Credit card interchange fee outrageous

[One Sweet World]

Birmingham News
June 10, 2007
By Rick Brown
http://www.al.com/opinion/birminghamnews/index.ssf?/base/opinion/118146364954081.xml&coll=2

Just about everyone carries a credit or debit card. We like to use them because they are convenient.
But most of us don't like all the fees the card companies add to our bills. Late fees, over-the-limit fees, even a fee for not using the card often enough. We may not like all those annoying credit card fees, but at least we know what we're paying and why.

Yet, there is one fee most consumers have never heard of and that the credit card companies don't want to tell you about. It's called the credit card interchange fee, and it never shows up on a monthly statement.

Every time you use your debit or credit card to pay for groceries, clothes or anything else, the retailer pays a fee for the transaction. The fee varies with type of card, size of merchant and other factors, but averages close to 2 percent. These hidden fees drive up the cost of goods and services for all consumers, whether they pay with plastic, cash or check.

One reason the big credit card companies can get away with charging hidden fees is that there really is no competition in the credit card business. Visa and MasterCard together control 80 percent of the market, and they wrote the rules that make it virtually impossible to tell consumers how much interchange fees cost them. The public has the right to know how much credit card interchange fees cost them, just like ATM fees, because even though credit card use is at an all-time high in the United States, credit card interchange fees keep going up.

[aikoaiko]

1. Isn't this just wrapped up in the price of the item or the seller eats it?

:shrug:

[On the Road]

2. Since It's a Virtual Duopoly,

government regulation should be on the table. As you point out, it is a de facto cartel charging artificially high prices.

[OPERATIONMINDCRIME]

3. I'm Not Sure What's Wrong With It. Seems Fine To Me.

It makes sense that they'd charge a fee and I can't find anything wrong with their doing so. As far as driving up cost of goods, that's not really a big deal either in the overall picture. Any store already sets their prices based on profit margin. When determing what price to set their products at, of course overall operating expenses are taken into account. Fees for their access to credit cards is just one more entry and a huge operating expenses list. Should I complain about how many lights each store uses or what the rent the landlord charges is?

[One Sweet World]

10. It's not the fee that's the problem

It's that Visa and MC have so much power in the marketplace that they make all the rules no questions asked. Both merchants and consumers should have a place at the negotiating table when these card agreements are formed and consumers should know what portion of the total cost of something goes to the card companies.

[OPERATIONMINDCRIME]

12. I Wholeheartedly Disagree.

Should we be at the negotiating table when leases are signed too? Should we be at the negotiating table when the business signs agreements on purchasing prices based on store volumes?

This is just one more business operating expense. I don't agree with your premise at all.

[johnaries]

4. deceiving article.

when a credit card or debit card is authorized from a poiint-of-sale or an ATM, it has to go through several different networks (Star Network, Cirrus, etc.) before it gets to the proper bank or financial institution. As it gets "interchanged" across all of these separate networks in order to get where it needs to go, the "interchange" fee is split up among them so that everyone gets a piece of the pie.
So the problem is not that there are too few companies, but that there are too many fingers in the pie for the transaction to get from point A to point B.

[JAYJDF]

5. As a small retail business owner, these fees are very real

The cost to process the cards depends on the type of card used and how many perks the card returns.
Also, each time a card is swiped, it costs around $.60.
So, if an item costs a retailer $1 to buy and sells it for $2 and someone wants to buy it with a credit card, over half the profit goes to the processing. Yet, we are told by the courts that we cannot refuse to accept a credit card based on purchase price.

A surcharge for using credit cards would be very fair but unless everyone did it, no one would buy much in your shop.

[Matariki]

8. I've been in many places that charge a fee if you use a card for an amount under $5.

[SoCalDem]

11. If one buys a hundred items, that's a bargain

A simple fee for purchases under a certain amount or a flat fee to just use it for cash is the answer:)

[blogslut]

6. Don't get me started on VISA

I'll just leave you with this link:

http://www.usdoj.gov/atr/cases/indx57.htm


This case has been floundering in the courts for years.

[mainegreen]

7. Anyone who has seen 'Minimum $10 purchase to use card' should have figured out there is a fee.

Is that fee wrong? Not really. I know my credit card company would loose money on me as a customer if not for the interchange fee. How else can they offer the perks they do to people like me who pay off all their bills at the months end?

[rox63]

9. Also some gas stations charge a bit more per gallon for credit card purchase

Most of the ones I've seen (mostly small independent stations) charge about .05 more per gallon for credit card purchases.