Saturday, November 25, 2006

"[Boston] Halts Use of Credit Cards at New Meters" (via The Boston Globe)

The member banks, in the same crib as Visa® and MasterCard®, have such oppressive regulations which may have forced the city of Boston to cease use of its high-tech credit and debit card-accepting parking meters. The new meters will no longer process electronic payments as they evaluate the interchange fee charges.

The Boston Globe reported earlier this week that the City was unfamiliar with the minimum card fee requirements. The member banks involved with this scheme should have wondered how the municipality was going to afford the interchange fees on a 5-cent charge so a parent can run in to the convenience store for a gallon of milk.

The Globe staff reporter, Bruce Mohl had interviewed us for background on his follow-up Nov. 22nd article. Mr. Mohl, like apprently the City was unaware of the onerous interchange fees and the myriad of regulations forced on merchants - and municipalities. This is not unusual however, as we regularly encounter cardholders and retailers who are equally confused too. According to The Boston Globe, the city's commissioner of transportation remarked that "with every transaction, there's a transaction fee." Not so. What is the interchange fee for writing a check - even though there are clearing and other costs? Zero. What is the interchange fee for using a PIN debit card in Canada? Zero. What is the interchange fee in several economically less developed nations than the U.S.? Not zero, but in many cases less than half the 1.7% average fee charged to process credit cards in the States.

Boston Globe Quote: "Mitch Goldstone , a small-businessman from Irvine, Calif., who is the lead plaintiff in a lawsuit challenging the fees charged by credit card companies, said Boston could end up losing money if it lets people charge for whatever amount of time they want. "If a motorist can park and run into a shop for five minutes and pay, say, a quarter on their credit card, the city is in trouble," he said. "They will be potentially paying more to Visa and MasterCard than they take in."

We wonder whether the City will send a bill to Visa and MasterCard and its member bank for potentially not being upfront and clearly commenting on the fees before the $10,000 fee for each parking meter investment occurred? Fine print on a contract is one thing, but installing parking meters without asking the city how they expect to make money after subtracting the interchange fees is another.

Next week's Micro and Small Payments Conference in New York City boasts an opportunity to raise these questions of the banks and payment processing companies. In many cases, the two are the same - ever since JPMorgan Chase acquired Paymentech to force a larger piece of the pie.

[Source:, via The Boston Globe]