Wednesday, May 17, 2006

The Two Sides of Wells Fargo® - Some Non-Profits Pay Upwards of 5% for Interchange Fees (

This posting is gutsy and provocative, but provides another opportunity to better understand the banks unbridled interchange fee cartel.


We salute The Human Rights Campaign which regularly recognizes Wells Fargo & Company® for reaching 100% on the Corporate Equality Index. This ranking identifies smart companies that advocate full protections in the workplace for LGBT employees. [Other banks also support diversity issues and compassion, including Chase®, Citigroup® and Washington Mutual® (all are named defendants in the Interchange antitrust litigation) and are HRC National Corporate Sponsors].

There is no question that the San Francisco-based financial services company honestly is deserving of this important distinction. [In addition to co-editing, as co-owners of 30 Minute Photos Etc. we have closely worked with leading Fortune 500 firm's, including IBM® and The Eastman Kodak Company® to foster better support for diversity].

As a model for celebrating corporate diversity for many minority groups, Wells Fargo's® advertisements and its Diversity Council provide the proof: the bank "fosters a culture in which all people and their individual differences are not only accepted, but celebrated! Our business atmosphere promotes inclusive community values, presents career opportunities to a diverse work force, as well as provides support to the GLBT [sic] community we serve."

This important ranking is also an important marketing tool. When organizations and businesses decide which bank to choose, the ranking does play a role. But, make no mistake, no matter what type of company you have, including non-profits, Wells Fargo® and its support for social consciousness is to a degree diminished in relation to the profits reaped from fees, like interchange. In some cases, the interchange fee charged to these non-profits can reach nearly 5% of the total contribution.

Nonetheless, just a few weeks ago, the bank via it's Well's Fargo Merchant Services®, again, brazenly raised Interchange fees. While Wells Fargo® explained that "Visa® and MasterCard® are changing certain credit card interchange rates and qualifications," they are talking about themselves. Wells Fargo® is both an issuing and acquiring bank that is a member of both Visa® and MasterCard®. While apologetic and holding the two leading payment processing services responsible, remember, the bank is a co-owner of both card associations.

The following abstract is from a typical merchant notice to amend the bank's processing agreement:

Dear Valued Merchant,

At Wells Fargo Merchant Services®, it is our mission to keep our customers updated regarding changes that affect their merchant card accounts.... Thus, please note that Visa® and MasterCard® are changing certain credit card interchange rates and qualification structures...

All changes will become effective April 1, 2006...

Your discount rate will increase by 0.30%.

The Qualified Rate for MasterCard® Credit and Debit and Visa® Credit and Debit is 3.1190%.

Effective April 1, 2006, your Non-qualified Surcharge will be increased by 0.75% to 1.50% per transaction.

The three page notice included a separate two page revised "Debit Network Fee Schedule" which is significantly complicated to understand and identify the actual interchange transaction charges.

On one side, the bank advertises that "we want every LGBT customer who walks into Wells Fargo to succeed financially." Then they charge a basket of extraordinary interchange rates to the non-profit groups which accept payment cards from its members; the fraud and other service costs are lessened because the contributors are less likely to not pay their bills. Similar diversity programs are in place for many other minority group.

These anti-competitive interchange fees plunder money donated to non-profit organizations. Even financial supporters to these non-profits may not realize that when they use their credit and debit cards to make contributions, often several percent off-the-top go directly to the banks. With nearly one hundred separate interchange fees, it is anyone’s guess just how much from each donation makes its way back to the group.