Visa Inc. Makes Operating Regulations Available to the Public

May 9, 2008

Before reprinting today’s Visa Inc. press release, these thoughts:

Our merchant interchange antitrust litigation is based on many years of alleged illegal activities.  Just as if a convicted bank robber apologizes and cleans up their act, they are still in violation of the law.  So too are Visa and MasterCard.  Because most of the same banks that control a large percentage of Visa’s newly public shares are also owners of MasterCard, we expect that the same decision will be forthcoming by the other credit card association. 

Moving forward, this is a smart decision and one more confirming action that Visa recognizes that they were in error and are quickly trying to fix their business model; from creating an independent board, to less ownership by the banks, to posting interchange rates online (although mostly as an attempt to respond to merchant concerns) and now this.  

The Visa Inc. May 9th press release is reprinted below.


Visa Inc. Makes Operating Regulations Available to the Public

Move Seeks to Increase Company’s Transparency

SAN FRANCISCO, CA, May 8, 2008
Visa Inc. announced today that it will for the first time make its Visa International and Regional Operating Regulations available publicly, effective May 15, 2008.

The Operating Regulations, which will be available on Visa’s corporate website at, are the set of rules which govern the participation of issuing and acquiring financial institutions in the Visa system.


“As Visa continues to evolve to meet the needs of customers, we are committed to providing our partners and interested parties with greater insight into Visa’s operations,” says Joseph W. Saunders, Chairman and CEO, Visa Inc.  “Greater transparency is one of the ways we hope to strengthen our working relationships in the marketplace.”


Previously, Visa Inc. made its Visa USA Operating Regulations available to merchants and third party agents under a non-disclosure agreement.  On May 15, Visa’s rules will be publicly available to interested parties, including all Visa rules related to merchants’ participation in the system.  However, to protect cardholder and merchant safety and the Visa system, Visa has omitted proprietary and competitive information, as well as certain details from the rules relating to the security of the network.  For example, in the merchant rules, Visa has omitted authorization limits by country and processing codes which could aid fraudsters.


“Today’s announcement builds on our commitment to making Visa transparent in an increasingly competitive environment,” adds Saunders.  “While our operating regulations only govern our client financial institutions, we believe that merchants and others will benefit from access to the rules, which provide a greater understanding of the complexities of electronic payments.”


Overview: Popular Interchange Commentaries

December 18, 2007

Interchange Fees Should Have Gone the Way of the IBM Selectric Typerwriters (

An Extraodinarily Fictional Read: MasterCard® Explains the Value of Interchange Fees (

Sixty-percent Rate Cut in 2008 by MasterCard Europe (Commentary,, via WSJ)

Seventy-two pages, five-pages or one line? (

Every Credit and Debit Card Receipt Should Include Interchange Charge (

Merchants sue MasterCard, Visa over ‘exorbitant’ interchange rates

Four-million “pay-pass” cards are another four-million more reasons to end Interchange fees (Commentary:

British Regulator “Slams Mastercard Fees” (BBC NEWS)

Summary: Briefing on Interchange Issues (

U.S. Chamber of Commerce Silent on Interchange Fees. Why?

November 27, 2007

As a longtime member of our local [Irvine] Chamber of Commerce [since 1990] we are wondering why the U.S. Chamber has not played a more active role in our battle against Visa, MasterCard and its thousands of member banks?  Could it be that the member banks are more active and well-funded members than 30 Minute Photos Etc. and

The closest to informational activism we came across was from a search of the word “interchange” which linked to this advisory written by one of the nation’s card processor’s, so really not much meat there. 

From the US Chamber website:

 Representing your ideas—and interests—in Washington for nearly a century.

The U.S. Chamber of Commerce is the world’s largest business federation representing more than 3 million businesses of all sizes, sectors, and regions. It includes hundreds of associations, thousands of local chambers, and more than 100 American Chambers of Commerce in 91 countries.

Whether you own a business, represent one, lead a corporate office, or manage an association, the Chamber of Commerce of the United States of America®  provides you with a voice of experience and influence in Washington, D.C., and around the globe. Our core mission is to fight for business and free enterprise before Congress, the White House, regulatory agencies, the courts, the court of public opinion, and governments around the world.

From its headquarters near the White House, the Chamber maintains a professional staff of more than 300 of the nation’s top policy experts, lobbyists, lawyers, and communicators. The Washington staff is supported by eight regional offices around the country; offices in New York and Brussels; an on-the-ground presence in China; and a network of grassroots business activists.

Our members include businesses of all sizes and sectors—from large Fortune 500 companies to home-based, one-person operations. In fact, 96% of our membership encompasses businesses with fewer than 100 employees.

Mission Statement:

“To advance human progress through an economic, political and social system based on individual freedom, incentive, initiative, opportunity, and responsibility.”

Programs and Affiliates

  • The National Chamber Litigation Center—our law firm that defends business interests and sues government agencies.
  • The Institute for Legal Reform—the Chamber affiliate that challenges lawsuit abuse on many fronts, fights for legal reform legislation, and educates voters in state judicial and attorney general races.
  • The National Chamber Foundation—our public policy think tank that drives the debate, develops the data and arguments, and influences policy options on the most critical business issues.
  • The Political Program—the Chamber’s aggressive political action component that endorses, supports, raises money, and turns out the vote for pro-business congressional candidates from both parties who are engaged in key races.  
  • Business Civic Leadership Center—an organization devoted to facilitating corporate civic and humanitarian initiatives.

Why Visa, MasterCard and its Member Banks Are Accused of Illegal Price-Fixing by Agreement

November 21, 2007

We found this very simple defination of price-fixing on the Wikipedia site [click here for more info].

Price fixing is an agreement between business competitors to sell the same product or service at the same price. In general, it is an agreement intended to ultimately push the price of a product as high as possible, leading to profits for all the sellers. Price-fixing can also involve any agreement to fix, peg, discount or stabilize prices. The principal feature is any agreement on price, whether express or implied. For the buyer, meanwhile, the practice results in a phenomenon similar to price gouging.

Methods of price fixing will include selling at a common target price; setting a common “minimum” price; buying the product from a supplier at a specified “maximum” price; adhering to a price book or list price; engagement in cooperative price advertising; standardizing financial credit terms offered to purchasers; using uniform trade-in allowances; limiting discounts; discontinuing a free service or fixing the price of one component of an overall service; adhering uniformly to previously-announced prices and terms of sale; establishing uniform costs and markups; imposing mandatory surcharges; purposefully reducing output or sales; or purposefully sharing or “pooling” markets, territories, or customers.

Generally, price fixing is illegal, but it may nevertheless be tolerated or even sanctioned by some governments at various times, particularly among those whose countries are developing economies. See also Collusion.

In neo-classical economics, price fixing is inefficient: the anti-competitive agreement by producers to fix prices above the market price transfers some of the consumer surplus to those producers and also results in a deadweight loss.

In the United States, price fixing can be prosecuted as a criminal felony offense under section 1 of the Sherman Antitrust Act. [1] In Canada, it is an indictable criminal offence under section 45 of the Competition Act. Bid rigging is considered a form of price fixing and is illegal in both the United States (s.1 Sherman Act) and Canada (s.47 Competition Act). In the United States, agreements to fix, raise, lower, stabilize, or otherwise set a price are illegal per se.[2] It does not matter if the price agreed upon is reasonable or for a good or altruistic cause; or if the agreement is explicit and formal or unspoken and tacit. In the United States, price-fixing also includes agreements to hold prices the same, discount prices (even if based on financial need or income), set credit terms, agree on a price schedule or scale, adopt a common formula to figure prices, banning price advertising, or agreeing to adhere to prices that one announces. [3] Although price fixing usually means sellers agreeing on price, it can also include agreements among buyers to fix the price at which they will buy products.

Under American law, exchanging prices among competitors can also violate the antitrust laws. This includes exchanging prices with either the intent to fix prices or if the exchange affects the prices individual competitors set. Proof that competitors have shared prices can be used as part of the evidence of an illegal price fixing agreement. [4] Experts generally advise that competitors avoid even the appearance of agreeing on price. [5]

Under U.S. law, price fixing is only illegal if it is intentional and comes about via communication or agreement between firms or individuals. It is not illegal for a firm to copy the price movements of a de facto market leader called price leadership, which has been seen to be the case in markets for breakfast cereals and cigarettes. But informal agreements or unspoken agreements to fix price also can violate the antitrust laws. The price-fixing laws apply to industries and professionals, for-profit concerns and non-profits and charities. [6] The United States Department of Justice Antitrust Division and United States Federal Trade Commission are responsible for enforcing federal price fixing laws; see also Sherman Antitrust Act. The Department of Justice handles both criminal and civil cases. As of 2004 under US law corporations may be fined up to $100 million for criminal price fixing; individuals can be charged and sentenced to prison sentences of up to 10 years for price-fixing violations. The Federal Trade Commission can prosecute firms for price fixing as a civil matter. Many State Attorneys General also bring antitrust cases and have antitrust offices, such as Virginia, New York, and California. Private individuals or organizations can bring their own lawsuits for triple damages for antitrust violations and also recover attorneys fees.

[Source: Via Wikipedia]

Returns After “Black Friday” Cause Losses For Retailers

November 20, 2007

The 40-billion dollar merchant interchange hidden tax is a mystery to many, and few understand how these fees work. 

A little known fact is that when shoppers return an item, the retailers can be out the interchange fee.  Depending upon the payment processing contract, reimbursments for the electronic charge payment do not always occur, even though a full refund to consumers are applied during returns.  Think of the billions of dollars in merchandise returns after “Black Friday,” traditionally the busiest shopping day of the year, following Thanksgiving.  Visa and MasterCard, along with its thousands of member banks’ motto should be “thanks for giving, but we might not refund your interchange charges for returned goods and services.”