Monday, October 30, 2006

MasterCard® Interchange Rate Schedules on Website (via PRNewswire)

[Commentary: - The Credit Card Interchange Report]

We wonder whether last week's press release helped speed up MasterCard's® decision to just one-week later begin posting the long awaited fees online?

MasterCard has issued a press release today announcing that their anticipated posting of U.S. merchants interchange fee schedules are now posted on its website. Click here to download the MasterCard interchange rates and criteria; it is 72 pages long.

Think how much time and effort would be saved if the exact fee was instead listed on every charge receipt?

If we are confused, and we are the lead plaintiff in the merchant antitrust litigation, imagine the local shop owner who downloads the rate schedules?

Take a look for yourself - try to identify what the exact interchange rates are. Can you? How do these U.S. merchant rates differ from other nations? What accounts for the difference and why are rates averaging 1.7% in the U.S. all the way to zero in other nations? [There are no interchange fees in Canada for PIN debit cards].

The merchant classifications are broken down by category, from cruise lines, airlines, car rental charges to restaurants and even as detailed as the fees for MasterCard PIN debit POS for convenience stores.

According to the MasterCard press release, Walt Macnee, president, Americas, MasterCard, said "... [The] merchant community has asked us for greater transparency, and we are pleased to accommodate their request... Just publishing rates alone could lead to confusion among merchants who may be seeing this information for the first time... We are confident that we are providing merchants with the information they need to understand the interchange rates and structure and determine which rates may apply to their transactions. We want to have an ongoing dialogue with merchants, acquirers and other interested parties about the format and content of our rate disclosure, as we plan to update this document regularly."

Also mentioned within their press release was a quote from Joshua Peirez, Group Executive, Global Public Policy for MasterCard, who said "MasterCard has been a leader in providing greater transparency in the payments industry..."

If MasterCard really wants to comply with the above comments, there is no more transparent, simply way to disclose interchange fees than to actually post the exact charge on every cardholders debit and credit card receipt. Click here for background.

[Source: via MasterCard press release and commentary]

Saturday, October 28, 2006

Mitch Goldstone to Address Intl Consumer Electronics Show (

The International Consumer Electronic Show (CES) has invited Mitch Goldstone to address what is the world's largest annual tradeshow for consumer technology on January 9th in Las Vegas.. CES is America's largest annual tradeshow of any kind. For session info, click here. Goldstone is president and CEO of 30 Minute Photos Etc., which is also lead plaintiff in the merchant interchange litigation. His company was the first to file a federal complaint in June, 2005.

[Source: via CES, and]

Friday, October 27, 2006

FedEx® vs. Visa® and MasterCard® (

Decades ago, when Fred Smith founded Federal Express®, their shipping labels necessitated the use of dense stacks of multilayered carbon copy order forms. Just the cost of printing and distributing those forms must have been a high-priced outlay of materials for the freight carrier. The unused forms, waste and processing costs were staggering.

The two leading credit card associations had similar costs to process payments. It was manual. Today, it is electronic, instant and highly efficient. Back then, merchants like us ordered bundles of carbon copy credit card receipts. We mailed it to a clearing house and it took days to process each payment. Fraud and other costs must have been mountainous. But, back then, the merchant interchange fees were cost-based.

Moving forward to the present.

We primarily use FedEx for all rush deliveries for our online boutique photo service. With the push of a few key strokes, the labels are designed and printed on standard paper. Everything is super fast, efficient and cost effective. Costs are streamlined, even with the recent ascending fuel prices. But, we can choose other freight carriers too.

Today, it seems that the banking and card payment industry are among the few which continually raise rates. Like OPEC, the banking cartel is in charge of setting fees. Even though other industries are embracing technology to lower costs, the card associations are raising theirs. In many cases, merchant interchange fees are the third most significant cost after rent and payroll. We even read that without intervention, the fees may even grow to exceed the cost of rent in coming years!

Through gimmicks and reward contests, retailers are being forced to pay more. These billions of dollars in hidden taxes levied on merchants and consumers are no small change. The fees are controlled by the banking cartel which stands accused of conspiring to set merchant fees at artificially high levels and illegally fix prices by agreement.


"MasterCard® to Defend Role in EU As Middleman in Processing Fees" (WSJ)

According to the Wall Street Journal (Oct. 27, page A6, U.S. edition), E.U. regulators have set a hearing in mid-November on MasterCard International's® role in setting bank fees and to discuss lowering banking costs. The article reported that the average fee for credit and debit cards in Europe is 1.16% and 0.8%, respectively. This raises the question of how can the banking cartel force extraordinarily higher rates in the U.S.?

Carl Munson, an associate MasterCard general council was quoted in the article as saying: "We continue to assert that interchange fees are necessary in a four-party system." While Mr. Munson explained that the value to the system is to elevate the level of competition and efficiencies. To us, it seems that the greater benefactor of the fees are the banks at the expense of retailers and consumers.

[Source: via WSJ]

Thursday, October 26, 2006

"Visa Moves Forward with Plans to go Public" (ATM MarketPlace)

"30 Minute Photos Etc. Not Backing Down" (Irvine World News)

Small business owners Mitch Goldstone and Carl Berman are the lead plaintiffs in a lawsuit against big credit card companies.


Last year, 30 Minute Photos Etc. received notice that interchange fees, the fee that banks charge retailers when customers pay with credit cards, would increase for frequent-flier cards.

Mitch Goldstone, co-owner of 30 Minute Photos Etc. and, wouldn’t hear of it.

Goldstone became lead plaintiff in a lawsuit filed in June 2005 against Visa, MasterCard and a host of banks that issue the credit cards. The lawsuit accuses banks of violating antitrust laws by conspiring to fix the fees at levels that aren’t justified by the costs of processing transactions.

Credit card companies counter that the rates are determined by the open marketplace and the services they provide increase sales.

Here’s an interview with Goldstone.

Why did you decide to take this on and be named as the lead plaintiff?
It upset me because it meant customers were being taken for a ride. After we received the letter I contacted Visa and MasterCard but received no response. I was then quoted in the Wall Street Journal. (Goldstone was then contacted by the law firm that filed the suit). I never thought I would be the lead plaintiff representing all of these merchants, but it is something that is very important to me.

Why do you think this is such an important issue?
Because it impacts every retailer and consumer. The banks are doing what the railroad industry did 100 years ago when it said to farmers this is what we are going to charge you to transport goods. Farmers had no choice because otherwise their goods would spoil. Visa and MasterCard account for 80 percent of all credit card transactions.

How have you seen these fees change?
In 1990 we had to take a credit card and imprint it on a stack of carbon copies. We mailed our copies to a facility in Florida where they were checked for fraud and other things. That is what the fees were created for. Back then there were about 10 interchange fees. Now there are about 100. But if you pay with a check the interchange fee is zero even though there are a lot of clearing costs.

When and why did you launch
We launched it in spring 2005. I was receiving so many calls and inquiries from the media and merchants all over the U.S. and I couldn’t talk with everyone. Now I just say go to Way Too High.

What stage is the lawsuit in and what’s the next step?
It is being heard in federal court in New York. It has been merged together with the other lawsuits – there are upwards of 50 separate lawsuits – in a multi-district litigation, with my law firm being lead firm. The next step is to get class action status. This will get all retailers in on the case.

What resolution would you like to see come out of this?
Ultimately there should be no interchange fees; there’s no need for it, and that is why this case is so important. I’d like to have Visa and MasterCard print out on every receipt the exact amount that goes to interchange fees.

[Source: Irvine World News]

Wednesday, October 25, 2006

Detailed Fee Postings Already Exist (

Our European readers already know that added to their purchase receipts from retailers are several extra fee identifications. Along with other fee items, receipts often post the charge in Euros and the former local currency.

  1. sample receipt one
  2. sample receipt two
Even though tax is added to the charge, that too is broken down on receipts. With technology today, posting the exact merchant interchange fee on every credit and debit card receipt would improve transparency and explain why consumers and retailers are battling the credit card associations and their member banks.

Providing retailers with the choice of adding these unambiguous and transparent interchange fees as an item on each receipt should be made available by 'Black Friday' - the busy shopping day after Thanksgiving. If the credit card associations can flip a switch to raise fees, they should also look into flipping another switch to print those fees on receipts. As retail business owners since 1990 and owner of a national ecommerce business, we would chose to include those fees on every customers receipt.


Overview: How a Southern California Retailer Became Lead Plaintiff (

Repost: "Mitch Goldstone Leads A Rebellion,This Time Against Credit Card Fees"

Reported by Robert Barnett, freelance writer in Los Angeles and contributing editor of the University of Southern California's Marshall Magazine.

Monday, October 23, 2006

Printing Exact Merchant Interchange Fee on Charge Receipts by Thanksgiving (


Irvine, CA October 24, 2006 -- said if Visa® and MasterCard Worldwide® would post the exact merchant interchange fees on every credit card receipt it would accelerate attention to the $30 billion annual hidden tax on consumers and retailers. This relief is being championed by the editors of -- The Credit Card Interchange Report.

Visa USA Inc. has already begun posting a matrix of perplexing rate schedules and scores of fees on its website; MasterCard plans a similar program soon.

"A more straightforward pricing model to easily obtain fee schedules is in place at most other businesses," explained Mitch Goldstone and Carl Berman, co-editors and lead plaintiffs in the antitrust litigation against the two leading credit card associations and its member banks.

As an example, Goldstone said "when consumers order concert tickets from Ticketmaster® the receipt includes the exact 'convenience charge,' 'delivery' and 'order processing fees.' When packages are sent via Federal Express®, a detailed price quote pops up on the online ordering page to provide the exact 'fuel surcharge' and other fees. If Federal Express' rates are too high, consumers can choose another carrier. But, with an 80% market monopoly, retailers are forced to accept the two leading payment card brands."

Some restaurants even post recommended tips on the receipts for average, good and exceptional service.

"While not endorsing a particular solution, it would be more helpful for consumers if there were unambiguous and transparent interchange fees for each transaction -- right on the charge receipt," said Goldstone, president and CEO of the Irvine, Calif-based 30 Minute Photos Etc. and, the national online boutique photo service. Goldstone and Berman's company was the first to file a federal complaint against Visa, MasterCard and its member banks back in June 2005 [MDL 1720]. recently profiled several other lead plaintiffs. Some publicly waged concerns about Visa opaquely publishing its U.S. interchange fee schedule in an attempt to appease retailers angered by the fees charged on card transactions.

Goldstone explained that the current Visa and MasterCard fee structures "resemble a distinctively strong onion flavor with multiple layers of confusion. To rid watery eyes when pealing onions, a solution is to soak it in water, but currently there is no fix for those nearly one-hundred separate and ambiguous, unbridled merchants card fees."

"Disclosing the exact interchange fee on every credit card receipt will help consumers and retailers better understand the real extent of these charges," commented Goldstone who explained that "average credit card interchange fee in the U.S. is about 1.7% of the total charge."

Just as sales tax is included on receipts, Goldstone believes that more transparency for the merchant interchange tax would lead to more competition among card networks. By doing so, he said "the volume of consumer and retailer outrage will be amplified, especially if this fee posting was implemented before 'Black Friday' -- the day after Thanksgiving which is among the busiest retail shopping days of the year."

Background: -- The Credit Card Interchange Report has more than 525 news and commentary posting on its website. 30 Minute Photos Etc. was founded in 1990 and operates a retail photo center and nationwide online boutique photo service. The company is lead plaintiff in the payment card interchange fee antitrust litigation. Goldstone is a well-known leader in the photo industry who regularly addresses photo imaging industry conferences across the country. He will be addressing the Las Vegas Consumer Electronics Show in January.



Sunday, October 22, 2006

"Credit Card Fees You Didn't Know You Pay" (Letter to the Editor, Washington Post)

Sunday, October 22, 2006

It is no surprise to merchants that the recent Government Accountability Office report found that credit card issuers are imposing excessive penalty fees and failing to fully disclose their fees, policies and practices to consumers ["Credit Cards' Hidden Costs," Business, Oct. 12].

Because the GAO was focused on direct consumer fees, the report missed an even larger hidden fee consumers ultimately pay: the interchange fees charged on virtually every purchase. Hidden from consumers because credit card contracts effectively prohibit their disclosure, these fees were over $30 billion in 2005 alone -- more than double the amount card companies collected in late fees.

Many Americans have never heard of interchange. Even though interchange averages close to 2 percent of every credit or debit card transaction, Visa and MasterCard rules effectively prohibit merchants from telling consumers how much these fees cost them. Interchange acts as a hidden sales tax on U.S. commerce, raising merchant costs and, ultimately, the price of goods and services sold to consumers.

Fees that are intentionally hidden from consumers create a system in which people lack the information they need to make sound decisions about their electronic payment choices. This does not reflect a market in which normal, competitive forces are working. It's time for that to change. If credit card companies insist on gouging consumers, at least let's ask them to be honest about it.

President and Chief Executive
Food Marketing Institute

[Source: Letter to the Editor, The Washington Post]

Friday, October 20, 2006

"National Restaurant Association Comments on Announcement that Visa® Will Publish Interchange Fee Schedule on Web Site" (NRA)

Washington, DC - The National Restaurant Association is pleased that Visa appears to be starting to respond to the efforts put forth by the Merchants Payments Coalition (MPC). The National Restaurant Association plays a leading role as a member of the MPC, which is actively working on legislative, marketplace, and litigation fronts to stop the rapidly escalating interchange fees that are hurting American restaurants, retailers, and consumers.

"While we are pleased that Visa now appears willing to post its fee schedule, we are still asking for full disclosure of all the rules by which merchants must abide, and will be demanding this in the litigation against Visa and MasterCard®," said Todd Mann, senior vice president of Business Development at the National Restaurant Association.

"While Visa states that the rules are available, they are only available to those merchants who have already agreed to accept the credit card, and only after that merchant signs a non-disclosure agreement. Should a merchant be considering whether or not to accept Visa, they should be able to see all the terms of the agreement before signing the contract," said Mann.

The Merchants Payments Coalition is comprised of about 20 trade associations representing well over half of the interchange transactions in the U.S. The group represents retailers, restaurants, supermarkets, drug stores, convenience stores, gas stations, on-line merchants and other businesses that accept debit and credit cards.

The National Restaurant Association, founded in 1919, is the leading business association for the restaurant industry, which is comprised of 925,000 restaurant and foodservice outlets and a work force of 12.5 million employees - making it the cornerstone of the economy, career opportunities and community involvement. Along with the National Restaurant Association Educational Foundation, the Association works to represent, educate and promote the rapidly growing industry. For more information, visit our Web site at

[source: National Restaurant Association, via their website press release]

"Rewards Account for 44% of Interchange Cost, Report Concludes" (Digital Transactions)

According to Digital Technology, key points from the Diamond Management & Technology Consultants report include:

"The days of merchant-subsidized credit card rewards programs, rapid increases in interchange fees, and confusing fee structures for credit card purchases are numbered, according to new research by Diamond Management & Technology Consultants, Inc. Pressure from Merchants Compels Credit Card Industry to Build New Business Models, According to New Diamond Report Billions in Interchange Fees, Customer Loyalty Programs at Risk as Banks, Card Issuers and Card Associations Face Merchant Backlash and New Competition," [From the Diamond Consultants website].
  • The costs of air miles and other perks and rewards account for 44% of bank card interchange
  • Card issuers’ cost of funds and profit margins take 35%
  • Network branding efforts account for 3%
  • 13% of the acquirer-paid fee goes toward various transaction-processing costs from which merchants derive a direct benefit
  • Interchange fees were subsidizing increasingly generous cardholder giveaways and other marketing programs
  • The report also underscores how much in the dark it says most retailers are regarding details of the fees
  • “Merchants really have little idea where their interchange dollars go,” says the report.
  • The fee structure itself can be confusing to merchants

[Source: Digital Travensactions, via report from The Diamond Report]


According to ASIATravelTips, MasterCard is even offering helicopter trips and 70,000 other prizes in its Macau sweepstakes.

Casualties of Technology (

The basis for this posting came from an indepth interview we had yesterday for an article that will be published on October 26th.

Study the changes to your industry against the banks and credit card associations. For us, our two separate industries also transitioned but had vastly divergent outcomes as technology forced changes. We made changes, the other one (in our opinion) is protected by the banking cartel.


As a longtime and well-known leader in the photo imaging industry, 30 Minute Photos Etc.
was forced to adapt. Today, very little business is derived from traditional film processing; it is mostly digital. Our customer-base is nationwide today. However, we would have no customers if we were still imposing a film developing charge for each online, in-store kiosk and other digital orders. If you have us make Kodak-quality photographic prints from your digital camera, you would be concerned if there was an added fee for film processing. Right?

Electronic Charge Card Payment Transactions

Think of the 30-billion dollar annual merchant interchange fee boondoggle. It was organized decades ago to cover the cost to process and clear carbon-copy credit card receipts. Today it is more of an untouchable, ghostly bank annuity - even as technology and efficiencies have altered its underpinnings.

Just like with film and many other products and services, the business has changed. However, Visa® and MasterCard's® member banks continue to maintain artificially high interchange fees because we allege it is set by illegal price-fixing and not subject to regular competitive forces. The conspiracy by the banks and their market power forgets that merchants remember the old-fashioned credit card imprinters and what interchange fees were designed to cover. The reward games and other schemes developed by Visa and MasterCard come at an added cost to merchants, cardholders and all consumers who eventually fund the banks interchange annuity.
Note: There are no interchange fees for writing and clearing checks. There are even no interchange fees in Canada for PIN debit card transactions. The merchant interchange fees in third-world countries are even lower than rates charged in the States.


Thursday, October 19, 2006

Are Airlines Double Carded? (

First, travelers use credit cards to book flights, which costs the airlines and travel partners like Travelocity® and Expedia® interchange fees, then they "earn" mileage rewards which costs the airlines more. Since most travel paymernt transactions require hefty interchange fees, the actual milage cost to their airlines can be much less than the merchant card fee card costs.

This is a double tax on the airlines.

A recent CNBC news profile on American Airlines® identified some interesting facts about credit card frequent flyer "rewards" and parnership programs:
  • American Airlines has 50 million AAdvantage program loyalty members
  • Of the more than one-thousand AAdvantage program partners, credit cards are the largest partners
  • 1/2 of all frequent flyer miles are earned from non-flying sources
  • There are nearly ten-trillion unused miles
  • Demand for redemption is very high and it is not easy to cash in
  • New gimmick: AAnytime mileage costs flyers two-times the regular points to redeem
  • Most profitable segment: airlines selling miles to banks; they get the funds upfront; generates $3-billion dollar annually for the airlines
  • 1/3 of all miles are not redeemed
  • Actual variable cost to the airlines to redeem 25,000 miles, when not displacing a revenue generating seat is just $10.00

What this means is that the incentive to have caredholders pay for products with credit cards is actually a sizable expense to businesses and consumers. It appears that Visa® and MasterCard's® member banks are the real benefactors. The perception is that there is a rich value to cardholders, but do the math to understand that businesses accepting credit cards are also being taking on a ride ... and a costly one at that.

Why frequent-flyer plans keep you grounded

[Source, via CNBC: "Inside American Airlines"]

"Visa® Publishes Interchange Fees For Credit Cards" (

By Martin H. Bosworth - ConsumerAffairs.Com

Visa has taken the unusual step of publishing a list of "interchange fees" it charges merchants to process their credit and debit cards when customers make transactions with plastic. The fees are often called a "hidden tax on consumers," as they can drive up the price of goods and services without consumers' knowledge.

It's these interchange fees that have led a
coalition of merchants and retailers to sue Visa, MasterCard®, and their partner banks, over what the merchants call collusive price-fixing. The interchange fee list, available as a PDF report, is a bewildering array of "performance thresholds" and "reimbursement fees" that seems to require a degree in calculus to understand.
The basic gist is that different cards and different purchases end up costing merchants different fees to process, ranging from 1 to 2 percent of the transaction plus change.

When you factor in the billions of credit and debit transactions that go on in the world daily, 1 percent of a purchase can add up to millions in revenue for banks and card companies. It can also
wipe out the retailer's profit from a transaction.

In order to make a profit, merchants will often raise prices on their goods and services, even for those who pay exclusively with cash.

The Merchant Payments Coalition, the group representing retail and restaurant chains, hailed the move but said that it wasn't enough to simply reveal the fees, and that more transparency was needed in the business.

"The report shows a bewildering array of rates for different cards, merchants and types of transactions, which emphasizes the opacity of interchange," said MPC chairman Mallory Duncan. Duncan also noted the recent Government Accountability Office (GAO) report on the
poor disclosure of credit card fees to consumers, saying it was "no surprise" that merchant fees would be similarly hard to understand.

Although Visa had originally claimed it would not publish its interchange fee rates, the world's largest credit card company reversed course after chief rival MasterCard agreed to do so in an attempt to appease the merchants suing the company.

Visa recently announced its own initial public stock offering, after eyeing the success of MasterCard's debut on the market. The
MasterCard IPO is chiefly designed to build a "war chest" of funds to pay for litigation and settlements in the merchant lawsuits, thereby shifting the risk to investors rather than the member banks that formerly owned MasterCard.

Mitch Goldstone, one of the lead plaintiffs in the class-action merchant lawsuits, said on his
blog that Visa and MasterCard should post the exact interchange fee of each transaction on the customer's receipt.

"Without this honest and straightforward posting, this hidden tax will continue to feed Visa and MasterCards' member banks with thirty billion dollars each year," Goldstone said.


B of A Surge in Card Fees; Profits Rise 41% in Qtr (via Reuters)

  • Debit card income increased 24 percent from the same quarter last year to $502 million and purchase volume grew 19 percent to a record $42.86 billion. Bank of America customers made more than 1 billion transactions with their debit cards during the quarter. Bank of America’s market share of debit card transactions is 16 percent, twice that of the nearest competitor.

  • Card Services had revenue of $5.33 billion, an increase of 137 percent compared to the third quarter of 2005. Net income more than tripled to $1.48 billion. On a pro forma basis, Card Services recorded an increase in revenue of 7 percent compared to the third quarter of 2005, while net income increased 47 percent.

  • Bank of America Corp. (NYSE:BAC - news), the No. 2 U.S. bank, on Thursday said third-quarter profit rose 41 percent, helped by consumer lending growth and a surge in credit card fees. [via Reuters]

[Source: via Edgar]

Wednesday, October 18, 2006

News Update - Goldstone to Address Major Intl Conference

Mitch Goldstone has been invited and accepted an invitation to address what has become one of the most popular international trade shows and news generating consumer events early next year. More to come soon.

As the first lead plaintiff in the merchant antitrust litigation, Goldstone is also co-founder of 30 Minute Photos Etc. and co-edits - The Credit Card Interchange Report. He has recently addressed other conferences in Orlando, Las Vegas and Minneapolis.

"Merchants Pledge to Fight Visa, MasterCard Fees" (Reuters)

The Wild Ride Continues: An Interchangeable Menu of Payment Card Schemes (Commentary:

What are the unambiguous and transparent merchant (consumer) interchange fees for each transaction?


Although Visa® just posted their interchange fee schedule on its website, it is confusing and draws more attention to their scores of separate fees. Instead, Visa and MasterCard® should be completely transparent and post the exact interchange fee on each customer's charge card receipt. Once consumers and retailers understand the real extent of these charges, the volume of outrage will be amplified. Without this honest and straightforward posting, this hidden tax will continue to feed Visa and MasterCards' member banks with thirty billion dollars each year.

According a Consumer Reports (Nov. 2006) article, PIN-based transactions are "15 times more secure than signature-based transactions, says Tony Hayes, a vice president at Dove Consulting, a Boston financial-services consulting group."

However, Visa and MasterCard really want consumers to use these safer cards as signature cards because they make more money. There are many new schemes employed by Visa and MasterCard to embolden debit card users to pressure merchants to process the transactions at the much higher percent-of-sale rather than flat-rate fee. The latest gimmick was announced today and is more of a spoof on how to fiscally prepare families for the costs of higher education.

Consumer Reports’ (Nov, 2006) profile provided additional insights: "To encourage you to use their cards, some banks offer reward programs that let you collect points, usually for choosing debit transactions that are completed with your signature rather than a PIN. Make $9,000 in signature debits with your Citibank card, for example, and you can cash in your 4,500 points for a Dirt Devil hand vac, a $50 value. But these rewards help banks boost fees to their merchant customers. Banks charge retailers significantly more to process signature debits than they do PIN-based debits--77 cents vs. 25 cents on a $100 sale. Visa says merchants get higher traffic and revenue from its branded signature debits. Maximize it. Don’t choose your bank or debit card based on rewards. Debit-card benefits equal only about a 0.5 percent rebate on each dollar spent. It could take years to rack up points for a reward. Moreover, retailers are complaining about being forced to pay more, and Congress is investigating. These programs might not be around long enough for you to collect."


Earlier today, MasterCard Worldwide announced a new college savings reward program for Debit MasterCard. In their words: "... launch of an innovative debit card rewards program that will provide cardholders a new way to save for the rising costs of higher education." We wonder what the costs are to merchants and cardholders for this Upromise MasterCard Debit Card Rewards Program "rewards points?" Is it only valid towards signature transactions? With other programs, PIN cardholders are seduced but earn nothing unless they insist that merchants complete the transactions at the much higher signature rates. From what we can guess, a family who enrolls in this Debit MasterCard program when their children are still infants might at best "buy" them a seat at a junior college and then just to audit one class.

These games and lavish incentives to spend more must end.

Rhetorically, why don’t banks offer these perks to PIN transactions?

These obsolete interchange fees must end too.

We would like to see PIN-based debit cardholders involve retailers and request they complete each electronic payment transaction as PIN, rather than signature rates.

PIN CAMPAIGN: What would happen if on the day after Thanksgiving - "Black Friday," the busiest shopping day of the year - cardholders selected to use debit cards as debit cards?

Every day our customers prod us to run their debit cards as credit cards so they earn points, rewards and other gimmicks. If they only knew how much it was costing them!


More than 16-years ago, 30 Minute Photos Etc. was founded in Orange county, Calif. when film was king and digital cameras were a futuristic invention. Also, back then, we used credit card imprinters to swipe traditional payment cards over a thick stack of carbon copy receipts. Along with million of other merchants, after processing and clearing those receipts we were charged interchange fees that were cost-based; there were just a handful of various interchange categories.Despite huge technological and infrastructure advancement in the photo and banking industries, only one has made adjustments and lowered its fees. In our opinion, the other is operated by a highly sophisticated cartel that illegally controls and manipulates rates.Sixteen months ago, our company was the first to file an anticompetitive complaint against the two leading credit card associations. Nearly 50 suits have followed ours. Since then, the card associations and member banks have throttled backwards and done some impressive backpedaling. When we called for them to resciend interchange fees at service stations, they slowly responded with heavy-handed window dressing placing a $50 cap on interchange fees at the pumps; most motorists pay less than that anyway.

Recently, Visa announced a restructuring. But, if they think that passing along the antitrust liabilities into public hands will solve its problems, they might consider going to a restaurant. Talk to restaurant owners. Understand how passionate and decisive are their arguments which are shared with merchants across the country and abroad.With Visa and MasterCard's member banks aggressively promoting debit cards, merchants are in an added bind. When a diner at a restaurant pays with a debit card, funds are quickly withdrawn from their account, yet the establishment is forced to process the cards as credit cards and pay the much higher interchange fees. Think of your experience. Servers at most restaurants do not have portable electronic PIN terminals so PIN-based debit cards are transacted at the much higher signature rates.

[Commentary: - The Credit Card Interchange Report]

"Merchants Respond to Visa's Release of Default Interchange Rates" (Merchants Payments Coalition)

WASHINGTON, Oct. 18 /PRNewswire/ -- Mallory Duncan, chairman of the Merchants Payments Coalition (MPC) and senior vice president and general counsel at the National Retail Federation, issued the following statement today:

"This announcement by Visa begins to shed a much-needed spotlight on the excessive interchange rates merchants and consumers are forced to pay on virtually every credit or debit card transaction. It is evident that Visa has felt the pressure of congressional scrutiny and merchant outrageover these anti-competitive practices, since as recently as September they maintained that these fees were already available."

"The release of these interchange rates brings to light the need forfurther transparency. The report shows a bewildering array of rates for different cards, merchants and types of transactions, which emphasizes the opacity of interchange. Without the operating rules that govern how these fees are applied, this announcement falls far short of the disclosure that is required and that Visa promised in testimony before Congress this summer. Given the recent GAO report on Visa and MasterCard's failure to clearly disclose fees and terms to consumers, their lack of transparency in dealing with merchants should come as no surprise."

"Our position is clear. The collective setting of interchange fees by Visa and MasterCard violates the antitrust laws and costs merchants and consumers $30 billion a year. Visa and MasterCard need to fulfill the promises they made in testimony to the Senate Judiciary Committee to provide their full operating rules. Only when the full picture of the interchange puzzle is complete can Congress decide what further action maybe required."

Duncan also noted that Visa's announcement inaccurately stated that merchants "do not pay interchange" but pay a merchant discount fee instead. In fact, interchange is a non-negotiable fee paid as part of the merchant discount fee, accounting for approximately 80 percent of the total merchant discount fee.

The Merchants Payments Coalition is a group of about 20 trade associations representing retailers, restaurants, supermarkets, drugstores, convenience stores, gas stations, on-line merchants and other businesses that accept debit and credit cards. MPC is fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees.

[Source: Merchants Payments Coalition]

Visa U.S.A. Inc. Posted Interchange Fee Schedule (Visa Website)

(Rates Effective, April 2006)

Tuesday, October 17, 2006

"Visa, Following MasterCard, to Disclose More Fees" (Reuters)

..."Visa USA on Tuesday said it has begun posting its U.S. interchange fee schedule on its Web site, six weeks after smaller rival MasterCard Inc. said it will do the same. The actions come after dozens of antitrust lawsuits by U.S. retailers and trade groups that accuse the world's largest credit card payment systems of price-fixing, including in the setting of artificially high interchange fees." ...

[Source: Reuters]

"Fewer Rewards for Frequent Triers" (The Sydney Morning Herald)

Abstract: Credit card reward schemes have suffered a nasty bout of inflation. It's taking more and more spending to get those "free" air tickets, home wares and electronic gadgets that made reward cards so attractive. An obscure report released by the Reserve Bank last week blew the whistle. It revealed the average spending required to earn a $100 shopping voucher on major bank reward cards three years ago compared with today. In 2003, it took an average of $12,400 but now its $16,000 - an average annual increase of $1200. .

[Source: The Sydney Morning Herald]

Monday, October 16, 2006

"NACS Chairman Addresses Hot Issues" (NACS)


LAS VEGAS -- “It will be a few weeks before we will know the makeup of the next Congress, good, bad or ugly. But whichever, I can tell you our agenda won’t change,” said NACS incoming Chairman of the Board Sam Turner during his Closing General Sessions remarks at the NACS Show 2006.

"NACS will continue to protect and defend our industry. No matter which issues come up we’ll stay the course and fight for what’s right,” he told attendees.

The biggest and toughest battle, one that Turner compared to “walking up to King Kong and pulling a hair out of his chest,” is over credit card interchange fees.

“Last year our industry paid almost as much in credit card fees as we saw in profits. That’s absurd!” stressed Turner.

But there is promise, noted Turner. Because of NACS, Capitol Hill is paying very close attention to the issue of credit card fees. “Through our efforts, both the House and Senate understand just how outrageous these fees are and that the system is broken,” Turner said. “The battle against the credit card companies will be difficult and NACS will push even further and harder in the next Congress.” ,,,


Credit Card Fees Got You Down? NACS Can Help!Card fees are definitely top of mind. [Read] what Convenience Store Decisions magazine has to say.

[Source: NACS]

"NACS Chairman Addresses Hot Issues" (NACS)


LAS VEGAS -- “It will be a few weeks before we will know the makeup of the next Congress, good, bad or ugly. But whichever, I can tell you our agenda won’t change,” said NACS incoming Chairman of the Board Sam Turner during his Closing General Sessions remarks at the NACS Show 2006.

"NACS will continue to protect and defend our industry. No matter which issues come up we’ll stay the course and fight for what’s right,” he told attendees.

The biggest and toughest battle, one that Turner compared to “walking up to King Kong and pulling a hair out of his chest,” is over credit card interchange fees.

“Last year our industry paid almost as much in credit card fees as we saw in profits. That’s absurd!” stressed Turner.

But there is promise, noted Turner. Because of NACS, Capitol Hill is paying very close attention to the issue of credit card fees. “Through our efforts, both the House and Senate understand just how outrageous these fees are and that the system is broken,” Turner said. “The battle against the credit card companies will be difficult and NACS will push even further and harder in the next Congress.” ,,,

[Source: NACS]

Sunday, October 15, 2006

"Visa's Initial Offering Expected to Fetch $5-Billion" (The Globe and Mail)

Abstract: "Visa said it plans to sell 51 per cent of the company and use the proceeds to invest in new technology, enhanced security, expansion into new markets, and to handle legal claims stemming from a spate of antitrust lawsuits in the United States and elsewhere. ... Visa officials also said an IPO would help the company deal with a spate of lawsuits that analysts have estimated could eventually cost it and MasterCard billions of dollars. In one case, U.S. retailers have launched a class-action lawsuit, alleging that credit card issuers have conspired to fix prices. They are seeking tens of billions of dollars in damages. Visa and MasterCard are also facing a suit by rivals American Express and Discover."

[Source: The Globe and Mail]

Thursday, October 12, 2006

But, the Alleged Crimes Have Already Been Committed (

While Visa's® proposed restructuring changes may be a remedy to temper future liabilities, the alleged crimes have already been committed.

What they are scheming reminds us of two mischievous adolescents. You know the scenario; the older, much bigger brother uses the younger sibling to test the waters. If he doesn't get caught, then the older teen pounces. The same banks which controlled MasterCard® and Visa did just that several months ago. They tested the waters with MasterCard's IPO and now they are plotting for the much bigger brother to follow.

Just as with MasterCard, the plans for a new entity called Visa, Inc. will not insulate the nearly identical group of member banks. Instead, it draws more convincing proof that the two card associations got caught with their hands in the cookie jar and are rushing to slam the lid on without getting caught again. We are talking billions and billions of dollars and years of transgressions, yet the bank-controlled cartel thinks that the legal damages from our charges of antitrust violations and illegal price-fixing will be softened and diverted.

The pages of dire Risk Factors that will be published within Visa, Inc's offering documents will explain all this in detail.


"Visa IPO Should Speed Innovations in Payments" (WSJ, subscription required)

"Charge it to Investors" (Marketplace)

Marketplace - Los Angeles,CA,USA.


MasterCard recently went public, now Visa says it's planning to do the same. Ashley Milne-Tyte looks at why the biggest names in credit cards are going public now.

Right now the credit card giant Visa is basically a private membership club. It's controlled by a network of banks. But yesterday, Visa said it's gonna reorganize and become a publicly-traded company. MasterCard went public in May. So what's up with this? Ashley Milne-Tyte reports.

It's about the money. Visa is facing a lawsuit from merchants claiming the company charges them artificially high fees each time a customer uses a Visa. Going public means the banks who now own Visa are protected from legal claims. And there'll be plenty more of those says Robert Manning, author of Credit Card Nation.

[Source: Marketplace]

Visa's® Planned Restructuring Sounds Like Musical Chairs (commentary:

On the day marketing our 500th posting, big news....

As the payment industry quickly runs out of chairs to hide under, the music is getting louder. The international battle lead by all-sized retailers over antitrust violations are forcing fewer places for the banks to hide. Today's announcement by Visa, which controls about 65% of total card sales volume, will create a giant publicly-held global corporation that raises new questions.

Their goal is probably to reduce its member banks' legal risks by shoving the antitrust liability into public hands. Just review the previous bank-controlled MasterCard® IPO and it's Risk Factors to understand what is at stake.

The encouraging news from Visa's press release is that the bank-owned credit card association expects that the new structure and capital inflow will strengthen their product development and innovations. For any other industry this means lower prices and more efficiencies. But, based on their record of unbridled price increases, it will be interesting to watch what happens to merchant interchange fees. Years ago, these were the cost-based charges when retailers used credit card imprinters and thick stacks of carbon-copy receipts to manually transact business. Even as technology has moved forward at lightening-fast speed, interchange fees have also risen too.

Part of the plan is for the credit card association to install an independent board of directors. Moving forward, this helps remedy the antitrust charges that the bank-controlled board conspired to set merchant fees at artificially high levels. Currently, interchange fees are not subject to regular competitive forces; it should be set by competition, not illegal price fixing by agreement.

According to MarketWatch, UBS advised its clients that "We believe Visa is unlikely to consider aggressively cutting rates and thereby eroding revenues as a for-profit entity ... [h]ence, we believe this move is supportive of pricing...."

In our opinion, when a perpetrator of a crime prepares for court, they often clean up their appearance. Polishing up, getting a nice suit and doing the right thing is customary. But, make no mistake, in this case it is nothing more than musical chairs and window dressing. Visa’s restructuring, along with MasterCard and their thousands of member banks are still being charged with breaking the law spanning many, many years; illegal price-fixing is a crime.

The Visa announcement today only signals their intent to proceed with a public offering within the next 12-18 months. Even if they are successful, the announcement itself does not change anything.

In discussing the reasons for the IPO, both Visa and MasterCard seem to think that hiding behind public ownership will help them avoid antitrust liabilities. To us, this is just another admission that their years of collusive price-fixing have violated antitrust laws and I expect that a jury will agree with them!

While the goal of Visa’s IPO might be to insulate it and their member banks from antitrust liabilities, if Visa’s restructuring agreements are prepared like MasterCard’s, then it too will violate the antitrust laws.

[Source: Commentary,]

Wednesday, October 11, 2006

"Visa® Plans an Initial Public Offering as Soon as Next Year " (NY Times)

"IPO Plan Reflects Desire to Head Off Critics" (Financial Times)

... Both Visa and its main rival, Mastercard, have in recent years come under attack from regulators, who have sought to break open what they argued was a cosy ...

[Source: Financial Times]

Visa® News Recap

"IPO plan reflects desire to head off critics" (Financial Times)

"Visa charges ahead with IPOCredit card brand to unify regional operations ahead of IPO" (MarketWatch) [Note: This article includes commentary by lead plaintiff, Mitch Goldstone]

"Visa execs tout IPO as best way to move forward" (MarketWatch)

"Visa rings up plans for IPO" (Times UK)

"Visa Announces Global Restructuring" (Visa online press release)

"Market Forces, Including Interchange Cases, Spur Visa to Plan for IPO" (Digital Transactions)

500th Posting!

This marks the 500th posting for - The Credit Card Interchange Report

Visa Restructuring (AP)

Breaking News

Visa plans to merge its international banking membership associations to form a publicly held company with independent board representation.

[Source: via AP]

Background: Click here to view Visa's press release.

Tuesday, October 10, 2006

"The Interchange Fee Debate: Issues and Economics" (From June, 2006 - Federal Reserve Bank of Minneapolis)

Link to this Federal Reserve report provided with the permission from author, Jim M. Lyon, First Vice President, Federal Reserve Bank of Minneapolis.

Monday, October 09, 2006

Interchange fees aren't the only thing going up, - The Credit Card Interchange Report is about to mark its 500th posting.

Tuesday, October 03, 2006

Out of Touch (

Their dawdled solution: With crude prices now dropping below $59 a barrel, the credit card cartel's previously announced plan to cap credit card fees at the pump at $50 now seems as obsolete and out of touch as are interchange fees - Too late. Too high... WayTooHigh.


Monday, October 02, 2006

"Unraveling the Card-Processing Conundrum" (Business New Jersey, subscription required)

... Retailers’ complaints have led to antitrust lawsuits against credit-card companies and processors, as well as calls for caps on the fees. ...

[source: Business New Jersey, subscription required]

"Bank of America and Visa Renew Partnership" (BusinessWire)