Tuesday, May 29, 2007

It's a Card Game (WayTooHigh.com)

In Australia, as the Reserve Bank moves to further reduce interchange fees, the banks are shifting their card brands towards Amex, because according to The Australian, those cards are not regulated. We are seeing a growing transformation in the U.S., where banks are issuing Amex-branded cards to replace those of the two leading card associations. This means that consumers and merchants are facing extraordinarily higher fees for processing electronic payments.

Prior Related Postings

Merchant Interchange Fees May Skyrocket (WayTooHigh.com)

American Express Tarnished, the Brand Leader's Cache Faces Saturation (WayTooHigh.com)

MBNA-AmEx Relationship Threatened (The News Journal / Bloomberg News)

[Commentary: WayTooHigh.com]

"RBA Threatens Card, ATM Fee Cuts" (via The Austrialian)

Sunday, May 27, 2007

Friday, May 25, 2007

"Visa's Changes Muddy Interchange Waters (Green Sheet)

Wednesday, May 23, 2007

"Cards Bring Few Rewards" (St. Petersburg Times)

Monday, May 21, 2007

"Merchants, Pay Attention to Rising Credit-Card Fees" (Indystar.com)

Shouldn't Technology Lower Interchange Fees? (commentary: WayTooHigh.com)

ScanMyPhotos.com, a division of 30 Minute Photos Etc. is profiled in two more leading national magazines [Reader's Digest, June issue. page 197; Women's Health Magazine, June issue. page 56].

What does this have to do with the multi billion dollar antitrust merchant interchange litigation?

Quite a bit.

As technology advances, the costs are supposed to decline; this is further explained by Moore's Law. For us, we invented an entirely new business model that is being followed throughout the photo imaging industry. Rather than charging $5.00 to scan a single picture, we charge just 5-cents for scanning 1,000 photos, or $100 to scan upwards of 1,600 4x6" photos when you fill up our prepaid ScanMyPhotos.com box. But, when it comes to the credit card associations, they allegedly practice anti competitive price-fixing by agreement which is illegal, but helps artifically raise their fees, rather. Think of the old manual credit card imprinters and multi-carbon-copy forms which had to be manually processed, mailed out of state and cleared - that is what the cost-based interchange fees were designed for.

Related WayTooHigh.com Postings
[Source -commentary: WayTooHigh.com]

Wednesday, May 16, 2007

More Windfall Profitering at the Pumps (WayTooHigh.com)

With renewed attention and motorist outrage, Visa®, the bank-controlled credit card association, along with MasterCard® are reaping more windfall profiteering during our nation's energy crisis - Record pump prices translate into record merchant interchange fees. As gas prices double, so to are the credit card fees paid in interchange charges. Why? And, what happened to the $50 MasterCard-led interchange cap at the pumps that was heralded late last year? What about Visa and its plan for deflecting this growing crisis and attention to charges that it [member banks] too is reaping huge windfall profits as motorists are forced to pay upwards of $4.00 a gallon?

MasterCard's® Planned Interchange Fee Cap For Gas Retailers (WayTooHigh.com)

[Source: WayTooHigh.com]

So, What Is The Exact Interchange Fee Anyway? (commentary: WayTooHigh.com)

In days, as millions of consumers read about ScanMyPhotos.com - a division of 30 Minute Photos Etc., we face a dilemma. Profiles in the June editions of Reader's Digest and Women's Health Magazine explain the new business we invented for digitally protecting photo memories. What is unclear is one component: what are our electronic payment costs?

As entrepreneurs, we have a mandate to know what all expenses are and quickly choose which vendors to work with. One company, which we have been buying products from since 1990, seems to have become distant and their rates for packaging materials were way too high. So, we did a search and found another suppler with rates nearly half of the other company. After the order, we received two letters of appreciation; clearly, they wanted to earn our business.

As for the credit card companies, Visa® and MasterCard's® nearly 80% market domination is in a different league. Just as we can choose our partners and easily understand exactly what we are paying, as we prepare for this extensive media coverage on our company, we have all costs in check, except our interchange fees.

And, here is why: While the Visa and MasterCard links posted on their websites identify their merchant interchange fees, it is easy to understand why it is clouded, confusing and unfriendly. With the onslaught of new orders we are preparing for, it is anyone's guess what our payment interchanges fees will be.

[source: commentary - WayTooHigh.com]

"Visa, CEO Preparing for Initial Public Offering" (The Mercury News)

The below excerpt from an an edited transcript of an interview with Mercury News personal finance reporter Mark Schwanhausser and Joseph W. Saunders, who was just named chairman and chief executive of Visa Inc., was published on May 16, 2007. However, it very well could have mirrored the identical arguments made by the railroad industry in the late 1800s, when they too tried justifying why farmers needed them to bring their goods to market. Back then, there was no Antitrust Act, but it was the force which caused its creation - to stop collusion to illegally fix prices.

For Mr. Saunders to opine that "we're not as far apart [on the rebellion against interchange fees] as some people may think" is distance from our prospective.

As a merchant, ecommerce business owner and lead plaintiff who is on the front line - dealing with consumers every day - we know differently. The reality is that our customers, along with fellow business owners continue to applaud our efforts, even as more merchant interchange fees continue to increase. We are about as far apart as were the framers in the late-1800s who faced monopolistic controls by the railroad titans who forced unbridled rate increases while applying talking points parroted by Mr. Saunders.

[from The Mercury News, see link]

Q How do you plan to soothe merchants who are rebelling over interchange fees?

A Ironically, I think we work on that all the time. Even while this litigation is going on, we've made a number of arrangements with a number of merchants, and I would say we're not as far apart as some people may think. It's a situation where we need each other. We provide services for them, and they provide an outlet for us. We need to continually work to make sure that relationship improves over time. It's clearly something we need to work on.

Q Is the key relationships or pricing?

A It comes down to the point when merchants feel there is value for the service we provide. Now, remember that at this particular point in time Visa does not have direct relationships with the merchant. The relationship is through the banks and third parties. The rub is that the suit is about the interchange rates. But it does still come back to showing the merchant that there is value in what we provide. And there is a lot of value, by the way.

[source: WayTooHigh.com, via The Mercury News, May 16, 2007]

Monday, May 14, 2007

MasterCard Worldwide® Sweepstakes More Like "Cheap"-stakes (commentary WayTooHigh.com)

Just like the myriad of other promotional campaigns offered by the two leading card associations, here is one more example of how merchants and cardholders are misled and affected by interchange fees - without even noticing. According to a Businesswire MasterCard Worldwide® release today, the company, along with The Home Depot Announced a "$100,000 Backyard Retreat'' Sweepstakes. Use your MasterCard cards to "automatically enter[ed] for a chance to win a $100,000 Backyard Retreat."

The catch? Read the fine print: PIN-based transactions are not eligible.

What this means is that it forces cardholders to demand that retailers electronically process their payments at the oftentimes much higher credit card rate, rather than at the flat-fee PIN-based rates. What a deal: MasterCard provides one lucky recipient with $100,000, yet retailers are forced to pay out huge interchange fees to the card associations and member banks.

See BW release

[Commentary: WayTooHigh.com]

Wednesday, May 02, 2007

"MasterCard 1Q Profit Surges 70 Percent" (via AP)