Sunday, July 30, 2006

Who Is The Real Violator? (

Merchants Too Should Alert Visa®, MasterCard®, the Issuing and Acquiring Banks When Cardholders Force Them to Run Debit, ATM and Check Cards at the Much Higher Credit Card Rate.

Having become among the key personalities and being so embedded in the merchant interchange battle, it seems that each day brings us new issues to discuss.

Today's topic -

The leading credit card associations - with a staggering 80% market grip - go to great lengths to encourage cardholders to report businesses which violate their merchant card agreements. If a retailer displays a MasterCard® logo but declines any payment card purchase or refuses to accept charges below a certain dollar amount, consumers are asked to turn them in.

A website link will alert the card associations and their issuing banks of these infractions. They want to also know if the retailer required identification (remember, Visa® and MasterCard® explain that interchange fees are designed to cover fraud costs). Did the merchant impose an additional levy for paying with plastic? They also want to know.

Conversely, there are many tricks and marketing gimmicks designed to help the banks make more money when cardholders use their PIN cards as traditional credit card transactions. The card associations have several customers; the acquiring and issuing banks (often the same entity); the merchants which accept their cards; and, the cardholders. However, Visa® and MasterCard® seem less interested in helping merchants save money.

Why does MasterCard's® interactive "Contact Us" website link only enable consumers to turn in retailers? Although not a violation of their merchant agreement, why are there not reciprocal feedback links for retailers to submit instances when debit card holder insists on having their ATM and PIN cards processed at credit card rates?

While merchants are prohibited from identifing the interchange fee on customer receipts, it would be interesting if retailers did provided a fact sheet explaining more about interchange fees and the real costs at check out.

[Debit card interchange fees have a fractional, fixed interchange fee of about 25-50-cents per transaction. But when a PIN card is used as a pen (signature credit card), the merchant is forced to pay upwards of 2-percent. On a $1,000 purchase, rather than paying a 50-cent interchange fee, retailers could be charged about $20 or more].

Every day, 30 Minute Photos Etc®. faces this dilemma; customers insist we accept their payment at the much higher credit card rate. Whether a debit card is used as a PIN or signature card, the funds are immediately withdrawn from the cardholders account. It makes no difference to the cardholder, unless there are games to promote the latters use.Just last week, one of our regular retail customers explained they saw a TV news segment on identify theft and was advised to never use a PIN transaction because their identify could be stolen if they entered their personal identification number into a retailers' terminal.

We cannot help but wonder which financial institution might have pitched that "story" to the media?

Banks are promoting debit card customers chose signature transactions because merchants pay much more - yielding greater new revenue centers at the expense of consumers. Banks even charge a fee if cardholders chose to use their debit cards directly. This, along with many reward programs when debit cards are used instead as signature cards, discourages its use and unfairly taxes everyone.

Wells Fargo® charges a dollar in fees each month when PIN cards are used to make check card purchases. The reward programs include hidden costs which on the surface might be appealing, but those free trips and perks are costly. What a game - 4,000 Visa Extra Points® will earn you a ten dollar clothing store gift card when you sign for debit card purchases.

The card associations and their member banks promote the use of debit cards, but then scheme to mislead consumers into having merchants transact the charge at much higher credit cards interchange rates. - The Credit Card Interchange Report would like to see merchants also contact the card issuing financial institutions and use these "Contact Us" forms to share their stories. Often, you will find the bank's toll-free number on the back of the cards.

Since most of Visa's® member banks also hold the identical position with MasterCard®, just use the existing MasterCard® "Contact Us" link to share your story. You have up to 5,000 words to explain your anguish and send a message about being forced by cardholders to pay erroneously excessive fees.