(Washington, DC) – The National Restaurant Association today applauded the House Judiciary Committee Antitrust Task Force for holding a hearing to review the interchange fee pricing practices of credit card companies.
"Today's hearing presents an important opportunity for further investigation into an issue that poses an enormous burden to small businesses, including restaurants, across the country," said Mike Shutley, Director of Legislative Affairs for the National Restaurant Association. "We are pleased that Congress is shedding light on this unfair credit card process, and are confident it will lead to making the system more competitive and transparent so that it better serves consumers and merchants alike."
The credit card interchange fee is a percentage of each transaction that Visa and MasterCard member banks collect from retailers every time a credit or debit card is used to pay for a purchase. The fee varies with type of card, size of merchant, and other factors, but averages close to two percent, or about $2 for a $100 purchase. Visa and MasterCard banks collected more than $36 billion in interchange fees last year, up 17 percent from 2005 and 117 percent since 2001.
According to a recent study, the credit card companies and their banks spend only about 13 percent of the interchange fee on actual. The rest goes for marketing, profit and other things like rewards programs.
Unlike other credit card fees that show up on monthly statements, the credit card interchange fee is hidden, and Visa/MasterCard rules make it practically impossible for merchants to tell customers how much they are really paying. Instead, merchants are effectively left to include the fee in the price of merchandise.
The National Restaurant Association is a member of the Merchants Payment Coalition (MPC), a group of nearly 30 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses that accept debit and credit cards are fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition’s member associations collectively represent 2.7 million stores with approximately 50 million employees. www.unfaircreditcardfees.com
[source: NRA News Release, Restaurant.org]
Tuesday, July 24, 2007
Monday, July 23, 2007
"NACS Calls the Rapid Increase in Card Fees “Unjustifiable and Unsustainable” (Supermarket & Retailer)
Noting that the convenience and petroleum retailing industry in 2006 paid more in credit card fees that it earned in overall profits, NACS President and CEO Hank Armour told the House Judiciary Committee’s Antitrust Task Force in written testimony that the “rapid increase in fees is unjustifiable and unsustainable.”
Armour was among those who submitted written testimony before the House Judiciary Committee’s Antitrust Task Force for the July 19 “Hearing on Credit Card Interchange Fees.” Scheduled to testify at the hearing on behalf of the retail community were Mallory Duncan, senior vice president and general counsel of the National Retail Federation and president of the Merchants Payments Coalition, and Steven Smith, president and CEO of K-VA-T Food Stores.
“The [convenience and petroleum retailing] industry posted $4.8 billion in profits last year – which includes profits both at the pump and inside the store – but paid $6.6 billion in credit and debit card fees on its transactions,” noted Armour. “The next time you stop for a fill-up, keep in mind that more of the money you are paying goes to the card companies than the retailer selling you gasoline will get to keep.”
Armour said that Visa, MasterCard and their member banks engage in activities that violate the anti-trust laws of the United States. “The collective setting of interchange fees represents an ongoing antitrust violation by the two leading payment card associations, Visa and MasterCard. These antitrust violations cost merchants and their customers tens of billions of dollars annually.”
The current interchange rates are not justified by costs, noted Armour. “While there may have been some reasonable basis for the size of these fees decades ago, the proliferation of card transactions has driven down per transaction costs. In fact, a bank consulting firm reported last year that the cost of processing transactions was only 13 percent of the interchange fees charged.”
In 2006, the card fees paid by the convenience and petroleum retailing industry increased 22 percent and represented the second largest operating expense in the industry, behind only labor. Overall, Visa and MasterCard have increased their revenues generated from interchange fees by 117 percent since 2001 for a total of $36 billion annually. Armour pointed out that about 60 percent of all interchange in the world is paid by American consumers.
“The United States enjoys the highest volume of credit card transactions in the world. Theoretically, this should lead to significant economies of scale and lower interchange rates. We also have the best technology for processing these transactions and we have very low, and decreasing, rates of fraud. Yet, somehow, U.S. rates are higher than corresponding rates in other countries.”
Armour argued that the reason Visa and MasterCard are able to charge such elevated rates for interchange is because they have market power, which they protect through a complex web of secret rules
[source: Supermarket & Retailer]
Armour was among those who submitted written testimony before the House Judiciary Committee’s Antitrust Task Force for the July 19 “Hearing on Credit Card Interchange Fees.” Scheduled to testify at the hearing on behalf of the retail community were Mallory Duncan, senior vice president and general counsel of the National Retail Federation and president of the Merchants Payments Coalition, and Steven Smith, president and CEO of K-VA-T Food Stores.
“The [convenience and petroleum retailing] industry posted $4.8 billion in profits last year – which includes profits both at the pump and inside the store – but paid $6.6 billion in credit and debit card fees on its transactions,” noted Armour. “The next time you stop for a fill-up, keep in mind that more of the money you are paying goes to the card companies than the retailer selling you gasoline will get to keep.”
Armour said that Visa, MasterCard and their member banks engage in activities that violate the anti-trust laws of the United States. “The collective setting of interchange fees represents an ongoing antitrust violation by the two leading payment card associations, Visa and MasterCard. These antitrust violations cost merchants and their customers tens of billions of dollars annually.”
The current interchange rates are not justified by costs, noted Armour. “While there may have been some reasonable basis for the size of these fees decades ago, the proliferation of card transactions has driven down per transaction costs. In fact, a bank consulting firm reported last year that the cost of processing transactions was only 13 percent of the interchange fees charged.”
In 2006, the card fees paid by the convenience and petroleum retailing industry increased 22 percent and represented the second largest operating expense in the industry, behind only labor. Overall, Visa and MasterCard have increased their revenues generated from interchange fees by 117 percent since 2001 for a total of $36 billion annually. Armour pointed out that about 60 percent of all interchange in the world is paid by American consumers.
“The United States enjoys the highest volume of credit card transactions in the world. Theoretically, this should lead to significant economies of scale and lower interchange rates. We also have the best technology for processing these transactions and we have very low, and decreasing, rates of fraud. Yet, somehow, U.S. rates are higher than corresponding rates in other countries.”
Armour argued that the reason Visa and MasterCard are able to charge such elevated rates for interchange is because they have market power, which they protect through a complex web of secret rules
[source: Supermarket & Retailer]
Saturday, July 21, 2007
Thursday, July 19, 2007
"U.S. Lawmaker Wants Proof Credit Card Fees Don't Harm" (Reuters)
According to the Reuter's story, Visa USA® Vice President Rosetta Jones said in a statement the interchange debate is about business decisions and not about antitrust issues. Ms. Jones is in our opinion, unequivocally wrong. As a retailer, I would be out of business is we were not forced to accept the two lead card association's products. To prove just how wrong Ms. Jones is, we eagerly away Visa's IPO filing and pages of Risk Factors, which we are eager to profile on WayTooHigh.com. If you thought that last year's MasterCard® Risk Factors were worrisome, just wait.
---------------------------------
[Repost from Friday, June 22, 2007]
"Visa Reveals Plan to Restructure for IPO" (via AP)
If you thought that the "Risk Factors" that MasterCard® described during its IPO filing was frightening, just wait for Vias's® list of reasons to get worried too. As reported today by AP, "The offering will also help insulate member banks from billions of dollars in potential legal damages from antitrust claims brought by merchants". Just as with MasterCard, Visa too can try to pawn off its legal liabilities onto others, but its prior alleged antitrust violations and legal obligations do not evaporate by selling shares to the public. Reuters is reporting that "the filing shows that Visa USA members will assume responsibility for a variety of litigation, including antitrust lawsuits in which merchants are accusing Visa and MasterCard of price-fixing.... Visa intends the IPO to fund expansion and help pay potentially heavy legal bills.
"These prior WayTooHigh.com postings help explain why, in our opinion, the transferring of ownership does nothing to dissolve their prior damages.
But, the Alleged Crimes Have Already Been Committed (WayTooHigh.com)
Visa's® Planned Restructuring Sounds Like Musical Chairs (commentary: WayTooHigh.com)
MasterCard's® Legal Bill Could Be $26 Bln (from report in CardLine)
Largest Planned IPO Since Google has No Safety Net (WayTooHigh.com)
MasterCard Inc®. IPO, "The Ultimate Hedge Against Litigation" (WayTooHigh.com)
Will "Risk Factors" Doom MasterCard's® IPO? (WayTooHigh.com)
"MasterCard's® Legal and Regulatory Risks Threaten ... Its Entire Business Model" (BW)
Banks Set to Bolt From MasterCard Inc.® on May 22 (WayTooHigh.com)
[source: WayTooHigh.com, with link to AP]
[Commentary, WayTooHigh.com, via Reuter's article]
---------------------------------
[Repost from Friday, June 22, 2007]
"Visa Reveals Plan to Restructure for IPO" (via AP)
If you thought that the "Risk Factors" that MasterCard® described during its IPO filing was frightening, just wait for Vias's® list of reasons to get worried too. As reported today by AP, "The offering will also help insulate member banks from billions of dollars in potential legal damages from antitrust claims brought by merchants". Just as with MasterCard, Visa too can try to pawn off its legal liabilities onto others, but its prior alleged antitrust violations and legal obligations do not evaporate by selling shares to the public. Reuters is reporting that "the filing shows that Visa USA members will assume responsibility for a variety of litigation, including antitrust lawsuits in which merchants are accusing Visa and MasterCard of price-fixing.... Visa intends the IPO to fund expansion and help pay potentially heavy legal bills.
"These prior WayTooHigh.com postings help explain why, in our opinion, the transferring of ownership does nothing to dissolve their prior damages.
But, the Alleged Crimes Have Already Been Committed (WayTooHigh.com)
Visa's® Planned Restructuring Sounds Like Musical Chairs (commentary: WayTooHigh.com)
MasterCard's® Legal Bill Could Be $26 Bln (from report in CardLine)
Largest Planned IPO Since Google has No Safety Net (WayTooHigh.com)
MasterCard Inc®. IPO, "The Ultimate Hedge Against Litigation" (WayTooHigh.com)
Will "Risk Factors" Doom MasterCard's® IPO? (WayTooHigh.com)
"MasterCard's® Legal and Regulatory Risks Threaten ... Its Entire Business Model" (BW)
Banks Set to Bolt From MasterCard Inc.® on May 22 (WayTooHigh.com)
[source: WayTooHigh.com, with link to AP]
[Commentary, WayTooHigh.com, via Reuter's article]
US House Judiciary Committee Antitrust Task Force Hearing Comments (
Click on each of the below witness names to view their provided testimony.
Mallory Duncan Senior Vice President and General Counsel National Retail Federation
Steve Smith President and Chief Executive Officer K-VA-T Food Stores, Inc.
Edward Mierzwinski Consumer Program Director U.S. PIRG
Tim Muris Of Counsel O’Melveny & Meyers
John Buhrmaster President First National Bank of Scotia, New York
[source: U.S. House of Representatives Committee on the Judiciary website]
Mallory Duncan Senior Vice President and General Counsel National Retail Federation
Steve Smith President and Chief Executive Officer K-VA-T Food Stores, Inc.
Edward Mierzwinski Consumer Program Director U.S. PIRG
Tim Muris Of Counsel O’Melveny & Meyers
John Buhrmaster President First National Bank of Scotia, New York
[source: U.S. House of Representatives Committee on the Judiciary website]
"Merchants Call Interchange Fee Practices Violation of Antitrust Laws " (MPC)
WASHINGTON, July 19 /PRNewswire-USNewswire/ -- In testimony prepared for delivery today at a hearing of the House Judiciary Committee's Antitrust Task Force, Mallory Duncan, Senior Vice President and General Counsel of the National Retail Federation and Chairman of the Merchants Payments Coalition (MPC), called the collective setting of interchange fees by Visa and MasterCard a violation of federal antitrust laws that costs merchants and their customers more than $36 billion every year.
"The collective setting of interchange fees by Visa and MasterCard represents an on-going antitrust violations and it costs merchants and their customers tens of billions of dollars annually," Duncan said. "These fees are in addition to the late fees, over-the-limit fees and other card fees with which consumers are only too familiar."
The credit card interchange fee is a percentage of each transaction that Visa and MasterCard and their member banks collect from retailers every time a credit or debit card is used to pay for a purchase. The fee varies with type of card, size of merchant, and other factors, but may be up to two percent or more, or about $2 for a $100 purchase. Visa and MasterCard banks collected more than $36 billion in interchange fees last year, up 17 percent from 2005 and 117 percent since 2001.
According to a recent study, the credit card companies and their banks spend only about 13 percent of the interchange fee on actual transaction processing. The rest goes for marketing, profit, and other things like rewards programs. In his testimony, Duncan points out that because so much of the credit card interchange fee is spent on marketing, consumers themselves end up paying for the millions of unwanted and unsolicited credit card offers that flood their mailboxes every year.
Unlike other credit card fees that show up on monthly statements, the credit card interchange fee is hidden. Visa and MasterCard rules make it practically impossible for merchants to tell customers how much they are really paying. Duncan pointed out that since Visa and MasterCard together control at least 80 percent of credit card purchase volume, merchants have no choice but to accept their cards. Because of the anti-competitive behavior of the big card companies and their banks, interchange fees keep going up, acting as what Duncan calls a "hidden sales tax on U.S. commerce, raising both merchant costs and ultimately the price of goods and services sold to consumer."
The MPC, a group of nearly 30 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses that accept debit and credit cards are 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.
SOURCE Merchants Payments Coalition
"The collective setting of interchange fees by Visa and MasterCard represents an on-going antitrust violations and it costs merchants and their customers tens of billions of dollars annually," Duncan said. "These fees are in addition to the late fees, over-the-limit fees and other card fees with which consumers are only too familiar."
The credit card interchange fee is a percentage of each transaction that Visa and MasterCard and their member banks collect from retailers every time a credit or debit card is used to pay for a purchase. The fee varies with type of card, size of merchant, and other factors, but may be up to two percent or more, or about $2 for a $100 purchase. Visa and MasterCard banks collected more than $36 billion in interchange fees last year, up 17 percent from 2005 and 117 percent since 2001.
According to a recent study, the credit card companies and their banks spend only about 13 percent of the interchange fee on actual transaction processing. The rest goes for marketing, profit, and other things like rewards programs. In his testimony, Duncan points out that because so much of the credit card interchange fee is spent on marketing, consumers themselves end up paying for the millions of unwanted and unsolicited credit card offers that flood their mailboxes every year.
Unlike other credit card fees that show up on monthly statements, the credit card interchange fee is hidden. Visa and MasterCard rules make it practically impossible for merchants to tell customers how much they are really paying. Duncan pointed out that since Visa and MasterCard together control at least 80 percent of credit card purchase volume, merchants have no choice but to accept their cards. Because of the anti-competitive behavior of the big card companies and their banks, interchange fees keep going up, acting as what Duncan calls a "hidden sales tax on U.S. commerce, raising both merchant costs and ultimately the price of goods and services sold to consumer."
The MPC, a group of nearly 30 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses that accept debit and credit cards are 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.
SOURCE Merchants Payments Coalition
Wednesday, July 18, 2007
U.S. House of Representatives Hearing on Interchange
Hearing on Credit Card Interchange Fees is scheduled for tomorrow by the Judiciary Committee Antitrust Task Force. Click here for more info.
Tentative witness list includes: John Buhrmaster President First National Bank of Scotia, New York; Mallory Duncan Senior Vice President and General Counsel National Retail Federation; Edward Mierzwinski Consumer Program Director U.S. PIRG; Tim Muris Of Counsel O’Melveny & Meyers; and, Smith President and Chief Executive Officer K-VA-T Food Stores, Inc.
[source: U.S. House of Representatives Committee on the Judiciary website]
Tentative witness list includes: John Buhrmaster President First National Bank of Scotia, New York; Mallory Duncan Senior Vice President and General Counsel National Retail Federation; Edward Mierzwinski Consumer Program Director U.S. PIRG; Tim Muris Of Counsel O’Melveny & Meyers; and, Smith President and Chief Executive Officer K-VA-T Food Stores, Inc.
[source: U.S. House of Representatives Committee on the Judiciary website]
Tuesday, July 17, 2007
Latest Credit Card Scheme (commentary: WayTooHigh.com)
From the banner add on Yahoo. If you think these official rules to "win" a trip for four to the World Series is lengthy, you really need only read to the third line:PIN-based and international transactions ineligible. "Why is this scheme so unfair to retailers and cardholders? It forces cardholders to demand that their debit card (PIN transaction) be processed at the much higher signature rates, where rather than a flat-fee, a percent of the transaction charge applies. The only home run here is to the banks and credit card association.
[Commentary: WayTooHigh.com]
[Commentary: WayTooHigh.com]
Monday, July 16, 2007
"Consumers Picking up Tab for Credit Card Junk Mail" (Merchants Payments Coalition)
WASHINGTON, July 16 /PRNewswire-USNewswire/ -- Did you ever wonder who
pays for all the credit card junk mail that's been burying you lately?
pays for all the credit card junk mail that's been burying you lately?
According to new advertisements appearing this week, all Americans do,
thanks to credit card fees that you have probably never even heard of.
The advertisements, placed by the Merchants Payments Coalition, a group
of merchant trade associations seeking a more competitive and transparent
credit card fee system, show how the big credit card companies use some of
the billions they collect from the credit card "interchange" fee to pay for
marketing campaigns, including a mountain of more than nine billion
unsolicited credit card offers that bury our mailboxes every year.
The ads depict a consumer buried in envelopes full of credit card junk
mail, and carry the text: "Ever wonder who pays for all that credit card
junk mail? You do. It comes from your credit card interchange fees.
Interchange is the biggest credit card fee you've never heard of -- and
it's dangerous."
The ads began running in Washington newspapers today in anticipation of
a hearing on interchange fees scheduled to be held Thursday by the House
Judiciary Committee's Antitrust Task Force.
The credit card interchange fee is a percentage of each transaction
that Visa and MasterCard banks collect from retailers every time a credit
or debit card is used to pay for a purchase. The fee varies with type of
card, size of merchant, and other factors, but averages close to two
percent, or about $2 for a $100 purchase. Visa and MasterCard banks
collected more than $36 billion in interchange fees last year, up 17
percent from 2005 and 117 percent since 2001.
According to a recent study, the credit card companies and their banks
spend only about 13 percent of the interchange fee on actual processing.
The rest goes for marketing, profit and other things like rewards programs.
Unlike other credit card fees that show up on monthly statements, the
credit card interchange fee is hidden, and Visa/MasterCard rules make it
practically impossible for merchants to tell customers how much they are
really paying. Instead, merchants are effectively left to include the fee
in the price of merchandise.
The MPC, a group of nearly 30 associations representing retailers,
supermarkets, drug stores, convenience stores, fuel stations, on-line
merchants and other businesses that accept debit and credit cards are
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.
SOURCE Merchants Payments Coalition
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