Tuesday, November 08, 2005


In our previous message, WayTooHigh.com warned that groups manufactured by or connected with the banks will launch an attack, but their most recent home-page posting is really ... stupid.

On the official-sounding "Americans for Consumer Education and Competition" ("ACEC") home page, next to what we see as the validity for "GREEN FRIDAY," they report on the "recent exchange" between big business and the banks over merchant interchange fees.

Be honest, this isn't a pleasantry "exchange," it is an all out battle.

It is not about "big business, " it is about all businesses - from the corner convenience store in an inner-city to the fashionable boutiques on Beverly Hills. It is a fight with two distinctive sides; every merchant in the nation and all consumers (except this apparent "consumer group") against the banks.

The real news is that for one of the first times, war is equally being waged by the banks against every sector, from "mom-and-pop" entrepreneurs and the giant chain stores and all retailers in between.

The only big business here is the $25-billion annual price-fixing charge the banks impose with collusion on retailers and thus consumers. We have no choice. Of course we have to accept credit cards, but Congress enacted the antitrust laws over a hundred years ago to protect consumers. Now retailers have no choice but to accept their nearly 100-separate and annually-growing interchange fees.

For a group to have the word "competition" in its title, you would think they would honestly address the continuing consolidation, and thus less competition within the credit card industry.

Where were they when HSBC Holdings PLC, the large British-based bank was preparing to acquire Metris Companies Inc., an independent credit card issuer? Did they issue a press release when the giant Bank of America announced plans to acquire MBNA? How about with Washington Mutual buying Providian Financial Corp?

Each of these deals substantially lessens competition. Each of these acquisitions will further shrink what is a rapidly a consolidating market and grow the banks market power. In fact, ACEC's website is a model for showcasing why GREEN FRIDAY is so important. When consumers use cash rather than debit and credit cards on Nov. 25th - the busiest shopping day of the year for non-Ecommerce transactions, it will draw transparent, honest attention. It will help illustrate why the growing battle over banks' interchange fees are so important.

Besides, ACEC should be supporting consumers using cash. The website explains that ACEC "designed [it's] site as a tool to help consumers effectively manage their finances. What better way for consumers to budget then by using cash on GREEN FRIDAY?

Do not be intimidated by ACEC and its message.

They told WayTooHigh.com that the train has left the station. Yes it has. And just like the great train robberies from the Wild West 1800s, even the credit card associations are running away. MasterCard is trying to sell off its liabilities onto the public. Visa is trying to placate merchants with a way-too-late rearrangement of its board.

The fact is look at nearly every other industrialized nation and how each handled their interchange fees. Look to Canada and its primary debit card system. Its interchange fees? It is zero. Or even in the U.S. and writing checks. Again, the interchange fee is zero.

But, do note the last paragraph of the ACEC press releases and its silver-tongued reference to how it "enjoys the financial support of Visa USA." Indeed they do.

[source: WayTooHigh.com]