On March 23rd, Bloomberg reported that Citigroup Inc. and other banks in Mexico agreed to again lower the merchant interchange fees for the second time in as many years. Up until the recent antitrust litigation against Visa and MasterCard, the U.S. trend was to regularly raise rates with unbridled arrogance.
Under a year ago, the banks which control Visa and MasterCard again raised rates in the U.S.. MasterCard elevated its merchant fees when cardholders pulled its premium World cards from their wallets and Visa raised its rate for their high-end Signature cards.
The new weighted-average interchange in Mexico is about the rate charged by banks in the U.S. Interchange, which was designed to be cost based for processing electronic payment transactions, is now a $25 billion dollar annual bank windfall. A study of the U.S. market, where technology leads the world for faster, more efficient electronic transactions and where fraud costs are subpar with Mexico is one example. With today's news, Visa and MasterCard will be grasping to maintain their fiefdom. WayTooHigh.com can already imagine those full-page advocacy ads that might be planned for the financial papers proclaiming a bent story on why these fees are necessary.
Mexican Interchange fees for credit cards will be about 1.8% and .80% for debit cards. While the Federal Reserve System in the U.S. watches, Mexico's Central Bank boldly "criticized the fees that banks levy on consumers and merchants" during a bankers meeting in 2005, as reported by Bloomberg.
Banks based outside Mexico control 90% of that nation's financial system.
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[Source: WayTooHigh.com]
