit card reforms, the MPC is arguing that any fix will be incomplete without addressing interchange fees. Consider:
Banks raked in an estimated $48 billion in interchange fees in 2008 – an average of $427 per American household in just one year.
This $48 billion total is more than triple the amount collected as recently as in 2001.
Hidden interchange fees cost Americans more than all credit card annual fees, cash advance fees, over-the-limit fees, and late fees combined.
U.S. interchange fees are the highest in the developed world. The U.S. pays approximately 60 percent of interchange fees globally – about double the U.S. percentage share of global GDP.
Compared to the rest of the world, U.S. interchange fees are more than two times the rates in the U.K. and New Zealand, four times the rates in Australia and more than six times the cross-border rates recently agreed upon by MasterCard and the European Union.
Meanwhile, the payments industry has back with its own “study.”
In a September 17 press release, Visa announced the findings of a new study that shows that “consumers believe retailers benefit far more from accepting credit and debit cards than they pay in costs.
The press release noted that consumers believe merchants see card cost acceptance as a part of doing business, much like paying for utilities such as electricity.
“Retailers and their well-funded trade associations have filed lawsuits and are aggressively lobbying Congress to allow them to shift their business costs to consumers by allowing merchants to charge checkout fees whenever consumers use credit or debit cards. At the same time, national convenience store chains have launched misleading, in-store petition campaigns to cover for their checkout fee efforts, noted Visa’s press release.
“The response is loud and clear: consumers aren’t buying the message convenience store chains and big retailers are selling,” said Bill Sheedy, group president of the Americas for Visa Inc., in the release. “This research demonstrates that consumers are well aware that legislation is a Trojan horse that likely will lead to higher prices for cardholders while retailers pocket the savings.”
Click here to read the recent report profiling interchange merchant interchange fees rates. U.S. credit card interchange fees ~2X rates in UK, New Zealand. ~4X rates in Australia. ~6X cross border MasterCard rates in the EU
“Not only do other nations provide lower interchange rates, but we can also learn from other countries’ experiences with interchange reform. Major countries around the world have addressed interchange reform, with some already demonstrating beneficial results for their economies. In particular, lessons learned from experiences in Australia, New Zealand, Canada, and the European Union, provide instructive examples about why interchange reform makes economic sense in the U.S. – especially now.”
WayTooHigh: Q: How can banks (MasterCard / Visa) site “competitive pressures” regarding need for soaring credit card rates? They own the Monopoly board!
WayTooHigh: You know it’s a good day for consumers and retailers when Visa publicly expresses extreme disappointment: http://ow.ly/kdXF
WayTooHigh: Q: Why hasn’t MasterCard, Visa, Chase, CitiGroup, BofA, etc… not been shut down for collusion and credit card price-gouging. A: Dunno
WayTooHigh: More Scheming by Visa and MasterCard. Anatomy of How an Electronic Gift Card “Works:” http://ow.ly/kdWc (new post)
WayTooHigh: MAJOR SCAM: Visa, MasterCard gift cards issued rather than checks. They keep micro-payments remaining, because you can’t exceed your balance
WayTooHigh: @nancytrejos– As credit card companies lower reward benefits merchants interchange fees should be too, WE (consumers) pay those rewards
WayTooHigh: Looking forward to watching NBC’s Meet the Press on Sunday – my hero, Rachel Maddow takes on someone I can’t stand, Dick Armey
WayTooHigh: Rob Reeg. pres Global Technology & Operations for MasterCard Worldwide, frightens consumers http://ow.ly/izsH with misinformation
WayTooHigh: credit card companies cut ad spending 50% (Brandweek) = less risk and lower mkting costs, yet record interchange fees? http://ow.ly/k8UC
WayTooHigh: Why should retailers be taken on a ride when affinity reward credit cards are used? Consumers ultimately pay = NO FREE REWARDS
WayTooHigh: media spending for credit card ads PLUNGED 50% means LOWER interchange change fees as marketing was part of the cost, so why HIGHER fees?
WayTooHigh: As recession-weary consumers are swearing off their credit cards, credit card brands are swearing off advertising http://ow.ly/k8Ua
WayTooHigh: Network Rivalry Sparks 10-Year Quadrupling of PIN-Debit Pricing (via Digital Transactions) http://ow.ly/k8mc
WayTooHigh: only justification [for soaring interchange fees} is when you have an anti-competitive business model and you can illegally fix prices
WayTooHigh: Improved processing technology and the weak economy should be driving card-acceptance prices down http://ow.ly/k8lP (Digital Transactions)
WayTooHigh: RT @Denrael: @WayTooHigh there is competition but challenge is getting wallet space [Not really, MasterCard and Visa wield 80% Market Power]
WayTooHigh: Stop Unfair Credit Card Fees Tell Your Elected Representatives To Act On Interchange Fees http://ow.ly/iEOe
WayTooHigh: FIGHT CREDIT CARD FEES: Write Congress – Share this link with fellow merchants http://ow.ly/iENK
WayTooHigh: Circle K Circulates Petition Chain placing petition protesting credit-card fees in its convenience stores http://ow.ly/iEN1
WayTooHigh: More consumers using debit cards (50.4%) over all noncash sales (AP), but ScanMyPhotos.com and many merchants process it at higher CC rates
WayTooHigh: New to ScanMyPhotos.com: For updates on our antitrust lawsuit against Visa, MasterCard, major banks See: http://ow.ly/k4Wj
WayTooHigh: Had media interview w/ biz pub. Explained credit card companies get away with high rates because they = monopoly, fix-prices, NO competition
WayTooHigh: Credit Card Issuers’ trick: Ads showing “fun” ways to design photos on credit card = distraction, should be URGING you to READ terms #18000
WayTooHigh: Three bills have been introduced in the 111th Congress that address the issue of interchange fees http://ow.ly/jNRA
WayTooHigh: It’s Visa and MasterCard that should thank consumers every time they use a debit / credit card at stores: http://ow.ly/iftW
WayTooHigh: From MasterCard Inc. Q2 Earnings Call, NO explanation about price-fixing and intl interchange fees that are 1/3 that in U.S.
WayTooHigh: NZ Commerce Commission settled out of court w Visa in deal that will change fees charged on all retail transactions in NZ http://ow.ly/jLA1
WayTooHigh: Commerce Commission And Visa Reach Agreement To Settle Credit Card Interchange Fee Proceedings http://ow.ly/jLmA
WayTooHigh: Our economy lost trillions POST Bush’s $300 p/ person stimulus program. But, Republicans silent on anything but attacking current plan.
WayTooHigh: SHAME on Visa, MasterCard, credit card companies for misguided effort to shift message from BANK GREED to chain store profiteering.
WayTooHigh: Congress must support “Credit Card Fair Fee Act,” especially in a recession. Takes ~$60 bln out of banks unfair rev into consumers pockets
WayTooHigh: Visa, MasterCard look abroad for growth (via Reuters) [Even thought U.S. interchange fees ~3x more than abroad?] http://ow.ly/jIw9
WayTooHigh: Stop Unfair Credit Card Fees Tell Your Elected Representatives To Act On Interchange Fees http://ow.ly/iEOa
WayTooHigh: When anticompetitive and illegal interchange fee price fixing ends, family-owned restaurants, dry cleaners, etc. will be SAVED
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.
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.
Improved processing technology and the weak economy should be driving card-acceptance prices down, according to Mitch Goldstone, president and chief executive of ScanMyPhotos.com in Irvine, Calif. “The only justification is when you have an anti-competitive business model and you can illegally fix prices,” says Goldstone, the lead plaintiff in a pending class-action lawsuit against bank card interchange. “That’s what it’s all about.”
Click here to read entire Digital Transactions article. (Aug 14, 2009)
Watch this ABC WCBV-TV News segment on merchant interchange fees and the escalating battle against credit card company fees.
NewsCenter 5’s David Brown reported that they are unregulated credit cards fees charged to store owners for every credit and debit card transaction. It’s a hidden fee that is eventually passed on to the consumer.
Listen to this radio segment on Marketplace Morning Report. Every time you charge your Big Gulp at 7-Eleven, a credit card company swallows part of the profit. But Slurpee slingers have had enough of the merchant fees. Stacey Vanek-Smith reports.
In response to Andrew Martin’s July 16th “Card Fees Pit Retailers Against Banks” New York Times article, I submitted this response:
Dear Editor,
I appreciated your thorough article, ‘Card Fees Pit Retailers Against Banks,’ New York Times, July 16, 2009, describing the serious problem of exorbitant and ever-increasing interchange fees incurred by merchants in the United States.
It is ironic that in a day and age when many businesses face possible extinction due to rapid advancement in technology that card payment systems like Visa and MasterCard continue to thrive and grow using magnetic strips embedded in plastic cards, which is a device closer to the bygone era of carbon copies than to advance technology.
All merchants should applaud the populist pressure and Congressional efforts to confront this hidden tax on the economy represented by interchange fees. It is important to note, however, that the problem is even greater for Internet-based merchants who have no choice but to accept payment cards and are captives to this system developed by the banks.
Perhaps this is the reason that banks impose even higher interchange fees on internet merchants, who also often receive no payment guarantee. That is why we, along with many other traditional merchants, both large and small, are leading efforts in the In re Payment Card Interchange Fee antitrust lawsuit in the Eastern District of New York to eliminate interchange fees and other abusive rules imposed on merchants.
Hopefully, through our efforts, combined with those of other merchants, their customers and Congress, we can succeed in eliminating this abuse of market position by the banks and their card companies.
Watch CBS Videos Online
With mortgage defaults and unemployment still on the rise, big banks are still taking a beating on bad consumer loans. To offset those losses, banks are hiking up their fees. Anthony Mason reports.
Via CNBC: Visa Inc., the world’s largest credit and debit card processor, said it has deposited $700 million into an account earmarked for litigation costs, a move that essentially acts as the repurchase of class B shares. Read more…
WayTooHigh: credit card issuers ADVERTISE to FORCE consumers to use plastic vs cash, then disassociate for taking responsibly for the surged in charges
WayTooHigh: Andrew Martin’s NY Times interchange article DOESN’T mention ZERO interchange fees in some nations, 4 writing checks, PINbased ATM in Canada
WayTooHigh: Not good news for small business financing and the economy: CIT says discussions with government have ceased, with no likelihood of support
WayTooHigh: Way to go MasterCard! Charge customers up to ~30% merchants up to ~5%, yet you get 16% discount on legal settlement http://ow.ly/gs5k#18000
WayTooHigh: It takes unbridled greed by Visa, MasterCard and the credit card issuers cartel to continue raising “SWIPE” interchange fees in a recession
WayTooHigh: ScanMyPhotos.com FORCED to accept Visa and MasterCard for our ecommerce business, as are most online companies, they wield 80% market power
WayTooHigh: Later this month stay tuned for more profiles on ScanMyPhotos.com & we’ll be sure to mention our battle against Visa, MasterCard fees #18000
WayTooHigh: technology has brought our cost to scan a photo from $5 to 5-cents, yet MasterCard and Visa keep raising their unjustfied interchange rates
Dallas (July 8, 2009) – In communities across America, 7-Eleven store owners and operators are undertaking an unprecedented, million-signature petition campaign calling on Congress to reform unfair and excessive credit card transaction fees.
Some 6,300 7-Eleven® franchisees, licensees and store operators in the U.S. are working to change the way credit card companies’ do business with retailers across the country and are taking their beef to the street – or in this case to their counters and customers.
Interchange fees are hidden fees to the consumer and are set privately by credit card companies and charged to store owners every time that a customer uses a credit card. Transaction fees squeezed American businesses and their customers to the tune of $48 billion in 2008 alone. On average, an American store owner will actually pay nearly twice as much in transaction fees as they earn in profits, according to the National Association of Convenience Stores 2007 State of the Industry data.
“7-Eleven stores are operated by franchisees who represent more than 6,000 small businesses on Main Streets and in neighborhoods across America,” said Darren Rebelez, 7-Eleven, Inc. executive vice president and chief operating officer. “This petition drive is a grassroots effort to get a fair deal, spearheaded by small business owners in the communities where they live and with the customers they serve every day.
“Interchange fees are hurting individual small business operators, which represent more than 75 percent of 7-Eleven stores in the U.S.,” Rebelez said. “Because more and more customers are using credit cards for small purchases, there are small transactions where the operator actually loses money. The fundamental challenge is that in most business relationships, both parties have the ability to negotiate, and in this case we do not. ”
The petition drive takes place at all of 7-Eleven’s U.S. stores, and a copy of the petition will be prominently offered for signatures at every check-out counter. At the end of the petition drive, 7-Eleven expects to deliver one million signatures to Congress, calling on them to stop credit companies from charging unfair, hidden transaction fees and to pass legislation empowering retailers to negotiate with credit card companies.
“We’re not asking for a bailout, we simply want to negotiate in good faith with credit card companies in the same manner we negotiate with thousands of our other business partners,” Rebelez said.
American consumers pay among the highest transaction fees in the industrialized world. An average of $2 out of every $100 Americans spend goes to transaction fees, and for many businesses, transaction fees are now their highest non-labor cost, growing even faster than health care costs. As other countries have reined in excessive transaction fees in recent years, and the actual cost of processing credit card transactions has gone down, Americans are now paying triple the amount in transaction fees they paid in 2001, reaching $48 billion last year alone.
Rebelez added, “In the convenience industry, credit card companies come out the winner making more than twice the profits of the industry in total. To date, we have been unable to convince these companies to come to the table to negotiate fair fees. In order to survive and stay in business, our franchisees and licensees plan to make a significant, collective statement with this petition drive. With this unprecedented effort, Congress will hear the message of 7-Eleven’s small business owners and our customers across the country loud and clear,” he said.
The 7-Eleven petition drive will continue through Aug. 10. At the conclusion of the campaign, the top signature-gatherers from each of 7-Eleven’s seven U.S. geographical divisions will be flown to Washington to personally deliver the signatures to Congress.
About 7 Eleven, Inc.
7 Eleven, Inc. is the premier name and largest chain in the convenience retailing industry. Based in Dallas, Texas, 7-Eleven operates, franchises or licenses approximately 7,800 7-Eleven® stores in North sales of more than $53.7 billion. For 15 consecutive years 7-Eleven has been listed among Hispanic Magazine’s Hispanic Corporate Top 100 Companies that provide the most opportunities to Hispanics. 7-Eleven is franchising its stores in the U.S., and is expanding through organic growth, acquisitions, and its Business Conversion Program. Find out more online at www.7-Eleven.com.
NRF Urges Senate to Pass Amendment to Credit Card Reform Bill Making Cash Discounts Easier
WASHINGTON, May 12, 2009 – The National Retail Federation today urged the Senate to approve an amendment that would make it easier for retailers to offer discounts to customers who use cash or other low-cost forms of payment rather than credit cards that carry increasingly high processing fees.
“Retailers should be able to offer discounts to their customers in any legal way they choose without interference from the credit card companies,” NRF Senior Vice President for Government Relations Steve Pfister said. “By reinforcing retailers’ ability to offer discounts, the Durbin-Bond amendment will directly help reduce the prices that consumers pay for goods and services.”
Pfister’s comments came in a letter to members of the Senate, which is expected to vote this week on legislation that would block a number of abusive credit card industry practices such as applying interest rate increases retroactively to existing balances or “double cycle” billing, where interest charges are computed on outstanding balances from more than one billing cycle.
Senate Majority Whip Richard Durbin, D-Ill., and Senator Christopher “Kit” Bond, R-Mo., plan to offer an amendment to the legislation that would make it easier for merchants to offer a discount to customers who use low-cost forms of payment.
Current federal law allows merchants to offer a discount in such cases, but complicated credit card company rules make it extremely difficult to do so in practice. The Durbin-Bond amendment would add debit cards to cash and checks on the list of payments for which a discount can be offered, and would prohibit credit card companies from penalizing merchants for offering a discount, for the way in which they display discounts or for directing customers toward a discount payment option.
The legislation would also direct the Federal Reserve to gather and publish information on credit card interchange fees, other credit card fees and rules governing them.
“These rules are essentially hidden today,” Pfister said. “Both retailers and the public have a right to more complete information given the billions of dollars involved and the impact these fees have on the cost of everyday goods.”
The amendment is aimed at credit card interchange, a fee averaging close to 2 percent that Visa and MasterCard banks charge merchants to process the transaction each time a credit card is used to pay for a purchase. Visa and MasterCard rules effectively require the fees to be built into the price of merchandise, driving up costs for all consumers regardless of whether they pay by cash, check or plastic. The fees totaled $48 billion in 2008 and cost the average household $427, according to NRF estimates. Both numbers are three times the levels seen when NRF began tracking interchange in 2001.
The interchange fee varies from as little as about 1.5 percent to as high as about 3 percent, with “premium” cards offering rewards programs to the users carrying the highest fees. In addition to adding debit cards to the list of payments for which discounts can be offered, the Durbin-Bond amendment would allow merchants to offer discounts to customers who use low-fee credit cards rather than high-fee cards.
The National Retail Federation is the world’s largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry’s key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees – about one in five American workers – and 2008 sales of $4.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com.
According to Canada NewsWire, MasterCard provided the following key points regarding interchange and debit and WayTooHigh.com replied below.
MASTERCARD CANADA: Canada has a well-functioning payments system that provides significant convenience and security to consumers and merchants. It has continued to operate effectively and drive commerce despite a global credit crisis. More than $240 billion in Canadian commerce is expedited on credit card systems annually.
WAYTOOHIGH: Nobody denies that payment cards are convenient and relatively secure. However, these benefits have nothing to do with interchange fees and do not confer upon issuing banks a blank check to extort supracompetitive profits from merchants and consumers through a hidden tax. Price-fixing is illegal!
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MASTERCARD CANADA: A merchant that processes a credit card transaction enjoys guaranteed payment even at a time of increasing consumer default rates.
WAYTOOHIGH: Merchants are not permitted by the Visa and MasterCard rules to separately negotiate for payment guarantee services. This should be a negotiable service subject to competitive forces. Merchants should have the choice of whether to purchase these services from the card networks, from a third party, or not at all. The card networks and issuing banks already include the risk of default in the interest rates they charge to consumers. There is no justification for forcing merchants to cover this cost.
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MASTERCARD CANADA: Merchants benefit from increased sales, improved payment efficiency, reduced cash handling, customer convenience and satisfaction, e-commerce facilitation, international purchase handling, automatic currency conversion and settlement, among other benefits.
WAYTOOHIGH: There are no studies supporting the assertion that card usage increases sales, reduces checkout time, or increases consumer satisfaction. These are simple advertising puffery. To the extent that some of these claims are accurate, they are neither an excuse to price-fix supracompetitiveinterchange fees nor a justifiable expense to force upon merchants without negotiation. Just look at the tricks MasterCard and Visa (both were controlled by thousands of the same member banks) They offer sweepstakes, but the less expensive PIN-based debit cards are ineligible. They charge merchants for the high-costing affinity (frequent flier reward) signature cards, but many consumers never cash in those rewards. And now, the credit card companies are taking back the accrued rewards if a cardholder defaults by a single day, some unscrupulous companies are even paying cardholders to close their accounts, thus also losing those rewards.
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MASTERCARD CANADA: Interchange is a fee that passes between acquirers (who handle card processing for merchants) and card issuers. Issuers receive interchange to compensate them for significant costs and risks borne in offering credit cards including interest-free periods, account management, credit losses, fraud protection and processing.
WAYTOOHIGH: Regarding the assertion that merchants don’t pay interchange, the rebuttal is that the merchant discount rate automatically includes the interchange fee. The rest is mere semantics. Also, why would they talk about benefits to merchants from interchange fees if merchants weren’t paying those fees? Remember: interchange fees were designed forty-years ago, when retailers used antiquated manual credit card imprinters (ScanMyPhotos.com used these way back in the early 1990’s. The fee was cost-based; remember those stacks of carbon-copy receipts? Write a check, which passes through the Federal Reserve network and the there is no clearing (interchange) charge. Use a Starbucks gift card, and there is no interchange fee. Use a shopping mall card, good at multiple merchant locations, and there is no interchange charge. Buy a gift card for any retailer at a supermarket and even though there is a network of payment mechanisms in place, there is no interchange fee. Use a PIN-based Debit card in Canada and there is no interchange fee. Use a credit card in Iceland and… you get the idea. As to the “issuer compensation” argument, many of those expenses should be borne by the consumer, not the merchant (e.g. free funding period). Furthermore, the merchant should not be forced to purchase these alleged services as a price-fixed bundle. These should be available separately and negotiably.
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MASTERCARD CANADA: MasterCard’s Canadian interchange rates remain well below those of other developed markets including the United States and below similar fees for American Express in Canada. A sampling of other countries with higher blended interchange rates than Canada include Argentina, Brazil, Germany, Greece, Indonesia, Japan, Philippines, Poland, Portugal, Switzerland, Turkey and Uruguay.
WAYTOOHIGH: The relevant comparison is not Canada v. Uruguay, it’s competitive v. anticompetitive. The fact that MasterCard’s supracompetitive interchange rates are not quite as inflated in other countries as they are in North America doesn’t render them legal. MasterCard and Visa boast 80% market power and are two giant cartels with, until recently, the same representatives on their board of directors. Collusion, greed, illegal price-fixing and hundreds of billions of dollars paid by consumers and merchants over the years is why this battle may be the largest antitrust case in U.S. history, and why the banks are engaged in a death-spiral battle against its two core customers – consumers and merchants.
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MASTERCARD CANADA: MasterCard receives no revenue from interchange.
WAYTOOHIGH: MasterCard remains a puppet of the issuing banks, who receive enormous amounts of revenue from interchange. How does MasterCard explain the term “Merchant Discount Rate?” So, where do their revenues come from, then?
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MASTERCARD CANADA: Consumers do not pay interchange fees nor merchant fees.
WAYTOOHIGH: As with the argument that merchants don’t pay interchange, MasterCard exalts form over substance. As a practical matter, merchants must build in their overhead costs into the costs of their products. Increasing interchange fees effectively increases the cost of goods just as would increasing the cost of the merchant’s rent or electricity. The nearly $60 billion dollars in merchant interchange fees in the U.S. last year came from somewhere! It is a hidden tax that ultimately, the consumers pay.
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MASTERCARD CANADA: Merchants who choose to accept credit cards pay to participate in exchange for the benefits received. The fee accounts for the multiple benefits received.
WAYTOOHIGH: The idea that merchants “choose” to accept credit cards is a myth. In reality, merchants must accept payment cards in order to stay in business. Furthermore, interchange is not cost-based. If it were, it would be far, far lower. Look at the European Union, where cross-border interchange is mandated to be cost based by law. For Ecommerce businesses, like ScanMyPhotos.com and millions of other online companies we are forced to accept Visa and MasterCard – they have an 80% market power over the industry. Their millions of dollars invested in TV commercials training consumers not to pay with cash is all the more reason why MasterCard and Visa are like drug dealers, they get consumers trained and then force them to use their products. Yes, force, and we can explain why.
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MASTERCARD CANADA: Merchants pay a merchant fee established by their acquirer, not MasterCard. Interchange forms a portion, but not all, of that merchant fee.
WAYTOOHIGH: Interchange accounts for the vast majority of the merchant discount fee and is non-negotiable. The merchant discount fee is always higher than the interchange fee, meaning that merchants effectively pay interchange. If the truth were otherwise, we’d have acquirer lawsuits against the networks and the issuers. Get real, it’s all about MasterCard. Until recently, MasterCard and Visa were just brands (trade associations) fully owned by the banks. Whether the fees go to the banks or the two giant credit card association, the same pockets were being enriched.
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MASTERCARD CANADA: MasterCard’s 2008 adjustment to interchange rates was the first in seven years. Some rates were reduced.
WAYTOOHIGH: Whether or not that’s true, it doesn’t change the fact that the rates are much higher than they would be in a competitive environment (assuming they’d exist at all). Some rates were 300% higher than in 1999. Without warning, millions of merchants receive a twice yearly letter explaining the new rates, just days prior to it taking effect.
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MASTERCARD CANADA: A merchant can obtain his MasterCard interchange rates via http://www.mastercard.ca. This information has been available for more than two years. [There is a now similar website in the U.S. with more than one-hundred pages of rate schedules].
WAYTOOHIGH: Only two years? Why was MasterCard so secretive before that? Regardless, the merchant has no way of knowing what the interchange rate will be at the time of sale and therefore cannot make an educated decision about whether to accept the card. There is no transparency, and those website rate schedules are unclear and confusing. If MasterCard was honest, they would easily post the exact interchange fee as part of every charge card receipt (right under the sales tax breakdown).
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MASTERCARD CANADA: When interchange was regulated in Australia, it led to reduced card benefits to consumers and there is no evidence that retailers passed on savings in reduced prices.
WAYTOOHIGH: To allege that a reduction in overhead costs for an entire country’s merchants would not result in lower prices is to allege a price-fixing conspiracy among all merchants. If so-called “cardholder benefits” were only available because of a price-fixing conspiracy between issuing banks, we should not lose sleep over the disappearance of those benefits when the conspiracy is busted up. The rule of law is what matters, not cardholder benefits.
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MASTERCARD CANADA: MasterCard Worldwide has a PIN-based debit payment solution – Maestro(R) – used by more than 652 million cardholders in over 100 countries.
WAYTOOHIGH: Perhaps, but that doesn’t justify the price-fixing conspiracy and it doesn’t justify forcing merchants to pay supracompetitive interchange fees. MasterCard and its issuers don’t get a blank check just because they provide some benefits. Banks would need to provide debit cards even if they didn’t get interchange fees. Otherwise, it would be like banks providing a checking account but no checks.
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MASTERCARD CANADA: MasterCard Canada is preparing to expand its global debit processing system in Canada where it would deliver compelling benefits to Canadian consumers and merchants.
WAYTOOHIGH: MasterCard is only increasing its market power so that it can continue to force supracompetitive interchange fees on merchants.
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MASTERCARD CANADA: Using Maestro, Canadian consumers could use debit all over the world.
WAYTOOHIGH: See previous two arguments.
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MASTERCARD CANADA: Accepting Maestro means Canadian merchants could accept international travelers’ debit cards.
WAYTOOHIGH: See above.
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MASTERCARD CANADA: MasterCard will provide technological advancements including greater security and fraud protections, innovations
WAYTOOHIGH: See above.
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MASTERCARD CANADA: MasterCard operates a global debit infrastructure with centralized operations that run 24/7. The system delivers significantly greater scale than Canada’s incumbent debit network. It has had zero downtime in more than seven years.
WAYTOOHIGH: See above.
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MASTERCARD CANADA: MasterCard will create competition in the Canadian debit market where it has never existed.
WAYTOOHIGH: MasterCard is not talking about competition for merchant acceptance, only “competition” for issuing banks, which has the effect of increasing interchange rates at the expense of merchants. Payment cards are a two-sided market (issuance and acceptance) and when MasterCard, Visa and the member banks talk about so-called “competition,” they’re never talking about the merchant side of the market.
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.
WASHINGTON — New transaction fee rate increases announced by credit card companies Visa and MasterCard are slightly under 2 cents per affected transaction, yet are expected to raise more than $600 million in revenues, according to a report by DigitalTransactions.com
MasterCard will increase its “Network Access and Brand Usage Fee” April 17, from 0.5 cents per transaction to 1.85 cents—a 270 percent increase—while Visa will increase its “Acquiring Processing Fee” from 0.5 cents to 1.95 cents—a 290 percent increase, with additional fees possible, according to NACS—the Association for Convenience and Petroleum Retailing, which opposed the proposed hikes.
“This begs the question: How can two ‘competitors’ announce price increase of nearly 300 percent at the same time in a recession?” NACS Senior Vice President of Government Relations Lyle Beckwith said in a statement. “From what we’ve seen with credit card interchange fees, the answer is obviously that two competitors with excessive and abusive market power can do what they want.”
Merchant-acquiring experts expect merchants to bear the cost of these fees because acquirers will simply pass them through to clients. “The ones we’ve talked to aren’t too excited about it,” an acquiring executive, who asked for anonymity, told the Web site. “It’s one of the bigger fee hikes.”
In a statement Visa told DigitalTransactions.com: “Visa Inc. regularly reviews its pricing, as any business would, and makes adjustments where appropriate depending on such factors as the value delivered to clients and the need to be competitive. Over the years, Visa has become a symbol of international acceptance, reliability and convenience, based on its commitment to provide superior value to clients. These clients, in turn, are able to offer competitive products and services to their customers. Financial institutions set their pricing to cardholders and merchants.”
In 2007, credit card fees cost convenience stores $7.6 billion, with the largest component being credit card interchange fees, which are a fixed fee and a percentage of each transaction, according to NACS. These fees average 1.8 percent in the U.S., which has the highest interchange rate of any industrialized country.
“The credit card fees that U.S. retailers pay are outrageous,” Beckwith said. “These newly announced fee increases are beyond outrageous. At a time when small businesses are feeling the economic pain of the recession, it is unconscionable that Visa and MasterCard can give themselves their own ‘bailout’ by slapping 300 percent increases on their fees.”
According to Reuters, next week the US Senate Banking Committee will meet to discuss new credit card legislation.
Areas of focus will be on prohibiting credit card solicitation to people under 21, and the current ability to change and terminate a cardholders account for any reason and at any time.
According to Reuters, “the Government Accountability Office, a congressional audit group, to study the effects of so-called interchange fees on consumers and merchants. Interchange fees are the cost for transacting purchases using an electronic payment system operated by Visa Inc and MasterCard Inc. In the House, the Judiciary Committee has been examining the issue.”
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.
During the past few weeks, we have tempered our discussions of the failing bank, along with MasterCard and Visa’s roll in devastating the global economy. One issue we are not reading, amidst the record job losses and banking mismanagement is why the credit card giants aren’t lowering their anticompetitive merchant interchange fees?
At our company, we are reaping strong returns, due to our innovative new photo imaging business model at ScanMyPhotos.com. We reinvented our business, while Visa and MasterCard simply charged more for supporting and antiquated pricing model as its technology leaped ahead of what was once an analog payment network.
Their actions help fuel our amplified commitment for calling attention to Visa and MasterCard’s unfair merchant interchange rates and its member banks continued monopoly of charging nearly $60 billion in antiquated annual interchange fees when you use a credit and debit card.
Other businesses are struggling to survive, but we are more determined than ever to win this litigation. Many member banks have failed and some CEO’s have been dismissed. However, their allegedly illegal price-fixing and ruinous financial burden on merchants and consumers continues.
Today, we learn that Well Fargo, a named defendant in the multi billion dollar merchant interchange litigation has decided that The Wynn Hotel in Las Vegas is not the place to host their upcoming event for their home lending unit. The same for Citigroup (another named defendant) for trying to spend $50 million of taxpayer dollars on a corporate jet.
As millions of jobs are lost and our economy rests on the brink of collapse, the least MasterCard and Visa can provide is immediate relief from their anticompetitive and illegally-based price-fixing scheme. If Denny’s can give away free breakfasts after the Super Bowl, think of the marketing grist that MasterCard and Visa would gain from saving retailers and consumers billions of dollars.
There are just hours remaining until Visa, MasterCard and their member banks face a new administration in D.C. To kick things off, this article was published today by Digital Transactions Magazine. Let’s remember that this issue is all about illegal, anticompetitive price fixing and unbridfled market power.
For other news on ScanMyPhotos.com, visit our “In the News” updates, including recent coverage and interviews on Fox Business News and USA Today. See Twitter.com/ScanMyPhotos.comfor more updates too. We are expecting several local and one national network news program to broadcast our Inauguration Day events at our retail and Irvine, CA location.
I couldn’t even invent this journey through a mythological abstraction from reality, so here it is in MasterCard’s® own words. To counter these assertions, see the below more than 1,200 unique WayTooHigh.com postings over the past nearly four years.
Now we learn that Treasury Secretary Henry Paulson has a plan to save Christmas by using taxpayer funds to bolster the credit card market. But before we shower taxpayer dollars indiscriminately at every down-at-heel, ragamuffin credit card lender, we should take a hard look at how they got themselves into so much trouble. Just throwing money at the credit card industry without requiring a systemic change in how it does business is merely asking for a repeat of the crisis.
The card industry’s business model is the heart of the problem and needs to change. Just as with subprime mortgages, the credit card business model creates a perverse incentive to lend indiscriminately and let people get into so much debt they can’t pay it back.
Card issuers make money on every credit card transaction, regardless of whether the consumer pays interest. The bank that has its name on the card receives around 2% of every transaction in a fee paid by the merchant (and passed on to all consumers in the form of higher prices). This is called the interchange fee. The banks will collect about $48 billion in interchange fees this year.
Because interchange is based on transaction volume, it creates an incentive for banks to issue as many cards as possible, regardless of the creditworthiness of the borrower. So, by creating a huge revenue stream unrelated to interest, interchange encourages banks to engage in reckless lending – and virtually every credit card loan is a “liar loan” with no income verification.
WayTooHigh.com: The Credit Card Interchange Report, is edited by Mitch Goldstone, co-founder of California-based ScanMyPhotos.com, the international online photo preservation service.
Goldstone and co-owner, Carl Berman are also the lead plaintiffs and class representatives in a antitrust class-action litigation against Visa, MasterCard and major banks that was filed in 2005.
This informational web site was created to provide news and commentary updates only. None of the information posted on WayTooHigh.com is intended to constitute legal arguments; it reflects only the opinions of its co-editors and not of any other plaintiffs or other parties involved in the merchant antitrust litigation. The information is not guaranteed to be correct, complete, or current. We make no warranty, express or implied, about the accuracy or reliability of the information posted by WayTooHigh.com or at any other Web site to which this site is linked. (c) 2010
Posted by waytoohigh 
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.
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