Seeking Ways to Cut Fees on Credit Cards

[One Sweet World]

Seeking Ways to Cut Fees on Credit Cards
New York Times
September 26, 2007
By JEFFREY SELINGO
http://www.nytimes.com/2007/09/26/business/smallbusiness/26card.html?_r=1&oref=slogin

THE sign advertising the gas prices at Twin Peaks Petroleum in San Francisco may remind drivers of days gone by: there is one price for credit and another, lower price, for cash.

Frustrated with credit card processing fees, the owner of the independent station, Michael Gharib, reintroduced the split pricing a year ago. Since then, he says, he has reduced by a third what he pays to banks and companies that handle card processing, to about $3,500 a month.

“It’s a big part of our costs, and when gas prices go up, so does the fee,” Mr. Gharib said.

With more Americans than ever using plastic to pay not only for high-price items but also everyday purchases like groceries, small businesses in particular complain that their profits are squeezed by card-related fees.

Even experienced merchants say that the fee structure for accepting plastic is confusing. Visa and MasterCard charge different rates, called interchange fees, depending on the credit card that is used. A debit card with a PIN has the lowest interchange fee; a credit card that offers reward points has the highest.

The companies that process the cards add another fee, so the merchant’s total cost for accepting Visa or MasterCard can be a bit more than 3 percent of a transaction. (The rates for American Express and Discover are more straightforward, because they contract directly with merchants.)...

[redqueen]

1. What a scam...

Those lawsuits wouldn't be necessary if we had a government willing to regulate the rackets.


Also, might wanna trim that down to four paragraphs.

[w4rma]

2. Businesses are getting price gouged by those fees. (nt)

[napi21]

3. Hmmmm...the CC companies must have changed the rules.

When I was a Cash Manager a number of years ago, I worked very closely with our cc processing bank. I learned all the rules, restrictions, and benefits of cc's. One of those rules was that no business was permitted to treat a cc customer any differently than a cash customer, and that meant you were NOT ALLOWED to add on, or charge more to a customer using their cc rather than cash. Believe me, our CCorporate Comptroller sure wanted to do that, and we were given the book of rules and regulations that plainly stated NO!!!

[aikoaiko]

5. Those rules are still there -- they call it a "cash discount"

[MiniMe]

6. I was going to charge something the other day (by phone)

and the company told me that they had a $5 processing fee for credit cards. The first thing out of my mouth was "that's illegal". They told me, no, lots of companies do it. I ended paying another way that didn't cost extra, but I wondered about it. Can they get away with it by calling it a processing fee?

[One Sweet World]

7. Revolution Card Could Help

Just like in the article, all types of businesses are getting creative to combat these outrageous interchange fees. Good news from Steve Case, who launched the Revolution card this week. It has a much lower fee than Visa and MasterCard. I hope it levels the playing field, that way we can eliminate all this cash discount/processing fee businesses. So confusing.
http://www.revolutionmoney.com/

[Lasher]

4. I'm still upset over the ATM fees.

Remember when debit (check) cards first came out? We no longer had to go to the bank to get a check cashed because we could just drop by any ATM and get money. Banks exploited that technology to significantly reduce costs by laying people off. More econimies were realized by them when we started making purchases with our cards instead of writing checks. After people got used to the arrangement, banks decided they had to stick us with enormous fees if we are ever unlucky enough to need cash when we can't get to one of our own bank's ATMs.

They continue to enact that and other similar tribute to this day.