Saturday, May 13, 2006

Competition Cuts Cost of Wiring Money (Washington Post)

Why exactly are merchant interchange fees so high and over the years continuing to rise?

In a related business, The Washington Post reported on May 12th that "the cost of sending money around the world has dropped significantly in the past five years, saving immigrants nearly $5 billion in fees, according to a report released today by the Inter-American Development Bank and the Annie E. Casey Foundation."

The article explained that "prices have been driven down with the help of competition, said Manuel Orozco, author of the report and a senior associate at the Inter-American Dialogue in Washington. The fees charged to send money from the United States to Latin America have dropped from about 15 percent before 2000 to 5.6 percent last year, meaning the cost of sending $200 went from about $30 to $11."

This report strengthens the argument that merchant interchange fees are controlled by the banking cabal, and even though technology and fraud issues are factors that should be lowering rates, it isn't. While the fees to wire money decreases, interchange fees continued to maintain their record high levels. There is little competition in the credit card business, where Visa® and MasterCard® dominate the industry with a nearly 85% share of the market; even the banks which own Visa® also own and control MasterCard®.

[source:, with link to The Washington Post]