“Cracking Down on Hidden Fees” (via Washington Post)

July 18, 2008

A bill that would allow merchants to negotiate interchange fees directly with credit card companies cleared a hurdle this week. In a 19 to 16 vote, the House Judiciary Committee approved the Credit Card Fair Fee Act of 2008.

And what exactly are interchange fees? You may not know this but every time you use your credit card to buy something, the merchant has to pay a fee to your card company. That fee is non-negotiable. You, the consumer, end up incurring the cost of that fee because retailers include them in their prices. Supporters of the proposal say it ended up costing Americans $42 billion last year.

Click here to read the article.

[source: The Washington Post]
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House Committee Passes Interchange Bill, Doesn’t include Panel of Judges

July 16, 2008

You know a Bill is pro-consumer when the banking industry association, Visa Inc. disapproves of it.  Click here for more info on today’s ruling.


“House to Hold Hearings on Credit Card Interchange Fees” (via ConsumerAffairs.com)

May 14, 2008

Click here to read the May 14th ConsumerAffairs.com article by Martin Bosworth.  Reprinted below.

Retailers, bankers gear up for discussion of ‘Fair Fee Act’

By Martin Bosworth, May 14, ConsumerAffairs.com

The House Judiciary Committee has scheduled hearings on legislation that would rein in credit card interchange fees tomorrow. The hearing will be preceded by a frenzy of lobbying as retailers square off against the financial industry over the hidden fees that retailers pay to process credit card transactions.

The hearing will discuss the “Credit Card Fair Fee Act of 2008,”introduced in March by Judiciary Committee chairman John Conyers (D-MI). The proposed legislation would require lenders and credit card companies to negotiate with retailers on terms for interchange fees, and for the Federal Trade Commission and the Justice Department to step in and arbitrate if an agreement could not be reached.

Currently, interchange fees are set by credit card companies such as Visa and Mastercard, and the payments are often high enough to wipe out a store’s profit on any sold item, forcing them to raise prices for all customers just to recoup their losses. A coalition of retailers banded together to sue both companies and many major banks for what they claim was collusion in setting interchange fee profits

Photo store [and ScanMyPhotos.com co-]owner Mitch Goldstone, one of the lead advocates of eliminating interchange fees, said that “We are ready to explain why interchange fees are obsolete, illegal and anti-competitive.” In a posting on his blog, WayTooHigh.Com, Goldstone said that “After years of toil, merchants and consumers are at the cusp of forcing the demise of these unbridled and unnecessary interchange fees on American’s and our neighbors around the world.”

Strange bedfellows

Both the retailer litigation and threats of proposed new regulations have conspired to bring together credit unions and national banks–traditionally old foes–to oppose the legislation. The Hill reported that both sides plan to bombard Capitol Hill with advertising urging Congress to oppose legislation restricting interchange fees.

Retailers and interchange fee opponents hope to take advantage of the zeitgeist surrounding credit card, as several members of both the House and Senate have introduced new legislation that would curb the most abusive practices of the industry, and have held multiple hearings decrying the more unscrupulous tactics of the financial industry against its customers.

Even with continuing healthy profits for both credit card companies and highly successful IPOs, both Visa and Mastercard are rumored to fear a “perfect storm” combining the elimination of the interchange fees, lower card usage and higher delinquencies due to the economic climate, and restriction of many of the fees levied on consumers.

Industry analysts have observed that one of the principal motives for both Visa and Mastercard to go public was to build up “war chests” for funds to recover losses if the interchange fee litigation should go against them–and to shift the bulk of the risk to shareholders and investors.


At $50 Billion, Is MasterCard and Visa’s Member Banks’ Cartel Nearing its End?

May 14, 2008
The total annual merchant interchange fees continue to soar and reflect a growing discontinuity with the nation’s recession and realities that technology and efficiencies should be lowering fees. Instead, according to Robin Sidel’s May 14th WSJ article [“Consumers May Pay For Credit-Card Bill“], merchant interchange fees “generated roughly $50 billion last year.”  Robin explained on the phone this afternoon that this rate was based on information from The Nelson Report,
Just how monstrously tainted are these anticompetitive charge-card fees that violate federal antitrust laws?

Look at it this way:  Visa and MasterCard’s member banks’ interchange fees last year were much greater than three-times Microsoft’s entire net income of $14.8 billion dollars last year. The total interchange fees charged to merchants and paid by consumers last year were greater than the combined net earnings of Chevron ($17.5 billion), Hewlett-Packard ($7.2), Intel ($6.2), Walt Disney ($4.6), Apple ($3.4), Lockheed Martin ($3.0) McDonald’s ($2.3), Federal Express ($2.0) and Walgreen ($2.0). [source: Forbes 400].
 

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

 

 

 

 

 


Visa, MasterCard: Credit Card Fair Fee Act of 2008 Hearing

May 11, 2008

The House Antitrust and Competition Policy Task Force holds a hearing on the Credit Card Fair Fee Act of 2008 to ensure competitive market-based rates and terms for merchants’ access to electronic payment systems.  Thursday 05/15/2008 – 11:00 AM; 2141 Rayburn House Office Building, Judiciary Committee Antitrust Task Force.


“Credit Card Stocks: The Credit Card Fair Fee Act May Kill The Interchange Fee… And Credit Card Company Revenues” (via Today’s Financial News)

March 18, 2008

Click here to read the Andrew Snyder article in Today’s Financial News

Excerpt:

  1. “…Instead, Washington wants to uncover the secretive fees most consumers know nothing about. After all, these “interchange fees,” which are the fees credit card companies charge vendors for the ability to accept and process their cards, cost Americans (even those that pay with cash) more than $42 billion last year.”
  2. “When you and I complain to our elected representatives, chances are, little action will be taken as a result of it. But when political and economic powerhouses like Wal-Martand Target pick up the phone, Capitol Hill starts to move. That is why MasterCard shareholders and future Visa shareholders need to pay attention. If Washington (or should I say Wal-Mart and Target) gets its way, credit card industry revenues will be slashed.”