Saturday, September 29, 2007

More Bank Profiteering From Record Gas Prices (

Regularly, interchange fee increases take place in the Fall and mid-Spring. We are closely monitoring to see whether Visa® and MasterCard® will be even more brazen and again hike their fees. But, one sector of our economy is posed to create unheard of profiteering for the card associations and its tens-of-thousands of member banks. We also wonder if the financial turmoil in the world credit cards, might create an opportunity for the banks illegally raise prices by agreement as they seek new profits by raising their interchange fees to cover the mortgage meltdown?

As gas prices continue to soar, so too is interchange fee profiteering, due to what we assert are illegal price-fixing by agreement and absolute market power (Visa and MasterCard's network controls about 80% of the electronic payment business).

Rather than rescinding their unjustified hidden-taxes on motorists and our entire economy, we are alarmed to learn that, according to The Wall Street Journal (page 1. Sept 29) [click here to read the article - subscription required], gas prices could rise to $100.00 a barrel. The two WSJ reporters, Peter Fritsch and Kelly Evans, explained how the U.S. economy could withstand $100 a barrel oil, but they were absent in also mentioning exactly what that stratospheric rate would do to the banks' bottom line. Nor did they explain how the banks can possibly justify this extraordinary profiteering as our nation faces such a burdensome economic energy crisis.

Forget, for a moment, ExxonMobil and other gas companies' earnings, and pause to ask why exactly are credit card interchange fees based on a percent of each sale? Even Realtors are dealing and lowering their once standard 6% commissions; in this case the banks are reaping about 1.7% off the top from every credit card charge at the pumps. Could they be earning as much as $2.00 - $3.00 from every fill-up, especially as motorists are now more inclined to use plastic, as they do not have enough cash on hand?

Last year, MasterCard announced they were instituting a $50.00 interchange fee cap at the pumps. Visa, however, has been silent on the issue, and we are unsure whether the fee limit by MasterCard ever took effect.

Either way, since many of the same banks which control MasterCard, also have stakes in Visa, it is really a giant shell game anyway.


Friday, September 28, 2007

The Battle Against Interchange Fees is Global [See Website: - The Credit Card Interchange Report has been providing daily news and commentary updates on our battle against merchant interchange fees for nearly 2 1/2 years, but our cause is not just domestic within the United States. EuroCommerce is hosting an outstanding website that further cements the critical multi-billion dollar issues that affects all retailers in Europe and across the globe. Next month, we [30 Minute photos Etc. and] will be attending and speaking at a photo industry convention in the UK and will be interested in gaining first-hand prospectives from other retailers on how the interchange extortion is affecting them as well.

The below highlights are from the website. Click here to read more.

  • Did you know? Visa and MasterCard argue that the hidden fees - which cost Europe €25 billion every year - are essential to run card schemes. Why then are there some card schemes in Europe which operate successfully without hidden ‘interchange’ fees?
  • “My bank told me the fee covers processing costs for Visa and MasterCard. But I read that only 13% of the fees go toward these costs, with the rest going to bank profits, and rewards for the select few cardholders. What’s the deal?”
  • Europe’s retailers want the best for Europe’s shoppers – in terms of price, quality, service and choice. But prices in Europe are artificially inflated because of hidden fees for debit and credit cards – fees which all shoppers end up paying for. We believe Europe’s shoppers have the right to know …
  • What is happening in Europe is not an isolated case. Visa, MasterCard and the banks that hide behind them try around the world to continue and spread their anti-competitive activities. Yet in some countries, they are no longer able to get away with it.
  • According to US Senator Arlen Specter: “We may need to modify our antitrust laws to stop credit card companies from engaging in activities to gouge and jack up prices.”
  • According to Philip Lowe, Assistant Governor of the Reserve Bank of Australia: “These fees are not subject to the normal forces of competition and in the RBA’s view were distorting the use of payment methods in Australia.”
  • MasterCard and Visa and their interchange fees have also aroused the interest of regulatory authorities and central banks in a range of further countries across the world. These include: Brazil, Columbia, Mexico, South Africa, Singapore, Switzerland, and Israel.
  • What is happening in Europe is not an isolated case. Visa, MasterCard and the banks that hide behind them try around the world to continue and spread their anti-competitive activities. Yet in some countries, they are no longer able to get away with it.
  • Why is it anti-competitive? Unless constraints are imposed by regulators, payment card companies and their banks can increase interchange rates at any time by any amount. In the words of the European Competition Commissioner, Neelie Kroes, “these high fees are a result of a lack of competition in a market where 95% of cross border payments in Europe are made by two companies. The situation is even bleaker in some Member States, where there is only one single acquiring bank servicing retailers.”
  • Why are interchange fees unfair? First of all, Visa and MasterCard do not inform customers of these interchange fees, they simply set them with the banks behind them and charge retailers and their shoppers accordingly. We believe you have the right to know more about these fees. It is even more unfair for shoppers who do not use the credit or debit cards. That’s because these hidden fees are not charged just to cardholders - that is forbidden the rules of by some card schemes and banks. The high cost of card payments must be passed on across all purchases. This drives up the cost of goods and services for all consumers whether they pay with plastic or cash. This has a serious knock on effect for the wider economy.
  • What’s it about? Whether you use a credit card or not, you pay a hidden fee on virtually every transaction you make. The fees have an inflationary effect and they add up. They cost European shoppers tens of billions of Euros every year.

[Source: Above abstracts from]

Wednesday, September 26, 2007

Riddle: What’s The Difference Between The Cost To Send An Email And An Electronic Payment? $40 billion each year! (

As our company continues to make news for the super-fast photo scanning business we built that is transforming the photo imaging industry and using technology to slash prices for preserving generations of photo snapshots, we wondered why technology has not also led to rock-bottom and tumbled-down interchange fees?

To be more transparent and divulge just how ghoulish this hidden tax is, Visa® and MasterCard® should post the exact interchange fee for each transaction as a separate item on every debit and credit card receipt. We first raised this issue in January, 2006, but they seem too busy figuring out how to go public to distance the banks from our alleged antitrust violations. If they would only pause from what we assert is their attempt to pass along the liability from this litigation onto the public, and instead, agree to post the exact interchange fees on every receipt, then, all merchants and cardholders would understand why we are so passionate about this issue. There would no longer be a hidden tax, but, rather a very vocal cascade of resistance against the peddlers of these unfair fees.

Why are the merchant interchange fees about 1.7% in the U.S. and as low as zero in other nations? And, as other electronic transactions have been slashed too rock-bottom, why have some of their rates [ex. debit cards] tripled in the past 8-years?

Let us pause for a brief study break and review the historical way of sending ["transmitting"] a traditional letter and the processing of a charge slip. In the previous decade, if you wanted to send a letter, you generally bought stationary, an envelope, postage and drove to the Post Office to mail it; days later it was received. Also about ten years ago, merchants, like us, had to stock up on thick, multi-page, carbon-copy charge card receipts, swipe the payment cards through a manual imprinter, mail it to the processing company on the other coast [Florida]. Then, days later, the transaction - less a substantially lower interchange fee than today - was credited to your bank account. As technology advanced, instead of lowering interchange fees, it has actually leaped ahead.

Today, we all use email, and essentially, it is free. Could you imagine if the two leading credit card associations and its thousands of member banks were also involved with the exploration of the Internet? Using their surreptitious market power and pricing domination, every electronic [email] "letter" would come with a beefed-up fee. But, the actual cost to use the Internet network to transmit an electronic message, must be about the same as the cost to transmit an electronic payment on its network, so why are the banks still granted the potency to exert such immense multi-billion-dollar hidden taxes on merchants, cardholders and our economy?


Sunday, September 23, 2007

"Dot-Com" Bust, Sub-Prime Mortgage Collapse, Is Interchange Scheme Next? (

Is another multi-billion dollar bubble about to collapse?

Hundreds of years ago, during Holland's speculative tulip bulb craze that gripped the nation, the laws of economics prevailed and the market for flowers collapsed. During the closing days of the last decade, we again witnessed a market failure from the Internet "" fiasco. This summer, it was the unchecked financial policies that led to our nation's housing predicament.

Where were the regulators when U.S. President Bush was encourage home ownership? Now, we are saddled with billions of dollars in losses because greed by the financial institutions was elevated above smart planning.

The same thing is again happening with merchant interchange fees.

Due to the banks' unbridled pricing controls over merchant interchange fees, what use to be cost-based is today a fiefdom for non-stop rate increases that retailers and consumers are unable to control. There are no checks to this madness; Visa®, MasterCard® and its thousands of member banks are today's new enemies battling its two core customers - retailers and cardholders. At least with the tulip craze in the early 1700s, there was a fragrant aroma, while today's threatening interchange fees and its electronic payment network is nothing more than a rotten, unfair conspiracy to unlawfully fix prices.

Studying MasterCard and now Visa's IPO "Risk Factors" says it all and flashes the most serious of warnings as they foreshadow what might just happen: the two leading credit card associations could become "insolvent" ["Interchange fees are often the largest component of the costs that acquirers charge merchants in connection with the acceptance of payment cards," according to Visa's SEC filing]

If our class action prevails in this antitrust litigation, the same outcome as with tulip bulbs in Holland, Internet stocks on Wall Street and the housing prices in southern California and other speculative markets might just be a giant foreshadowing of what could happen to this interchange fee debacle.

Today, there is little justification for any interchange fee, let alone upwards of $40 billion dollars each year.

Today's market power of the general purpose card network is without justification. Just look at other nations, even those less industrialized ones and ask why their interchange fees are so much lower than the 1.7% in the U.S.

And, why again are interchange fees for the very costly check writing and clearing process also zero in the U.S.?


Saturday, September 22, 2007

"Paper or Plastic? Retailers Struggle With Fees as Customers Increasingly Use Bank Cards Over Cash" (The Patriot Ledger)

The following is a reprint from the Steve Adams reported article in The Patriot Ledger on Saturday, Sept 22, 2007 - The Patriot Ledger


Retailers say they’re the biggest tax you’ve never heard of: They’re transaction fees that credit card companies and banks charge merchants every time a customer swipes a credit or debit card to pay for a purchase.

As dozens of lawsuits challenging the fees grind through the courts and Congress holds off on any action, many mom-and-pop merchants are taking matters into their own hands. Violating the terms of their card agreements, many are requiring minimum purchases - typically $10 - for customers using plastic.

Rockland-based Tedeschi Food Shops has received at least two complaints in recent weeks about franchisees setting minimum purchases, executive vice president Robert Tedeschi Jr. said. The company has notified them that they are violating Tedeschi’s policy.

Still, Tedeschi said he sympathizes with the plight of independent merchants, who lose money every time a customer pays for a small transaction with a card.

‘‘We put a notice out to all franchisees that you can’t do it,’’ Tedeschi said. ‘‘I hate to tell them that, because it’s just killing them.’’

Tedeschi Food Shops typically would make a profit of 2 cents on a $3 gallon of gas, but transaction fees gobble up 9 cents per gallon, causing shops to oftentimes lose money on gasoline sales, Tedeschi said.

As plastic threatens to overtake greenbacks as the predominant form of payment in stores, the stakes are high for merchants, banks and card companies.

A Morgan Stanley report indicated that average transaction fees rose from 1.6 percent of a purchase in 1998 to 1.75 percent in 2004. The report said the dollar volume of fee transactions grew from $9.4 billion to $17.5 billion during that period, through a combination of rising fees and more card transactions. The Merchants’ Payment Coalition, a group of retailers organized to fight the fees, estimates interchange fees hit $30.7 billion in 2005.

Transaction fees consist of three elements. When a customer pays with a debit or credit card, the bank that issued the customer’s card charges the store’s bank a ‘‘merchant discount fee’’ and an ‘‘interchange fee’’ to cover the cost of issuing cards and collecting payments. The merchant’s bank then imposes an additional fee, which is also charged to the merchant.

Credit cards have dozens of fee structures that incorporate factors such as the issuing bank’s fees, whether the customer pays with a credit card, a debit card with signature or a debit card with pin code, and how often the merchant reconciles transactions. Rewards cards typically have higher fees than others.

Regardless of the details, fees can wipe out profit margins and make minor card purchases a losing proposition for merchants.‘‘

If somebody puts a pack of gum on the counter and pays with a credit card, you’re better off if the person just stole it,’’ said Jeff Lenard, spokesman for the Washington-based National Association of Convenience Stores.

According to a survey of its members, convenience stores and gas stations made $4.8 billion in profits in 2006, a figure that was diminished by the $6.6 billion they paid in card fees.‘‘

Essentially the credit card companies made more at the stores than the stores themselves,’’ Lenard said.

The Electronic Payments Coalition, which lobbies on behalf of banks and credit card companies, disputes that fees are inflated and says government regulation would reduce choices for consumers. Executive Director Peter Madigan said the fees reflect investments by banks and credit card companies in technology, enabling millions of transactions to be processed in seconds. Fees are overhead costs for merchants, enabling them to attract business they otherwise wouldn’t get, Madigan said.‘‘

We think it does a lot for the merchant. It brings you in as a customer if you’ve got no money in your pocket,’’ he said.

Critics say Visa and MasterCard enjoy a virtual ‘‘duopoly’’ over electronic payments, enabling them to jack up fees out of proportion to their administrative expenses. The House Judiciary Committee heard testimony in July that the fees violate antitrust laws, and Congress continues to study the issue.‘‘

It’s been a very tight relationship and they have had the ability to do whatever they want with transaction fees,’’ said Pete Bartolik, spokesman for alternative transaction processor Tempo Payments of San Mateo, Calif. ‘‘ The more people use (debit and credit cards), the more prices go up.’’

Madigan said there is ample competition within the industry, with more than 14,000 banks offering debit and credit cards.

Rosetta Jones, vice president of Visa USA, defended interchange fees.‘‘

Visa will continue to protect consumers against some merchants who want to shift their cost of doing business onto consumers by charging a check out fee,’’ Jones said in a prepared statement. ‘‘This approach has already been tried - and according to reports failed - in Australia where check out fees have resulted in increased costs and fewer choices for cardholders.’’

In the meantime, retailers such as CVS and Quincy-based Stop & Shop Supermarket Co. have launched debit cards under their own brands with alternative transaction processors that offer lower fees.

Stop & Shop in 2005 launched a ‘‘PayVantage’’ card that links directly to customers’ checking accounts and also stores their loyalty card information. The transactions are processed by First Data Corp., a Colorado financial services company. After a test-launch at 12 Massachusetts stores, the card is now available at 30 stores.

On Sept. 10, Woonsocket, R.I.-based CVS began test-marketing a loyalty ‘‘rewards payment’’ card at 141 stores in the Indianapolis area. The cards link directly to customers’ checking accounts, cutting Visa and Mastercard out of the loop. It also stores information on purchases typically saved on a CVS ExtraCare card, serving both as a loyalty card and a debit card.

The card is issued by Prospect Heights, Ill.-based HSBC Finance Corp., which is trying to set up loyalty debit card programs with other retailers.

Tempo Payments was founded in 2000 to offer merchants an alternate card processing system. The company charges retailers a flat 15-cent fee per transaction, said Bartolik, its spokesman.

Issued by individual retailers under their brand name, the cards are accepted at 200,000 retail locations nationwide including such chains as Best Buy, Circuit City, Marshalls, T.J. Maxx and Talbots. Customers’ cards can be used not only at the retailer that issued the card, but any other retailer that accepts Tempo.

Boca Raton, Fla.-based National Payment Card has launched its own ‘‘decoupled’’ debit cards that link directly to customers’ checking accounts and is targeting gas stations as retail partners. The company says it can reduce merchants’ transaction fees by more than 80 percent.

Retailers, in turn, typically offer three-cent-per-gallon discounts on gasoline to encourage customers to sign up for the service.

In the 21 states that embed magnetic strips on the back of driver’s licenses, customers can enter their license information on a Web site and swipe the license at stations as a form of payment.

NPC processes the transactions through the Automated Clearing House, a network commonly used for direct deposits and automatic withdrawals from bank accounts.

The company counts several hundred gas stations in southern states as customers, CEO Joe Randazza said. He predicts explosive growth because of merchants’ concerns over fees.‘‘

This is the second-largest expense to a gas merchant (after the cost of fuel),’’ he said.

[source: Copyright 2007, The Patriot Ledger]

Friday, September 21, 2007

Where Are The Pro-Interchange Fee Blogs? (

Like in baseball, it is easy to keep score, just look at the scoreboard. In politics, there are polls. For interchange fees, there is little other than those regular notices of fee increases.

As retailers continue battling against the two leading credit card associations and its member banks, it is also easy to keep score.

With nearly 800 postings on - The Credit Card Interchange Report, we have yet to profile a single pro-interchange fee blog. Not one. Well, there is always that "pro consumer," "pro competition" group that enjoys the financial support of Visa, but that really shouldn't count.

Where are the merchants championing 1.7% interchange fee rates, and challenging Where are U.S. retailers thanking Visa® and MasterCard® for charging among the highest rates in the world, while abroad, the interchange fees are 0.7%, 0.5% and even 0.0% - there are no interchange fee for debit PIN-based cards in Canada.

The reason for such silence?

Merchants understand they are being taken on a ride when cardholders present their affinity frequent flyer cards. The merchants, and thus the consumers are paying for these perks and the nearly $40 billion a year in interchange fees.

Since we were the first to launch the merchant interchange litigation back in mid-2005, there have been no pro-interchange fee blogs that we are familiar with. That speaks volumes about our cause and the unfair fees.

*** Stay tuned for our regular news and commentary updates on Visa over the next several months as it attempts to follow MasterCard and try to distance its member banks' liabilities.


"Mastercard Paid Lobbyist $280,000" (via AP)

"Credit Card Fees Eat Up Merchants’ Profits" (

From the John Boyle reported Citizen-Times' merchant interchange article, we share this observation about who actually receives the $40 billion dollars each year from interchange fees.

Someone does!

As MasterCard® spokeswoman, Sharon Gamsin was quoted in the article, MasterCard [and the Visa® network] "does not receive revenue from interchange — it is a payment between acquiring and issuing banks to balance costs in the system.” However, let us look at who owns [owned] the two leading credit card associations. That's right! The member banks - the same ones who stand accused by us and millions of retailers through our class-action antitrust litigation of illegal price-fixing.

Many banks are double billing; they are both the "acquiring" and "issuing" bank, so how exactly can they justify the double-billing? If they ever get around to answering that, then, question number two: How are the banks justifying they deserve a percent of evey credit card sale at the gas pumps? Oh yes, when you can illegally fix the prices and own the network, you can get away with anything as long as your customers don't notice. As the first of the new lead plaintiff's, having filed the new merchant interchange class-action in 2005, we notice and are asking the questions.

Even as Visa prepares to follow MasterCard towards seeking to protect its current owners (the banks) from this multi-billion dollar potential liability, whether you say that the card associations or the banks directly earn the interchange fee is more about semantics and the interrelationship between the two.


"Study Looks at Merchants’ High Credit Card Fees" (The Journal Record)

Thursday, September 20, 2007

"Crude-oil Futures Hit New High Above $83 a Barrel" (via MarketWatch)

With new record gas prices, motorists are forced to more often than ever have to use plastic, rather than pay with cash, as the amount of each fill-up rises. This means that in many cases, the credit card associations' member banks are reaping even more grossly-inflated interchange fees at the expense of all consumers; they continue to reap windfall profits during this national economic energy emergency, and, seemingly, nobody is noticing?


"Interchange Fees Are Really "Sky High" (

During an evening flight last evening down from the Bay Area, the pilot on American Airlines announced that they were conducting a test for a new service and that only credit and debit cards would be accepted for in-flight purchases. Imagine that - no cash. The flight attendants used wireless credit card terminals to swipe the magnetic strips on the cards.


Tuesday, September 18, 2007

Barrel of Gas at $81.90 !!!

More windfall profiteering for interchange charges at the gas pumps; A barrel of gas surged to new trading highs today of $81.90 on the New York Mercantile Exchange. How are the credit card associations and its member banks justifying their extraordinary profiteering during our nation's economic energy crisis?


Saturday, September 15, 2007

Super-charged Greed! (Commentary,

[repost from April 11, 2006]

Friday, September 14, 2007

"Visa's IPO Use of Proceeds Plan and Interchange Overview (commentary,

Many of the same banks that owned MasterCard®, own Visa®. And, as with the earlier MasterCard IPO, according to a Reuters news report, Visa plans to set aside a portion of its IPO windfall to open "an escrow account to help cover potentially hefty legal bills."

As mentioned in the prior posting, Visa explains in its SEC filing that among the risk factors for an investment in the company is that they may become "insolvent" due to the merchant's interchange litigation victory. Is this a possible reason for the IPO - to transfer liability onto shareholders and restructure the banks ownership to limit their liability? After all, according to the filing, "Interchange fees are often the largest component of the costs that acquirers charge merchants in connection with the acceptance of payment cards."

For those unfamiliar with our battle against Visa, MasterCard and many of its member banks, here are some points of interest:

  • The payment card interchange fee and merchant antitrust litigation alleges anticomptitive, antitrust violations by Visa and MasterCard, which is made up of thousands of banks
  • Many banks sat on both the Visa and MasterCard boards and stand accused of illegally fixing the interchange fees by agreement and in coordination with each other.
  • Many electronic payment transactions were handled by the same banks, as the issuer and acquirer, meaning they get fees twice.
  • There is no real competition; Visa and MasterCard maintain an 80% market power over electronic payment processing.
  • Interchange fees have more than doubled in the last 10-years.
  • Few customers know about interchange fees because it is virtually impossible for merchants to tell customers what the exact fee is.
  • Every consumer pays for these hidden credit card fees, even cash customers because the cost is built into every product - a gallon of milk bought with cash by a mom is also paying to award premium signature card holders' bonus mileage to Europe.
  • Interchange fees are one of the worst and most unfair fees paid by American consumers - it's more than six times what people paid in ATM fees.
  • Huge profits: Even though the actual cost to process a $1 transaction is virtually the same as that of a $10,000 transaction (buy a soda or a Cartier watch), the interchange fee is based on a percentage of the total. Even Realtors lowered their commissions when housing prices soared.
  • The interchange fees are far higher than the actual cost o the transaction they are meant to pay for.
  • The technology used to process credit card transactions are today more efficient and less expensive.
  • Why are interchange rates higher in the U.S. in most other industrialized nations?
  • U.S. interchange fees are close to 2%, while other countries, like the UK are typically 0.7% and Australia averages 0.55%.
  • Did you know that merchants are forbidden from disclosing to consumers the fees that are charged?
  • Behind closed doors, Visa and MasterCard meet to increase these anti-competitive hidden fees. It seems they are regularly being raised, not lowered as technology creates more efficiencies for speedier electronic payment processing.
  • We understand that these price-fixing practices are in violate antitrust laws.
  • Few things are more anti-competitive than the credit card market - virtually every other marketplace lowers prices because of competition.
  • Study the market dynamics of other counties with significantly lower interchange rates to understand that the banks and card association are still doing well and they have not experienced disruptions in transaction handling processes, despite lower rates.
  • We assert that the banks which make up Visa and MasterCard have colluded to set these fees which in any other industry would be in violation of federal antitrust laws.

Repost from Prior Summary - Briefing on Interchange Issues (


"Visa, Inc.® FORM S-4 SEC Registration Statement" (click here to view the SEC filing)

It weighs in at more than 400 pages, but among the critical pages to read begin on page ten [risk factors] of Visa, Inc's® S-4 Registration Statement in advance of its planned IPO early next year.

We remember years ago when the banks explained that interchange fees helped cover losses from fraud, yet that concern is way down on the factors threatening this offering. Instead, this phrase, "...cause us to become insolvent" is higher on the list of risks and is associated with the merchant interchange multidistrict litigation, which might force Visa Inc. to pay substantial damages.

Last evening, CNBC asked whether Bank of America® was using its new [nearly doubling] $3.00 ATM surcharge for non-customers to bail out from the sub prime mortgage disaster? A bigger question is whether the banks, many of which had also owned MasterCard, and reaped billions after its IPO, are using this IPO to not just bail out from their mortgage malaise, but to run for the exit and pawn off the potential litigation liability on to the public? But, remember, the alleged crime of illegal price-fixing by agreement did not occur when the public owned the stock, but rather, under the banks watch.

The CNBC segment discussed how non-customers using the Bank of America ATM network are paying fees twice; talk about double dipping. The same happens billions of times each day with the Visa and MasterCard® payment network too. Interchange fees are paid twice, once to the issuing bank, and then to the acquiring bank, and in many cases, it is the same bank!


Thursday, September 13, 2007

"Visa Wins OK From SEC As It Readies IPO" (via Reuters)

"Crude Futures Mark First-Ever Close Above $80" (MarketWatch)

"Bank of America Raises ATM Surcharge" (USA Today)

Wednesday, September 12, 2007

The Robber Barron's Had Nothing On This Interchange Fee Heist (Commentary,

This is shocking to merchants; it doesn't make sense, but it is making lots of dollars....

Crude-oil futures climbed into uncharted territory and have now reached $80.00 a barrel...

The result is record, windfall profiteering by Visa®, MasterCard® and its member banks.

Why exactly are interchange fees based on a percent of each transaction.

What, do they think they are selling real estate?

Even real estate brokers lowered their 6% standard commissions when housing prices reached record levels.

What are the banks doing to help during this fiscal energy crisis.

Our earlier proposal to the CEO's of Visa and MasterCard to rescind interchange fees at service stations remains one immediate solution.

See these prior related posts
"Credit Card Fees Siphoning Gas Stations’ Profit" (The Times-Tribune)

An Orgy of Credit Card and Bank Profiteering From Record Pump Prices (

Oil Surges Past Record High, Above $78 a Barrel; Yields More Windfall Profiteering For Banks (

Visa® and MasterCard® About $1.50 Per Fill-up

Open Letter to Visa® CEO: suspend gas station credit card interchange fees to help motorists save ~$1.50 per fill-up

"More Windfalls At The Gas Pump" (Forbes)


"BASIC INSTINCTS; Cards Train Teenagers To Use Plastic" (, Aug 25th)

Debit cards targeted at teens could train them how to handle money, but there are better ways...

"Oil Hits Record Near $80 On Tight Supply" (via Reuters)

As our nation faces another economic energy crisis, what exactly are Visa®, MasterCard® and its member banks doing to help? The reality is that as gas reaches $80.00 a barrel, the service stations are forced to pay in most cases, a percent of every tank fill-up in interchange fees. The result is that the banks are realizing a huge multi-billion dollar windfall profit at the expense of motorists and all consumers. Is this how they are helping to cover their real estate loan losses?

Let us keep in mind that the financial credit crunch caused by sub-prime loans is affecting the banks. The Wall Street Journal (Sept 8, page B-14) )reported that the losses to banks could be about$100 billion. Yes, the banks have reserves, but we wonder how that will be impacted when our litigation is resolved; from where will the money come from?

[Commentary:, via news report from Reuters]

"The Dark Secrets of Debit" (Consumer Reports.Org)

The September issue of Consumer Reports details what we have long been warning, that banks try to force consumers to get debit cards, but use it as a credit card.

Click here to view the entire story about "why do banks push debit cards for every purchase you make? Because they stand to make millions--largely at your expense..."

"Debit rewards: More glitter than gold."

According to Consumer Reports, "a Visa Extras roundtrip airline ticket from the U.S. to Europe would require 200,000 points--or $400,000 worth of spending on those debit cards for a ticket with a value capped at $1,100."

[Source, via Sept issue of Consumer Reports.Org]

Tuesday, September 11, 2007

The Pigs of Greed (Commentary:

You would think that $40,000,000,000 [ that's 40-billion dollars in annual interchange fees] would be enough to fill the bellies of greed by the two leading credit card associations and its member banks, of which are the defendants in our antitrust price-fixing litigation, but no.

Here is another example of unbridled greed and growing buffet of piggishness.

Last Saturday, we receive a call from a customer in Florida who was not pleased with the nearly 1,000 pictures we scanned for her. Like all orders, it was received, scanned and mailed back the same day, but, she said the scans were "too dark."

Because retains all images for 60-days, a quick look at her order revealed that the scans were perfect. But, we've been in business for 17-years because "word-of-mouth" and credibility matters most. In this case, without any discussion, we advised the customer that an instant full-refund was just applied to her charge card. We took a full loss on the order [$49.95, plus delivery charges]. When we issued an electronic refund, it occurred to us just how piggish the merchant interchange cartel is. While we issued a full-refund, the interchange fee charged, remained.

FACT: There are no refunds to cover merchant costs for interchange fees when refunds are initiated.

Nice going, Visa and MasterCard! Can't wait to read read your next PR and marketing profiles about how business friendly you are.

[Source: Commentary,]

Sunday, September 09, 2007

We Pause: In Memory of "9/11"


In tribute to those who lost their lives, family members and to all of us, we pause in memory of the events of September 11, 2001.

For those readers who might not be familiar with several of our prior grassroots advocacy campaigns, including "Fly With Courage," where we flew from Barcelona to New York City and Los Angeles on September 11, 2002, when few passengers had the courage to travel, we share these memories with you. On that day, the airlines and our nation's commerce were again threatened due to fears placed on the first anniversary since "9/11." The planes we traveled on were empty, the immigration and customs areas empty, airports empty, but our message was heard that it was safe and vital to support the airlines and The Big Apple - as part of our efforts, when we arrived in Los Angeles late that evening, we were profiled on ABC News.

Like everyone, and as native New Yorkers, we too were moved by September 11, 2001 and spent the next two months working to launch a campaign that brought thousands of people from across the country to The Big Apple on Veteran's Day - two months to the day after "9/11." Our journal from that emotional pilgrimage to support the airlines and commerce in New York City can be seen at:"


The City of New York invited us to Ground Zero - see photos

Letters from [current presidential candidate and former] Mayor Rodolph Giuliani, [current SEC Chairman] Chris Cox and others are also posted on the site.

[Source: Carl Berman and Mitch Goldstone, co-founders of EPICCUSA.COM and co-editors of - The Credit Card Interchange Report]

Saturday, September 08, 2007

Presidential Candidate Christopher Dodd on Interchange Fees (via

Presidential candidate and Senate Banking Committee Chairman Christopher Dodd, D-Conn, recently addressed interchange fees during a Senate hearing. Click here for complete transcript.

"And lastly, I would be remiss if I did not mention one issue likely not to be explored today-- credit card interchange fees. These fees are imposed on merchants and consumers by banks and card associations when a credit or debit card is used to pay for a purchase. Interchange fees are growing exponentially– and the costs associated with these fees are expected to be between $30 and $40 billion this year alone. These opaque fees, assessed on merchants, are passed on, in part or whole, to consumers who have no knowledge or understanding that a fee is even a part of the cost of bread or milk, or any other consumer product. I believe that this is another area that this Committee should examine as part of the series of hearings on credit cards. With that, I would like to introduce the witnesses before the Committee."

[Source: link]

Friday, September 07, 2007

Presidential Candidates' Position on Credit Card Fees

We will begin posting comments and views as the presidential candidates begin to address credit card fees.

As the first entry, we came across this blog posting from about former Senator John Edwards' support of lowering credit card fees. The blogger posted the below comments to address additional concerns that would help the candidate "win over small business owners:"

See this link for complete comments by the Blogger.

Assure that all credit card fees are cost-based.

In short, any fee charged by a credit card company must a) be justified, and b) reflect the cost of whatever service is being performed that the fee is being charged for. This is an issue for the Consumers Union's credit card agenda and for merchants especially. And it's merchant fees where Edwards could find new headway.

If you haven't followed my diaries on the subject of the interchange fee, see my first one here:
"The Biggest Reverse Robin Hood Scheme You've Never heard Of." If you've never heard of it, that's not your fault -- the banks which control the credit card associations prefer it that way. So while proposal #5 is just a good idea in any case, it might carry specific political benefits if he put some emphasis on that fee in particular. In practice, this would likely remove the interchange fee from the reward card equation. Rewards on Gold and Platinum cards come from the fees incurred by these transactions. That's also where the banks' never-been-higher profits derive. But if it costs $.50 to send the payment through, don't worry -- they'll take a lot more.

I'm not sure where now but I read recently that only 13% of interchange fees actually goes towards paying the processing transactions -- the rest goes to fund rewards as mentioned above as well as advertising and junk mail. Transactions should be no more expensive than they need to be. The fee as it was originally created was a necessary measure to cover costs. No one here is saying there shouldn't be any interchange fee (although some foreign governments are considering just that).

And though the fee is charged to businesses large and small that have merchant credit card accounts, it is a consumer issue, too because it drives down your purchasing power. It is an artificial form of inflation, where the premium above regular prices goes into the pockets of bank shareholders and toward their next free airline ride. Interchange fees are reflected in the price of nearly everything you buy. As much as $2 of every $100 you spend goes to card issuers -- no wonder interchange has risen a staggering 117% since 2001. Moreover, bringing this fee back to what it was all about in the first place would give smaller merchants more pricing flexibility -- another way to compete for your business, and maybe save you a bit of money. The current system costs the average American family more than $300 a year in interchange fees.

This might also be a good way to reinforce his opposition to the bankruptcy bill, and keep up the fight for working Americans. He has been a good advocate
against the 2005 bankruptcy bill, but not everyone has forgotten his voting for a bad one in 2000 that Bill Clinton had to veto. I noticed the Dodd campaign is pushing a quote from Paul Wellstone in 2001, who said the bill "punishes the vulnerable and it rewards the big banks and credit card companies for their poor practices ... We are heading into hard economic times and we're going to make it hard for people to rebuild their lives."

Small business owners might be where Edwards can make up the most support over the next few months I think we can all agree we need bankruptcy reform, and credit card reform. And I know when it comes to merchants, I know how the rising interchange fee is hurting them. If Edwards wants to make some inroads with a group that might be skeptical of him, I can think of no better way than by bringing them into his fight against the credit card industry.

[Source, via - link:

"The Economic Law of GREED" (Commentary:

With gas prices again surging to record highs - a barrel today is costing more than $77.00 - it seems that even ExxonMobil, Shell and others are somehow able to lower the cost at the pumps.

But, look at the huge merchant interchange fee windfalls and exaggerated profiteering as motorists, truckers and others fill-up at the pumps and are forced to use plastic to charge. While the interchange fees maintain their steep rates, gas prices have actually declined. So, how is it that with gas prices at record highs, the price at the pump (in So. Calif) is about $2.75 for regular?

When a barrel was hovering at about $70.00, the pump price was about $3.25 and more. The Question is: what is artificially keeping gas prices down, and why aren't the credit card associations and member banks also helping to lower their fees too? The Answer, in our opinion: A classic case of illegal price-fixing.

What happened to MasterCard's® plan to cap interchange fees at the pumps to $50.00, and why has Visa® been silent on this issue, and if they agree to putting an interchange fee cap at the pumps, why not on all transactions too?

Interesting Question: Why Only Cap Interchange Fees At The Pumps? (


Thursday, September 06, 2007

Will Interchange Fees Increase to Bail Out the Banks? (

Part II

With the growing turmoil in the financial markets, due to unchecked risky loan schemes, we worry that the banks might use their market power to raise interchange fees. Is this possible? Because of the 80% monopolistic anti-competitive grasp that the credit card associations' member banks wield, we would not be surprised.

Angered, yes.

Surprised, no.

Just today, it was reported that Countrywide's stock price plunged below the $18 price that Bank of America may plan to use as the bench mark for its announced $2 billion investment in the largest mortgage lender in the U.S. With all the attention to the damage caused by loans to people earning $40,000 a year, but "qualifying" for $800,000 homes, the banks will be forced to do something. They will refill their swimming pools of cash if the Visa® IPO moves forward, but even that is questionable, especially as they prepare to identify the risk factors to their planned IPO in early 2008.

According to Reuters, the Mortgage Bankers Association announced that "the rate of home loans in foreclosure rose to a record high in the second quarter of 2007 as more homeowners in California, Florida and other states could not refinance their adjustable-rate mortgages."

Will Merchant Interchange Fee Cash Cow Be Used To Bail Out The Banks? [ commentary]


Saturday, September 01, 2007

Why Is The Interchange Fee Scheme Inflationary? (Commentary,

Even gas prices are declining.

The Federal Reserve and the Executive Office are stepping in to help lower interest rates to protect risky real estate investments, where people effectively rented their homes and gained huge tax incentives to borrow against phony valuations.

Seemingly most fees and rates are being lowered, except the bank controlled $40 billion dollar annual fiefdom they created which is now used to extract a hidden tax from merchants and consumers. If only they agreed to our recommendation to post the exact interchange fee on every debit and credit card receipt to transparently present how their scheme works.

We regularly point out that technology and efficiencies are helping to lower rates for products and services, but as far as MasterCard®, Visa® and its member banks, they seem to have missed that lesson on Moore's Law. Even our photo scanning business is garnering nationwide attention for helping to lower the cost to preserve generations of analog pictures.