THERE IS AN ANSWER!
And it starts by the Merchant Service Industry and Self-Serving Sales Representatives ceasing from overcharging merchants. The Economics are driven to support the banking system NOT the merchant. FACT!
Debra Aragon, Founder Better Business Alliance
Better Business Alliance “SO THEY SAY”
‘There’s no good answer here’
Academics and economists who have studied the issue of interchange fees say one big problem is that there’s no real way of knowing what the justifiable value of an interchange fee is, let alone how one would go about regulating such fees.
Better Business Alliance “response”; considering there are over 300 interchange base wholesale rates mandated by VISA and MasterCard Association and where all banks/processors price their costs over these wholesale base rates, “their profits” then the justifiable value is then predicated on controlling the banks/processors costs over the interchange base rates. WAKE-UP! The mere statement “There is no good answer” is just another bogus manipulation leading merchants to believe there is no solution.
“The question is whether they’re using their market power to make an excessive profit, and, if so, what would you do about it?” said Richard Schmalensee, a professor of applied economics at Massachusetts Institute of Technology, who has studied the issue. “There’s no good answer there.”
Schmalensee said it’s also hard to judge how much, if any, impact the fees have on the prices that are eventually charged to the consumer. That’s because so many factors go into pricing individual items.
Better Business Alliance “response”; STOP trying to confuse this situation by implying “there are so many factors go into pricing individual items? The only Factor here the costs Banks and Processors charge over the set base rates. Why not start training merchant sales representatives to stop pricing merchants with one single rate for Qualified, Mid-Qualified, Non-Qualified and now the new category Partially Qualified. Tiered price structure produces huge profits for the bank, processor and huge residual income for the sales representative-GET REAL!
Retailers, card industry escalate fight over fees Merchants ask Congress to step in with more regulations for issuers
By Allison Linn
Senior writer
msnbc.com
7-11 CEO Joe DePinto speaks amid boxes of petitions during a press conference September 30. DePinto announced that 7-11s across the country have collected some 1.66 million signatures on a petition calling on Congress to pass legislation to stop credit card companies from charging unfair, non-negotiated transaction fees.
The two sides are embroiled in an increasingly nasty fight over the fees retailers are charged every time a credit or debit card is swiped. And consumers are in the middle.
Retailers argue that the system for setting such fees subjects them to restrictive rules and is not competitive enough. They are calling for congressional regulations.
“The consequences of the card companies’ practices are hurting our customers and are hurting us,” said Mallory Duncan, general counsel for the National Retail Federation and chairman of the Merchants Payments Coalition, which is calling for stiffer regulation of the fees charged to retailers.
Those in the credit card industry counter that the fees are necessary to make the payment system function.
They also say the fees are justified because when a customer uses a card the retailer is reimbursed quickly while the card issuers are taking on the risk that the customer won’t pay. That risk has been amplified over the course of the recession as credit card companies have grappled with a steep increase in chargeoffs because more customers can’t pay their bills.
The American Bankers Association reported last week that bank card delinquencies rose to a record 5.01 percent of all accounts in the second quarter.
“Candidly, card acceptance is not a God-given right. … It has a cost associated with it, and merchants should be bearing this expense,” Chris McWilton, president of U.S. markets for MasterCard Worldwide, said in a recent conference call with journalists.
Hoping to sway public opinion in their favor, both sides have released competing surveys and polls, launched Web sites and created YouTube attack videos. On the heels of a new bill offering more protection to consumers who use credit cards, the retailers also are hoping to spur Congress to pass legislation regulating the fees.
Last week, executives from the 7-11 convenience store chain went to Washington to hand-deliver a petition they circulated asking customers to “help us stand up to the credit card companies and put an end to these unfair credit card fees.” MasterCard immediately countered with a survey it said showed the 7-11 petition was misleading.
Margaret Chabris, a 7-11 spokeswoman, said company officials agree some fees should be paid, but they think the current system is unfair. They planned to meet with politicians but are not offering a specific proposal, she said.
“All we’re asking for is that they be looked into,” she said.
Complex system
Everyone agrees that the charges, called “interchange fees,” are complex and hard to fully explain to consumers.
Visa and MasterCard, by far the largest players in the market, both offer a long list rates they charge per transaction. The fees can vary substantially depending on where a person shops, what kind of debit or credit card is used and even how much that person spends.
For example, the fees may be lower for supermarkets, who generally have razor-thin profit margins and might not accept cards if the fees were too high. But the fees might be higher if a customer uses a rewards card, such as one offering cash back on purchases, because such cards are more expensive to operate.
The interchange fees can range from a small flat fee to a charge of as much as 3 percent per transaction, with many falling around the 2 percent range, according to MasterCard and Visa’s public fee list.
At 7-11, Chabris said the average rate for in-store sales using all types of MasterCard products is about 2.5 percent per transaction.
The dollar amount of interchange fees has risen sharply in recent years, as more people have begun using plastic for everything from fast food and groceries to cars and luxury items. The Merchants Payments Coalition estimates that the fees totaled $48 billion in 2008.
Retailers say the more widespread use of credit and debit cards, combined with some rate increases, has put pressure on their profits and forced them to charge higher prices.
“(It’s) almost inevitable that the vast majority of these credit card fees get passed on to consumers,” Duncan said.
Duncan said the retailers have only a limited ability to shop for a more competitive rate, because Visa and MasterCard control so much of the market. The other option, to not accept cards as payment, could drive away customers.
