During one U.S House hearing from time ago, the question was asked why the banks [Visa® and MasterCard®] are charging such high fees. That question was raised when oil was a tiny fraction of today's $93.00 a barrel.
We ask the question again.
- Whatever happened to MasterCard's proposal to cap interchange fees at the pumps at $50.00?
- Why, as best we can identify, did Visa remain silent and not join in the cap on interchange fees?
- If they can put a cap on gas station fees, why not all fees, since, it is our contention that the bulk of the actual costs are tiny (only about 13% of interchange fee costs are used to cover its transaction costs).
- If MasterCard could issue a press release that touted a cap on interchange fess at the pumps, why not in everything else too?
Interesting that Visa enable its much smaller card association ally to come up with the cap in interchange fees at service stations without matching the program. If they were truly competing with each other, you would have thought the price elasticity would have snapped in place. By the way, whatever happened to that MasterCard's interchange fee limit, did it ever take effect that was promoted in their press release more than a year ago? [MasterCard was reported to explain that they were establishing this cap, but, was it ever imposed]?
Remember: both Visa and MasterCard are/were owned by thousand of the same member banks, so they were more like a giant Starbucks-type business, then separate, like McDonald's and Burger King. Could you imagine if two independent, competing multi-national business conglomerates had the same board representation and the same group of owners? Think of Richard Branson's Virgin Airlines and its arch rival, British Airlines. I doubt they even talk to each other, other than in biting advertisements taunting each other, and thus much less likely to meet together and use their market power to illegally fix airline prices. Hey, that is our argument for how the electronic payment network regularly operate[s]d.
MasterCard's® Planned Interchange Fee Cap For Gas Retailers (WayTooHigh.com) Dec 16, 2006