Banks and Credit Card Companies Profiting off Donations to Haiti

[garybeck]

As Wallets Open For Haiti, Credit Card Companies Take A Big Cut
http://www.huffingtonpost.com/2010/01/14/as-wallets-open-for-haiti_n_423238.html

...snip

Thanks to this hidden fee, American banks and credit card companies are making huge profits -- somewhere in the neighborhood of $250 million a year -- off of people's charitable donations,

snip...


personal note... I hesitated about posting this because it does cost banks to transfer money and process orders. there's no such thing as a free lunch. and saying all of the money they take from these transactions is "profit" is a bit of a stretch, unless I'm not reading it right. still, it is a concern, and people should be aware. if you want 100% of your money to go to the organization, use a debit card or send a check. you can also use your online billpay in many cases.

[Deep13]

1. Banks should donate those fees to Haiti.

Or, more directly, waive them. In the mean time, I'll send a check.

[garybeck]

2. at the very least, it should be a nominal flat fee for non profits. charging a % is outrageous

it probably costs them less than a dollar to process a transaction. but on a $100 donation they get $3. On a $1000 donation they get $30. Why should they get more on a larger donation? They are performing the same function.

[naaman fletcher]

3. It's a percentage for a reason..

When the bank processes a credit card transaction, there is a risk of a chargeback.. that the charge was fraudulent. The bank then has to recover the money from who they bank sent it to, and sometimes that is costly.

Please don't get me wrong: The credit card companies and banks are the scum of the earth, but there needs to be a fee, and it needs to be tied to the size of the transaction because the greater the transaction, the greater the risk.

[DireStrike]

4. I disagree

The costs need to be covered somehow, but it doesn't need to come from a percentage transaction fee.

This just happens to be a place they can stick a fee where it is less obvious.

[naaman fletcher]

5. I'm not sure what you disagree about..

The fact is that the larger the transaction the more risk there is in the transaction. If the fee is not based on transaction size, then in effect those who spend less would be subsidizing those who spend more.

[garybeck]

7. Is this a stupid question: ?

how many people would steal a credit card and use it to donate to a non-profit organization?

Isn't the risk different for non-profit donations compared to buying a TV at Best Buy? Seems to me the risk is lower so the fee should be lower. If you want to keep it at a percentage, fine, but the percentage should be lower for non-profits.

[naaman fletcher]

8. Well..

1. I have no idea if anyone uses stolen credit cards to donate money to charity. I wouldn't be surprised if some 4chan hacker group did that, but I have no idea.

2. Yes the risk is different, and different industries do pay different rates.

3. The fee should reflect the risk on the transaction. Whether or not it does here I don't know.

All that being said, please I am defending this is theory. The CC companies and merchant banks are all scum.

[garybeck]

9. well last time I looked into getting a merchant account it was also ~3%

which is the same amount the article says they're charging the non-profits.

[naaman fletcher]

11. 3% is pretty high..

I just got a merchant account for a company I am a partner in that will accept 100% of its orders over the phone or online, and we are paying less than that.

[Romulox]

10. Right. But the banks' risk is always underwritten by the US taxpayer. So what's your point?

:hi:

[naaman fletcher]

12. well, right, fair enough.

[sixmile]

6. What about the phone companies

and the enormous texting fees they are generating?