“NACS’ CEO Details Progress in Interchange Fee Fight” (via NACS)

October 6, 2008

CHICAGO — Calling outrageous credit card fees the most important battle faced by the industry, NACS President and CEO Hank Armour said the industry continues to put pressure on the issue, “2009 looks to be the watershed year in which we may finally get significant relief,” he said during the Opening General Session at the NACS Show 2008 on Oct. 5, 2008.

“This is the biggest issue that our industry has faced in decades, and we’ve taken it head on,” said Armour. “With the tremendous help and support of many of you, we made a lot of progress this year.” The Credit Card Fair Fee Act was successfully passed out of the House Judiciary Committee (H.R. 5546), and the legislation was also introduced in the Senate (S. 3086), he noted.

“We obviously have the credit card companies’ attention,” said Armour, referencing what he described as public relations stunts that Visa and MasterCard attempted this summer to deflect attention away from the issue of interchange. “While Visa and MasterCard claim they have fixed the problem, they haven’t. The only thing they fix — and they continue to do so — is the price,” said Armour to applause.

[Source: NACS – CS News, click here to read more]


Smart launch towards leadership, but it took $700 Billion to make washington listen

September 24, 2008

Finally, signs of reform and smart leadership in Washington!

The Congratulations to the U.S. House of Representatives. On Tuesday they passed the Credit Cardholders’ Bill of Rights Act.  It now requires passing by the U.S. Senate and the presidents signature.

Hopefully, no more unfair credit card merchant fees, moving forward.  The MDL antitrust litigation hopefully will take care of past abuses and penalties dating back to 2004, although I think it should date back, minimally to the early 1990s.

Will the president cave in to his banking buddies, or has the executive branch learned its lesson? Maybe they can next visit overturning the unfair and catastrophic penalty against working families and millions of consumers forced into bankruptcy, while Visa and MasterCard are shielded from fiscal liabilities?

The legislation did not, however address interchange fees, but hopefully, that will be forthcoming.   Merchant interchange fees are the key point of the Credit Card Fair Fee Act and represent nearly $50 billion in annual hidden taxes on Americans.

According to The Denver Post, “The Act stops unfair interest rate hikes retroactive to balances incurred under a previous rate; stops assessment of hidden interest charges on balances already paid off ; stops late fee charges even though consumers mailed payments 7 days ahead of the due date.

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

August 1, 2008

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

By Jessica Dickler, CNNMoney.com staff writer

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

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

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

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

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

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

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

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

Congress takes action

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

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

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

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

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

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

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

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

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

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

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

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

[Source: CNN Money]

“House panel favors retailers in vote to cut credit card fees” (via The Hill)

July 16, 2008

The House Judiciary Committee on Wednesday voted to give retailers a rare break from antitrust laws, approving legislation to allow them to band together when bargaining over the credit card fees they pay to banks.

The 19-16 bipartisan vote handed a victory to a coalition of supermarkets, convenience stores and big box retailers that has argued that so-called interchange fees are too high.

“We are very happy with the bipartisan vote and support that we got in the Judiciary Committee today,” said Chris Tampio, the senior director for government relations at the National Association of Convenience Stores , a coalition member.

The Electronic Payments Coalition , which represents banks and credit unions that collect the interchange fees, decried the legislation as “a sweetheart deal for giant retailers.”

Click here to read more

[Source: The Hill]

Three in Four Americans Support Credit Card Fair Fee Act

July 16, 2008

via MPC news release

National Poll Finds Voters Want To Rein In Hidden Credit Card Fees That Inflate Prices; Legislation Would End Credit Card Secret Price Fixing

Washington, D.C. – July 11, 2008 – Better than three in four (77%) voters favor the “Credit Card Fair Fee Act,” bi-partisan legislation that would empower retailers to negotiate credit card fees directly with the credit card industry as a means to cut interchange fees, according to a poll released by the Merchants Payments Coalition (MPC).

According to the survey, public sentiment that something needs to be done about the credit card industry is at an all-time high. Concerns about credit card industry fees, policies, and practices touch hot buttons across party lines: identical 51% majorities of Republicans and Democrats alike say they “strongly” support passage of the Credit Card Fair Fee Act.

Consumers are three times as likely to say credit card companies don’t do business the right way compared to cable companies and six times as likely to say that when compared to phone companies. In particular, nearly two in three (65%) say credit card companies don’t share their business values.

Credit card fees known as interchange have skyrocketed on food and gasoline in recent years; they cost Americans $42 billion last year. Revenue that goes to the credit card industry on motor fuels alone has risen steeply in the last year alone, closely following the accelerating price of gasoline.

Interchange fees amount to approximately $2 of every $100 spent using credit cards. These fees inflate the cost of nearly everything consumers buy at retail whether or not they use plastic, cash, check, or food stamps. In 2008, the average American family will pay upwards of $427 in hidden credit card interchange fees.

Currently, credit card interchange rates are set in secret, hidden from view and exclude merchants from the negotiating process. Raising interchange fees is how Visa and MasterCard encourage banks to issue more credit and debit cards – as long as rising rates are kept top secret, consumers have no way of knowing the extra costs they are paying through higher prices. The Credit Card Fair Fee Act would introduce market transparency and open negotiations into the process.

About the survey

Penn, Schoen, and Berland LLC conducted telephone interviews with 605 likely voters nationally June 19, 2008 on behalf of UnfairCreditCardFees.com. The margin of error for national voters is +/- 3.98 at the 95% confidence level and larger for subgroups

Click here for the full results of the poll.

About UnfairCreditCardFees.com/Merchants Payments Coalition

The Merchants Payments Coalition (MPC), UnfairCreditCardFees.com, is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees. For further information, please visit http://www.unfaircreditcardfees.com.

Noise from the American Bankers Association

June 25, 2008


The American Bankers Association does it again. What a surprise that they issue a press release regarding a recent comment regarding the Credit Card Fair Fee Act.  What is purely stunning is that the bank trade association could even suggest that the consumer friendly legislation is “plainly anti-competitive and would violate fundamental antitrust principles.”  Have they no shame?

Visa and MasterCard with its 80% mammoth market power and well documented anti-competitive practices [See prior ~1200 posts below] is the reason millions of merchants are involved with our class-action litigation. 

Shortly, when you do an online dictionary search under the term “antitrust,” Visa and MasterCard will be used as the model for why the named worldwide defendants conspired to illegally fix prices and force merchants to pay supra-competitive Interchange fees.  Their actions are the reason we have the protections of the Sherman Antitrust Act.

While the Banks’ trade association’s president, Edward Yingling, said “this legislation will hurt competition and harm consumers, plain and simple,” he is wrong.  Competition is non-existent and millions of retailers and consumers worldwide are harmed every day due to the card associations unbridled greed.  

Did MasterCard and Visa just give American Express about $4.0 billion dollars to settle the prior antitrust suit [read more] because they are nice guys, or because they violated the law?  I look forward to an apology and recognition from the ABA that they were wrong.

Arguments and press releases like theirs is silly.  Ex: “The fact is the card payment system brings considerable benefits to all parties to a transaction,” said Yingling.  This might have been the same argument the railroads used in the 1800s when they forced farmers to either transport their goods via trains or let it rot.  That is also the reason the Sherman Antitrust Act was enacted.  Merchants like us [ScanMyPhotos.com] are forced to accept Visa and MasterCard or we will be out of business, just as the farmers were when they were forced to use the railroad network, as merchants are today forced to use the electronic payment network.  Differing networks, same violations.

If the ABA was representing consumers and retailers, rather than financial institutions, they would understand the facts, rather than parrot the replies from high-powered legal teams.