$25 Oil vs. $60 Billion Visa & MasterCard Interchange Fees?

December 4, 2008

The greedy banks and auto industry execs failed their shareholders and Americans. Their mismanagement is being rewarded with billions, or is it trillions in free money?

Everything has turned upside down.

Accountability is irrelevant and Washington lobbyists are all powerful.   Look at today’s Merill Lynch & Co assessment that oil might soon be trading at just $25 a barrel, according to a Bloomberg report.   If gas can plunge from nearly $150 to under $50 in just a few weeks, due to the economic seizure, why are the Visa and MasterCard merchant interchange fees – fueled by its member banks – continuing to rise? 

Something is very broken and wrong.

Tulips, Silver, Housing Market and Oil Speculators Have Nothing on MasterCard and Visa


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

November 11, 2008

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

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

“Rally protests gas prices, credit card fees” (via OC Metro)

July 4, 2008

Via OC Metro Magazine

Irvine business owner organizes rally to call attention to the fees credit card companies are raking in with rising gas prices.

By Olga BelogolovaPublished: July 03, 2008 04:10 PM

More than 30 people gathered at the corner of Jamboree and Barranca Avenues this morning to protest high gas prices and high credit card fees. The protest, organized by small-business owner Mitch Goldstone, took place during the morning commute.

On the cusp of Independence Day weekend, protesters gathered wearing American flags and patriotic gear.

One of them, Mary Lou Barry of Tustin, dressed in a full American-flag jacket and glistening blue hat, spoke about the gas problem. “People are just accepting it,” she says. “We have to talk about it and maybe get some attention.”

The high gas prices are not only affecting drivers, explained Mitch Goldstone, but independent business owners as well, whom, he says, “are going out of business because of Visa and MasterCard.”

Navdeep Bassi, a 7-Eleven franchise owner, is feeling the weight of these fees. “Credit card fees are killing us,” he says. “We make no profit.”

Also personally affected by the gas prices, Lauren Young came to the protest with her daughter Samaia.

Having no car, Young explains: “It’s hard to get rides because a lot of people don’t want to do it. It makes a lot harder,” Young says, “doctors appointments and everything.”

Overall, organizer Mitch Goldstone was very pleased with the turnout. “Everyone is so passionate about record gas prices,” he explained, “especially right before our holiday weekend.”

Goldstone is the president of ScanMyPhotos.com and 30 Minute Photos, Etc., which are located near the protest location as well as a nearby Chevron station.

For more information about gas prices, credit card fees and Goldstone’s efforts, go to WayTooHigh.com

[source: OC Metro Magazine]

“Gas stations charge extra for credit” (Via Florida Today)

July 3, 2008

Facing fees from Visa and others that erode already small profits on gas sales, some stations have started charging customers extra for using credit cards.  Station operators say credit card companies charge them fees — often 2 percent to 4 percent of a sale — when customers buy gas with credit cards. Those “interchange” fees either cut into their few-cents-per gallon profit or force them to raise their prices, potentially costing themselves customers.  So they are trying to give consumers an incentive to pay with cash.   A few stations around the nation have even stopped accepting credit cards for gas purchases.  Click here to read more.

[Source: Florida Today].

“Credit card costs are driving up the price of gas” (via OC Register)

July 2, 2008

Reprinted from The Orange County Register “Gas Pains” blog, July 2, 2008 [posted by John Gittelsohn].

It’s hard to argue that soaring crude oil costs are driving up the price of a gallon of gas.

But Mitch Goldstone, an Irvinegoldstone-protest-2.jpg businessman, says credit card companies are making visits to the pump even more painful — adding 8 to 10 pennies to the price of each gallon of gas.

“A bunch of people are angry at gas prices, but consumers don’t know that credit card fees exist,” Goldstone said.

Goldstone plans what he calls “The Great American Protest Against MasterCard and Visa Fees on Gasoline.” He expects to be joined by hundreds of demonstrators, including some gas station owners at the protest Thursday at 7:30 a.m. at the Chevron gas station at the corner of Jamboree Road and Barranca Parkway in Irvine.

Visa Inc. announced June 26 that it was taking steps to address these types of complaints by capping debit card transactions at the pump at 95 cents per purchase — effective July 18. The San Francisco-based company also said it will reduce the fees it charges fuel stations for transactions on its credit cards, called the “interchange rate.”

“Even though Visa’s interchange rates on fuel transactions are already among the lowest in our system, the run-up in fuel prices to today’s unprecedented levels requires an exceptional response,” said Bill Sheedy, global head of corporate strategy and business development for Visa Inc.

In response to questions from the Register on Wednesday, Visa asserted that it was not ultimately responsible for the cost of its services impacting prices at the pump:

“It’s important to note that retailers, such as gas stations, pay what is called a Merchant Discount, which is their cost of accepting card payments from their customers.  They pay this amount to their own financial institution, known as a merchant bank or merchant acquirer.  Large oil companies often negotiate their merchant discount rate with their financial institution directly and then impose those rates on their franchised stations.  In many cases, rates given to stations are marked up by the oil companies.  These rates are never set by Visa.” 

It’s no secret that some of the cheapest gas in California is sold by ARCO. One reason: ARCO stations do not accept credit cards — and they often charge customers an extra fee for using a debit card to fill up.What’s less well know is how much credit card companies charge to retailers — not just gas station owners, but any company that uses a credit card for a transaction

“Now, a lot more people are being forced to use credit cards because they don’t carry $100 in cash to fill up,” he said.

Essentially, Goldstone says there’s a compound interest problem here.

Credit card companies make retailers pay an interchange fee each time a customer buys something with their card. The fee is based on the size of the purchase. So as a gallon of gasoline soared an average $1.50 — almost 50 percent — in the past 12 months, the credit card companies have increased their fee collections almost 50 percent, without lifting a finger.

In fact, Goldstone argues, credit card companies are doing less work for each transaction, because the technology has improved so much.

“It used to be that we’d make carbon copies of receipts and mail them to Florida,” he said.

Here’s what Visa said in its June 26 announcement:

As an example, under the new rates, if a motorist uses a Visa Signature credit card to fill a 15-gallon tank at $4 a gallon – or $60 total – the acquiring institution generally would pay $0.94 in interchange fees, a savings of 14 percent over current rates. Using a debit card, that same transaction could be cleared within hours, quickly removing the $60 hold that is often placed on a consumer’s funds for one or two days in the current system. For higher transaction amounts, these interchange adjustments have an even greater impact. For a $120 consumer transaction, the level of interchange for the same Visa Signature transaction would be $1.63, for a 43 percent savings. With the cap on Visa Check Card interchange, an acquirer would see a reduction of 59 percent on fuel transactions.

Goldstone, owner of an Irvine photo shop [30 Minute Photos Etc. and ScanMyPhotos.com], is lead plaintiff in a class action lawsuit filed by thousands of merchants alleging that Visa, MasterCard, several banks and credit card companies are violating anti-trust laws. The plaintiffs’ attorney, Craig Wildfang of Minneapolis, said the soonest the case could come to trial is late 2009.

To see a copy of the complaint, filed in U.S. District Court in New York, CLICK HERE.

To see more about how Visa Inc. is offering to help gas consumers, CLICK HERE.

RALLY ’ROUND THE PUMP (Via Irvine World News)

July 1, 2008

Irvine business owner Mitch Goldstone says Visa and MasterCard are profiting from high gas pump prices.From The Irvine World News, July 1: 

Irvine business owner Mitch Goldstone is mustering the home guard not only against Big Oil; he’s got Visa and MasterCard in his sights, too, over the cost of fuel. Goldstone has put out a call to all motorists who are “steaming mad” about prices at the pumps to join his All American Rally. The rally is scheduled for Thursday, the day before the Fourth, from 8 to 10 a.m. next to the Chevron station at the corner of Barranca Parkway and Jamboree Road.
    “Visa, MasterCard and thousands of its member banks are making windfall profits every time you fill up and pay with a charge card,” says Goldstone. Goldstone says he and his partner, Carl Berman, are the lead plaintiffs in a multibillion-dollar litigation against the two credit card associations and member banks over “anticompetitive price-fixing practices.”
    “Except for OPEC, has anyone enjoyed a greater windfall from $4-plus gasoline than the credit card industry?” asks Goldstone. To learn more about Thursday’s rally, call Goldstone at his business, ScanMyPhotos.com, 949-474-7654.
– Don Dennis

Click here for more.