See The Incredible Animated Story Of Kim Kardashian’s Credit Card For Kids #swipefees

November 20, 2010

The Taiwanese animation studio is covering America’s the next big scandal: The Kardashian Kard. This is a ridiculously expensive prepaid credit card for 13-year-old children. And now they are plugging their very own MasterCard… and charging us $99.95 for the “privilege” of using one.

Excerpt via Bill Hardekopf, CEO of LowCards.com:

Last week, the Kardashian sisters launched a new credit card targeted at teens, one of the worst products to enter the financial market in a long time.

The card is very expensive and using the Kardashians as financial role models to impressionable teenagers is already being questioned by financial experts around the country.

The card is a prepaid MasterCard debit card with the Kardashian sisters’ picture on the plastic and is done in partnership with Mobile Resource Card, providers of custom prepaid card programs. The card is promoted as a way for parents to monitor their children’s spending while teaching them money management skills.

But the cost of the card for the first year is $99.95 which includes a one-time card purchase of $9.95, 12 months of monthly fees at $7.95 per month, and preloaded deposit of $5.00. After the first year, a $7.95 monthly fee will be assessed. If consumers prefer a six month option, the cost is $59.95.

The fees do not stop after the card is purchased. ATM withdrawals cost $1.50 in addition to ATM fees. Automatic bill pay using the card costs $2 per item. There is a 2.5% fee for instant transfers that are made from a credit card or debit card. If you want to add money to the card, tack on an additional $1. It will cost you $6 to close the account. Have a question on the card? That will be $1.50 to speak with a live operator.

 

Here’s the video:

via See The Incredible Animated Story Of Kim Kardashian’s Credit Card For Kids.

http://blogs.forbes.com/moneybuilder/2010/11/18/kardashian-kard-is-a-rip-off/?boxes=Homepagechannels


Visa, MasterCard Interchange Definitions

November 27, 2009

Want to know everything about Interchange?

The below glossory of terms were extracted from the May 23, 2008 second consolidated amended class action complaint re Payment Card Interchange Fee and Merchant-Discount Antitrust Litigation, filed in the U.S. District Court Eastern District of New York.  These definitions of key terms associated with the antitrust litigation are helpful, especially if any defense attorneys or advocacy groups are unfamiliar with interchange issues.

DEFINITIONS as used in this Complaint, the following terms are defined as: 

  • a. “Access Device” means any device, including but not limited to a Payment Card or microchip, that may be used by a consumer to initiate a General Purpose Card or Debit Card transaction.
  • b. “Acquiring Bank” means a member of Visa and/or MasterCard that acquires payment transactions from merchants and acts as a liaison between the merchant, the Issuing Bank, and the Payment-Card Network to assist in processing the payment transaction. Visa and MasterCard rules require that an acquiring Bank be a party to every merchant contract. In a typical payment transaction, when a customer presents a Visa or MasterCard card for payment, the merchant relays the transaction information to the Acquiring Bank. The Acquiring Bank then contacts the Issuing Bank via the network for authorization based on available credit or funds. Acquiring Banks compete with each other for the right to acquire payment transactions from merchants but do not compete on the basis of the interchange fee, which is the subject of this Complaint.

  • c. “All-Outlets Rule” is a rule of the Visa and MasterCard Networks that requires a merchant with multiple outlets to accept Visa or MasterCard, respectively, in all of its outlets, even if those outlets are owned by a separate corporate entity, operated under a different brand name, or employ a different business model.

  • d. “Anti-Steering Restraints” are the rules of the Visa and MasterCard Networks that forbid merchants from incenting consumers to use less expensive payment forms, including: the No-Surcharge Rule; the No-Minimum-Purchase Rule; and the Networks’ so-called “antidiscrimination rules,” which prohibit merchants from treating any other Payment Card or medium more advantageously than the Defendants’cards. The Defendants’ standard-form-merchant agreements proscribe steering by preventing merchants from establishing procedures that favor, discourage, or discriminate against the use of any particular Card.

  • e. “Assessment” refers to an amount computed and charged by the Networks on each transaction amount to the Acquiring and Issuing Banks.

  • f. “Authorization” is the process by which a merchant determines whether a cardholder is authorized by his or her Issuing Bank to make a particular transaction. The merchant sends the cardholder’s information to its Acquiring Bank or a Third-Party Processor, which sends it to Visa or MasterCard, which then sends it to the issuer or the issuer’s processor, to obtain authorization. If authorization is given, the process is repeated in reverse.

  • g. “Charge Card” or “Travel & Entertainment Card” (T&E) is an access device, usually a Payment Card, enabling the holder to purchase goods and services on credit to be paid on behalf of the holder by the issuer of such device. Typically, the contractual terms of such cards require that payment from the holder to the issuer be made in full each month, for all payments made on behalf of the cardholder by the issuer during the preceding month. The issuer does not extend credit to the holder beyond the date of the monthly statement, nor does it impose interest charges on the balance due except as a penalty for late payment. Examples of Charge Cards are the American Express Green, Gold, Platinum, and Centurion cards as well as the Diners Club and Carte Blanche cards issued by Citibank.

  • h. “Credit Card” is an access device, usually a Payment Card, enabling the holder to (i) effect transactions on credit for goods and services purchased, which are paid on behalf of the holder by the issuer of such devices; or (ii) obtain cash with credit extended by the issuer. Credit Cards permit consumers to borrow the money for a retail purchase from the card issuer and to repay the debt over time, according to the provisions of a revolving-credit agreement between the cardholder and the issuer. Examples of Credit Cards are the Visa and MasterCard Credit Cards issued by members of the Defendant Bank card networks, as well as the Discover and Private Issue cards issued by Morgan Stanley, Dean Witter & Co., and the Optima and Blue-type cards issued by American Express. Proprietary cards of individual merchants for use only at particular merchants’ outlets are not included in this definition.

  • i. “Debit Card” is an access device, usually a Payment Card, enabling the holder, among other things, to effect a cash withdrawal from the holder’s depository bank account, either at an Automated Teller Machine (“ATM”) or a point of sale.

  • j. “Float” refers to the expense the Issuing Bank incurs by extending interest-free credit to the consumer for the grace period between the date of purchase and the date of payment.

  • k. “General Purpose Cards” collectively refers to Credit Cards and Charge Cards.

  • l. “Grace Period” refers to the time between a consumer’s purchase and the date on which the consumer’s payment is due to the Issuing Bank, during which time the consumer pays no interest.

  • m. The “Honor All Cards” Rules are rules of the Visa and MasterCard Networks that require any merchant that accepts Visa or MasterCard Payment Cards to accept all Payment Cards that are issued on that Network.

  • n. “Interchange Fee” in the United States General Purpose Card Network Services and Debit Card Network Services markets means a fee that merchants pay to the Issuing Bank through the Network and the Acquiring Bank for each retail transaction in which the Issuer’s card is used as a payment device at one of the Acquirer’s merchant accounts.  The Interchange Fee is deducted by the Issuing Bank from amounts otherwise owed to Class members on Payment Card transactions, and constitutes a component of and a floor for the Merchant-Discount Fee. The following example illustrates how the Visa and MasterCard Interchange Fees work. A customer presents a Visa or MasterCard card to a merchant as a payment method. The merchant contacts the Acquiring Bank, either directly or through a Third-Party Processor, to authorize the transaction. The Acquiring Bank submits the transaction to the Network. The Network relays the transaction information to the Issuing Bank or the Issuing Bank’s Third-Party Processor, which approves the transaction if the customer has a sufficient line of credit or available funds. If the transaction is authorized through the Network, the Issuing Bank pays the Acquiring Bank the payment amount minus the “Interchange Fee,” which is fixed by the member banks of Visa and MasterCard. The Acquiring Bank then pays the merchant the payment amount minus the Interchange Fee and other charges for processing the transaction. The total fee charged the merchant is often referred to as the “Merchant-Discount Fee.” The Interchange Fee is the largest component of the Merchant-Discount Fee. Visa Interchange Fees are fixed periodically by Visa member banks, acting through the Visa Board of Directors. MasterCard Interchange Fees are fixed periodically by the MasterCard member banks, acting through the MasterCard Board of Directors. “Merchant-Discount Fee” means the the same Third-Party Processor.

  • p. “Issuing Bank” means a member of Visa and/or MasterCard that issues Visa and/or MasterCard branded Payment Cards to consumers for their use as payment systems and access devices. Issuing Banks compete with each other to issue Visa and MasterCard cards to consumers. Visa and MasterCard rules require that all member banks issue, respectively, Visa and MasterCard Payment Cards.

  • q. “Merchant-Discount Fee” is the total sum that is deducted from the amount of money a merchant receives in the settlement of Visa and/or MasterCard transactions. The largest component of the Merchant-Discount Fee is the Interchange Fee.

  • r. “Miscellaneous Exclusionary Restraints” refer collectively to the All-Outlets Rule, the No-Bypass Rule, and the No-Multi-Issuer Rule.

  • s. “Network Services” means the services and infrastructure that Visa and MasterCard and their members provide to merchants through which payment transactions are conducted, including authorization, clearance, and settlement of transactions, and those similar services offered by American Express and Discover. As they currently are offered by Visa and MasterCard and their member banks, Network Services include Network-Processing Services and the Visa and MasterCard Payment-Card Systems that facilitate acceptance of Visa and MasterCard Payment Cards.

  • t. “Network-Processing Services” are the services that are or may be used for authorizing, clearing, and settling Visa and MasterCard Credit and Debit Card transactions.

  • u. “No-Minimum-Purchase Rule” is a rule of the Visa and MasterCard Networks that prohibits merchants from imposing minimum-purchase amounts for Visa and MasterCard Credit-Card purchases.

  • v. “No-Bypass Rule” is a rule of the Visa and MasterCard Networks that prohibits merchants and member banks from bypassing the Visa or MasterCard system (thereby avoiding the supracompetitive Interchange Fees) in order to clear, authorize, or settle Credit Card transactions even if the Issuing and Acquiring Banks are the same, or even if an independent processor has agreements with both the Issuing and Acquiring Banks on any given transaction.

  • w. “No-Multi-Issuer Rule” is a rule of the Visa and MasterCard Networks respectively, that prohibits Visa and MasterCard transactions from also being able to be processed over other Networks.

  • x. “No-Surcharge Rule” is a rule of the Visa and MasterCard Networks that forbids merchants from charging cardholders a surcharge on their Payment-Card transactions to reflect cost differences among various payment methods. For example, merchants are prohibited from surcharging cardholders who use a Visa Credit Card rather than a Discover-branded Credit Card, or use a Premium Credit Card rather than a standard Credit Card, or use a Credit Card rather than another form of payment.

  • y. “Offline Signature Debit Card” or “Offline Debit Card” is a Debit Card with which the cardholder authorizes a withdrawal from his or her bank account usually by presenting the card at the POS and signing a receipt. Offline Signature Debit Card transactions are processed as Credit Card transactions. Examples of Offline Signature Debit Cards include Visa’s “Visa Check” product and MasterCard’s “Debit MasterCard” product.

  • z. “Online PIN-Debit Card” or “PIN-Debit Card” is a Debit Card with which the cardholder authorizes a withdrawal from his or her bank account by swiping her card at the POS and entering a Personal Identification Number (“PIN”). PIN-Debit-Card networks grew out of regional ATM networks and are therefore processed differently than Offline transactions. Examples of Online PIN-Debit-Card networks include Interlink, Maestro, NYCE, and Pulse.

  • aa. A “Premium Card” is a General Purpose Card that carries a higher Interchange Fee than a Standard Card and is required by a network to carry a certain level of rewards or incentives to the cardholder. Visa’s “Signature” and “Traditional Rewards” card products and MasterCard’s “World” card product are examples of Premium Cards.

  • bb. “On-Us Transactions” are transactions in which the Acquiring Bank and the Issuing Bank are the same. Even when the Issuing and Acquiring Banks are identical, Visa and MasterCard require that the Issuing Bank charge an Interchange Fee to the merchant.

  • cc. “Payment Card” refers to a plastic card that enables consumers to make purchases from merchants that accept the consumer’s Payment Card.  The term “Payment Card” refers to several different types of cards, including, General-Purpose Cards, Debit Cards, Travel & Entertainment Cards, stored-value cards, and merchant-proprietary cards.

  • dd. Although “Payment Cards” are a subset of “Access Devices”, the two terms are used interchangeably herein, because despite evolving technology, Payment Cards continue to constitute the vast majority of Access Devices.

  • ee. “Payment-Card-System Services” means the standard-setting functions performed by Payment-Card Networks. Payment-Card-System Services encompasses the brand of the particular card program, the rules and protocols for providing merchant acceptance of and conducting Payment-Card transactions under that brand, and the rules and protocols for conducting transactions under that brand. The four leading providers of Payment-Card-System Services are Visa, MasterCard, Discover, and American Express.

  • ff. “Payment-Guarantee Services” refers to a service that a merchant might purchase to insure the merchant against Credit- or Debit-Card fraud, check fraud, and other forms of payment fraud, and/or assists the merchant in minimizing the costs of such fraud.

  • gg. “Settlement” is the process by which the merchant is reimbursed for a Payment Card transaction. While Visa and MasterCard rules require that an Acquiring Bank be a party to all merchant card-acceptance agreements, merchants often use Third-Party Processors to process these transactions. The Acquiring Bank or its processor credits the merchant’s bank account with the amount paid by the cardholder less the Merchant-Discount fee, the largest component of which is the Interchange Fee, and then transmits the transaction data to Visa or MasterCard, which sends it to the Issuing Bank or its Third-Party Processor. The Issuing Bank then sends payment to the Acquiring Bank through Visa or MasterCard (and possibly the Acquirer’s processor). In a Credit Card or Offline Debit Card transaction, settlement occurs two to four days after authorization and clearing. In a PIN-Debit transaction, all three processes occur in the same electronic transaction virtually instantaneously.

  • hh. “Third-Party Processor” is a firm, other than Visa, MasterCard, a member bank, or an entity affiliated with a member bank, that performs the authorization, clearing, and settlement functions of a Visa or MasterCard Payment-Card transaction on behalf of a merchant or a member bank. Examples of Third-Party Processors include First Data and Transfirst.

    [/source]

     
     
     

     


  • Recent Tweets From WayTooHigh

    August 16, 2009

    Follow WayTooHigh.com on Twitter

  • Cc_normal
    WayTooHigh: Visa and MasterCard operate like price-fixing cartels and violate federal antitrust laws.
     
  • Cc_normal
    WayTooHigh: Q: Why should retailers be taking on a ride when affinity reward credit cards R used? A: Consumers ultimately pay = NO FREE REWARDS
     
  • Cc_normal
    WayTooHigh: Visa, MasterCard make bulk of their money from charging fees to financial institutions that issue the cards http://ow.ly/io8j
     
  • Cc_normal
    WayTooHigh: Bank of America Says Three Directors Quit as Exodus Totals 10 http://ow.ly/iM7h
     
  • Cc_normal
    WayTooHigh: All About the Visa and MasterCard Promotional Gift Card Scheme (repost) http://ow.ly/kdY6
     
  • Cc_normal
    WayTooHigh: Q: How can banks (MasterCard / Visa) site “competitive pressures” regarding need for soaring credit card rates? They own the Monopoly board!
     
  • Cc_normal
    WayTooHigh: You know it’s a good day for consumers and retailers when Visa publicly expresses extreme disappointment: http://ow.ly/kdXF
     
  • Cc_normal
    WayTooHigh: Q: Why hasn’t MasterCard, Visa, Chase, CitiGroup, BofA, etc… not been shut down for collusion and credit card price-gouging. A: Dunno
     
  • Cc_normal
    WayTooHigh: More Scheming by Visa and MasterCard. Anatomy of How an Electronic Gift Card “Works:” http://ow.ly/kdWc (new post)
     
  • Cc_normal
    WayTooHigh: MAJOR SCAM: Visa, MasterCard gift cards issued rather than checks. They keep micro-payments remaining, because you can’t exceed your balance
     
  • Cc_normal
    WayTooHigh: @nancytrejos– As credit card companies lower reward benefits merchants interchange fees should be too, WE (consumers) pay those rewards
  •  

  • Cc_normal
    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
     
    • Cc_normal
      WayTooHigh: Rob Reeg. pres Global Technology & Operations for MasterCard Worldwide, frightens consumers http://ow.ly/izsH with misinformation
    • Cc_normal
      WayTooHigh: credit card companies cut ad spending 50% (Brandweek) = less risk and lower mkting costs, yet record interchange fees? http://ow.ly/k8UC
    • Cc_normal
      WayTooHigh: Why should retailers be taken on a ride when affinity reward credit cards are used? Consumers ultimately pay = NO FREE REWARDS
    • Cc_normal
      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?
    • Cc_normal
      WayTooHigh: As recession-weary consumers are swearing off their credit cards, credit card brands are swearing off advertising http://ow.ly/k8Ua

       

    • Cc_normal
      WayTooHigh: Network Rivalry Sparks 10-Year Quadrupling of PIN-Debit Pricing (via Digital Transactions) http://ow.ly/k8mc
    • Cc_normal
      WayTooHigh: only justification [for soaring interchange fees} is when you have an anti-competitive business model and you can illegally fix prices
       
    • Cc_normal
      WayTooHigh: Improved processing technology and the weak economy should be driving card-acceptance prices down http://ow.ly/k8lP (Digital Transactions)
       
    • Cc_normal
      WayTooHigh: RT @Denrael: @WayTooHigh there is competition but challenge is getting wallet space [Not really, MasterCard and Visa wield 80% Market Power]

       

    • Cc_normal
      WayTooHigh: Bank of America drops arbitration requirement (via AP) – http://ow.ly/k7KK (new post)
    • Cc_normal
      WayTooHigh: When I sued Visa, MasterCard + its member backs for illegal price-fixing of credit card fees back in ’05, never imagined power of Twitter
    • Cc_normal
      WayTooHigh: Bank of America Says Three Directors Quit as Exodus Totals 10 http://ow.ly/iM7e
    • Cc_normal
      WayTooHigh: Stop Unfair Credit Card Fees Tell Your Elected Representatives To Act On Interchange Fees http://ow.ly/iEOe
    • Cc_normal
      WayTooHigh: FIGHT CREDIT CARD FEES: Write Congress – Share this link with fellow merchants http://ow.ly/iENK
    • Cc_normal
      WayTooHigh: Circle K Circulates Petition Chain placing petition protesting credit-card fees in its convenience stores http://ow.ly/iEN1
    • Cc_normal
      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
    • Cc_normal
      WayTooHigh: New to ScanMyPhotos.com: For updates on our antitrust lawsuit against Visa, MasterCard, major banks See: http://ow.ly/k4Wj
    • Cc_normal
      WayTooHigh: Had media interview w/ biz pub. Explained credit card companies get away with high rates because they = monopoly, fix-prices, NO competition
    • Cc_normal
      WayTooHigh: RT @7ElevenCedarPk: NYTimes article on 7-Eleven and the petition for unfair credit card fees. http://bit.ly/5fgCx
    • Cc_normal
      WayTooHigh: The fees – known as credit-card interchange fees, or swipe fees – are unfair to us and deceptive to the donors. http://ow.ly/jwd8
    • Cc_normal
      WayTooHigh: Congress must support “Credit Card Fair Fee Act,” especially in a recession. Takes ~$60 bln out of banks unfair rev into consumers pockets
    • Cc_normal
      WayTooHigh: Maria Aspan (American Banker) says Citigroup will charge annual free for some credit cards. even as Interchange fees at record high
    • Cc_normal
      WayTooHigh: credit card company merchant interchange swipe fees ARE wiping independent businesses off the map in neighborhoods across the U.S.

       

    • Cc_normal
      WayTooHigh: TARP Recipients Fighting To Keep Charging Exorbitant Credit Card Fees (via Huffington Post) http://ow.ly/gVvH
    • Cc_normal
      WayTooHigh: Obama administration planning broad reworking of fees financial firms pay for their federal regulation, (WashPost) http://ow.ly/k0aJ
    • Cc_normal
      WayTooHigh: Visa and MasterCard issuers collectively set credit card interchange fees in secret. These fees can’t be negotiated
    • Cc_normal
      WayTooHigh: A central bank study in March recommended changes to Brazil’s credit-card market to make it more efficient http://ow.ly/jjm1
    • Cc_normal
      WayTooHigh: U.S. retailers and consumers refuse to be treated worse than New Zealand, Canada, Australia and other countries. http://ow.ly/jVvR
    • Cc_normal
      WayTooHigh: 4-party credit card payment systems is broken; interchange fees no longer cost-based, floods banks with $ at expense of consumers
    • Cc_normal
      WayTooHigh: Competition – what Visa, MasterCard, banks know little about, is why 0 interchange fees will benefit consumers = lower costs
    • Cc_normal
      WayTooHigh: Did you know that when you make a non-profit charitable donation, Visa, MasterCard and credit card issuers MAKE $$$ off the top.
    • Cc_normal
      WayTooHigh: Tulips, Silver, Housing Market and Oil Speculators Have Nothing on MasterCard and Visa {July, 08, WTH) http://ow.ly/g1aY #18000
    • Cc_normal
      WayTooHigh: Commerce Commission And Visa Reach Agreement To Settle Credit Card Interchange Fee Proceedings http://ow.ly/jLmK
    • Cc_normal
      WayTooHigh: Why Won’t Visa Give U.S. Competition & Transparency Promised to New Zealand on Credit Card Fees? (via @NCASOnline) http://ow.ly/jVvd
    • Cc_normal
      WayTooHigh: Retailers are asking the public to help them eliminate a credit card interchange fee that often gets passed on to users http://ow.ly/jVuD
    • Cc_normal
      WayTooHigh: How Credit Card Companies Are Changing the Fine Print (via Mary Palon, WSJ) http://ow.ly/jVsw
    • Cc_normal
      WayTooHigh: Banks are like health care industry, LOADS of misinformation on credit card interchange fees. Credibility at zero.
    • Cc_normal
      WayTooHigh: Many non-profit charities HURT by MasterCard and Visa credit card fees. Forced to pay upwards of 5% interchange fee for few manual charges

       

    • Cc_normal
      WayTooHigh: Credit Score Shell Game: As High Scores Vanish, Borrowers’ Luck Runs Out (via Nancy Trejos Washington Post) http://ow.ly/ftrP #18000
    • Cc_normal
      WayTooHigh: Businesses incurs a fee anytime a customer swipes a card. http://ow.ly/j0eY

      Cc_normal

    • WayTooHigh: Credit Card Issuers’ trick: Ads showing “fun” ways to design photos on credit card = distraction, should be URGING you to READ terms #18000
    • Cc_normal
      WayTooHigh: Three bills have been introduced in the 111th Congress that address the issue of interchange fees http://ow.ly/jNRA

       

    • Cc_normal
      WayTooHigh: It’s Visa and MasterCard that should thank consumers every time they use a debit / credit card at stores: http://ow.ly/iftW
    • Cc_normal
      WayTooHigh: From MasterCard Inc. Q2 Earnings Call, NO explanation about price-fixing and intl interchange fees that are 1/3 that in U.S.
    • Cc_normal
      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
    • Cc_normal
      WayTooHigh: Commerce Commission And Visa Reach Agreement To Settle Credit Card Interchange Fee Proceedings http://ow.ly/jLmA
    • Cc_normal
      WayTooHigh: Our economy lost trillions POST Bush’s $300 p/ person stimulus program. But, Republicans silent on anything but attacking current plan.
    • Cc_normal
      WayTooHigh: SHAME on Visa, MasterCard, credit card companies for misguided effort to shift message from BANK GREED to chain store profiteering.
    • Cc_normal
      WayTooHigh: Congress must support “Credit Card Fair Fee Act,” especially in a recession. Takes ~$60 bln out of banks unfair rev into consumers pockets
    • Cc_normal
      WayTooHigh: Visa, MasterCard look abroad for growth (via Reuters) [Even thought U.S. interchange fees ~3x more than abroad?] http://ow.ly/jIw9
       
    • Cc_normal
      WayTooHigh: Stop Unfair Credit Card Fees Tell Your Elected Representatives To Act On Interchange Fees http://ow.ly/iEOa
       
    • Cc_normal
      WayTooHigh: When anticompetitive and illegal interchange fee price fixing ends, family-owned restaurants, dry cleaners, etc. will be SAVED

    MasterCard: Legislation Would Let Merchants Keep the Benefits of Card Acceptance But Make Consumers Pay the Price

    June 6, 2009
    [source: MasterCard Worldwide press release, June 4]

    Purchase, NY, June 04, 2009MasterCard said today that legislation introduced today by U.S. Rep. John Conyers (D-MI), by exempting merchants from antitrust laws, would take away the fundamental protections that these laws provide consumers. This would result in less credit availability, along with higher prices and reduced benefits when Americans choose to use their credit or debit cards. Antitrust laws are designed to protect competition and consumers, but this bill would have the opposite effect.

    Conyers’ legislation, H.R. 2695, would give merchants a special exemption from antitrust laws enabling them to engage in anticompetitive and collusive behavior when establishing the fees and terms applicable to accepting payment cards. The bill is part of an organized merchant campaign to shift their card acceptance costs to consumers, and does not require merchants to pass on any savings to consumers if they succeed in lowering these fees.

    When similar legislation was considered last Congress, it stirred considerable controversy and was only narrowly approved by a deeply divided Judiciary Committee. In addition, a wide array of organizations from non-profits to community banks and credit unions to minority small businesses voiced their opposition. The Department of Justice also expressed concern about the bill indicating that its antitrust exemptions “would appear to be the type of naked collusion that the antitrust laws condemn as per se unlawful because such conduct lacks plausible benefits to competition.”

    Experience demonstrates that consumers lose when merchants no longer pay their fair share for the valuable benefits they receive from accepting payment cards. This is precisely what happened in Australia when the government reduced interchange fees. Although it cut costs for merchants, many Australian consumers now pay more for their payment cards and receive less in return as a result of the government’s intervention. Furthermore, there is no evidence that merchants reduced prices for consumers as a result of the government’s intervention.

    Both merchants and consumers benefit from the ability to use and accept electronic payments, and in today’s free market system, each pays a share of the cost of the service. The benefits and the cost of card payment services are now shared between merchants and consumers but the merchants behind the Conyers bill seek to retain the benefits while shifting the costs to consumers.

    Finally, MasterCard noted that any serious discussion of these issues should wait for the results of the Government Accountability Office (GAO) study ordered by Congress as part of the Credit CARD Act. Consumers stand to be severely damaged by government intervention and the findings of the GAO study may help avoid consumer harm that inevitably flows when merchants no longer pay their fair share for the benefits they receive.


    “Culture Shock for IPOs: Pay Disclosures ” (via WSJ)

    December 8, 2008

    From The Wall Street Journal on Dec 8th, by reporter Lynn Cowan  [see link], is an article about executive pay.  The executive excesses at MasterCard and Visa could be further signs that the two giant credit card cartels are generating massive revenues from its discount interchange fee and other monopoly-generated charges. 

    Excerpt:

    MasterCard’s final prospectus in May 2006 contained 15 pages describing how much and what types of  compensation executives were paid, but wasn’t very specific about how bonuses or incentives were determined, listing 18 possible goals, from stock price to revenue, that could be used.

    Two years later, rival Visa’s March 2008 IPO documents contained an executive compensation section that totaled 28 pages, and included how its executives’ pay compared to peer companies; the names of those peers; and what measurements, such as net income, that are used to determine executives’ bonuses.

    MasterCard wasn’t spared forever. After the rule took effect, its next proxy statement’s executive-pay section had doubled in size to 30 pages, and contained much of the same level of detail that Visa provided.

    For example, instead of listing 18 possible goals, it specified that net income and return on equity targets would be the basis of cash bonuses.

    Visa declined to comment.

    MasterCard spokesman Chris Monteiro said the disclosure process “certainly took time and effort” but resulted in a “transparent and detailed view” of the company’s compensation structure.


    $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


    Even the Oil Cartel Lowers Prices

    October 10, 2008

    Crude-oil futures plunge nearly $7 to trade below $80 a barrel

    During this global financial crisis, even gas prices are plunging. In an earlier WayTooHigh.com posting, I quipped that a barrel of gas would more likely fall to $50 than interchange fees be lowered.  Interchange fees is the cost that merchants are forced to pay to the banks, and in turn to Visa and MasterCard though a not-very “discount” fee. 

    Now oil is nearly $80 from its high of about $150, yet the global economy still has record interchange fees.  When you operate a collusive, monopoly that is the way things work.  I wonder whether the government’s intervention into nationalizing the banking system will speed up more attention to these unfair rates?

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

    As millions of businesses and consumers are impacted by the dismal performance and unbridled greed from the failed banking industry and financial institutions, now is the opportunity and perfect storm to finally demand that the unfair interchange fee scheme be terminated.