Credit and Debit card swipe fees to reduce

[chinaco]

It is about time. This burden is put on all products even if we pay cash.

Quote:

The new restrictions, most of which won't be made final until April 21, aim to cap the amount of money that debit-card issuers can charge merchants for so-called swipe fees. Banks would face a seven-to-12-cent-per-transaction cap on the interchange fees under either of the two proposals unveiled Thursday. That represents as much as an 84% drop from the current average of 44 cents. Analysts had been expecting a drop of up to 60%.

Merchants held captive.

Quote:

The card companies don't actually collect swipe fees themselves, but the new proposed rules would loosen their control over the process and allow merchants to choose rival payment networks. Some analysts say banks will try to pass on some of their lost revenue by reducing what they pay the credit-card networks.

Fed's New Debit-Card Fee Rules Hit Hard; Issuers Howl - WSJ.com


This adjustment has been long over due. The world has shifted to electronic commerce and they have taken advantage of it long enough.

[ERD50]

Rather than try to do price controls, I wish they would create an environment for competition in this market so these companies would be fighting for my business rather than calling the shots. Overcharges are rare in a truly free market.

The CC cos will just find an alternate route, as long as they have the power. I'll wager this bill has close to zero effect overall, regardless of what appears to be good intentions.


-ERD50

[chinaco]

The fees have gotten out of hand.

I would be fine if retailers offered a discount for cash purchases.

[plex]

While free market competition is wonderful, it can and does get clogged up on its own very often, and competition comes to a complete halt. Companies don't like wasting their time and money competing, and are constantly looking for ways to avoid it. This is especially the case in industries where there are huge barriers to entry. Monopolies or situations very much like a monopoly can very commonly happen (a "common practice" agreement between the major companies in the industry). The only option left is for intervention of some sort to occur in those sorts of situations.

[ERD50]

Quote:

Originally Posted by chinaco The fees have gotten out of hand. I would be fine if retailers offered a discount for cash purchases.

This is the rub, as I understand it. The CC cos tell a retailer - we will let you accept our card if you don't offer cash discounts. The retailer is free to tell them to go pound sand, but then he loses business to people who want to use a card.

So we all end up paying the transaction fee in the price of the goods whether we use credit, debit or cash. Some of us get a portion of it back in rewards.

Quote:

Originally Posted by plex While free market competition is wonderful, it can and does get clogged up on its own very often, and competition comes to a complete halt. Companies don't like wasting their time and money competing, and are constantly looking for ways to avoid it. This is especially the case in industries where there are huge barriers to entry.

Right, that is one of the things that keep a market from being free enough to have the suppliers competing for business.

What I'm always saying in these matters - if Congress is going to get involved, they should do something to increase competition. If they are successful at that, all the other problems will likely go away. Mange it at the top level, not the bottom.

-ERD50

[Alan]

Quote:

Originally Posted by chinaco The fees have gotten out of hand. I would be fine if retailers offered a discount for cash purchases.

The only retailer I pay cash at is at the liquor store Specs and they do offer a 5% discount for cash. Well worth it since we shop there anyway because of their range of products and low prices.

I don't understand why more merchants don't do this.

[lowflyer]

Quote:

Originally Posted by Alan The only retailer I pay cash at is at the liquor store.

Back in the "good-ole-days" I always paid cash at the liquor store too, but that was so no one could see how much I was spending there.

[JohnDoe]

Quote:

Originally Posted by ERD50 Some of us get a portion of it back in rewards. -ERD50

The rewards might get smaller to help offset the lost income. This regulation, as it stands, is not helping the consumer at all.

[BigMoneyJim]

When talking about card fees I never see what cash costs are. Surely those armored car pickups and dropoffs and counting machines cost money. I have no idea how cash-support costs compare to debit/credit-support costs, but it seems like it would be useful to know when talking about cash discounts versus card merchant fees.

Since a lot of us use reward cards and pay our bills monthly, I presume the reward funds are covered by the merchant fee. If that's true then it would seem the merchant fees might have some fair wiggle room in them. On the other hand, there may be enough balance-carrying reward card users to cover those of us who are taking the "free" money.

[mickeyd]

New regs won't directly affect me as far as I know as I use a CC for almost all purchases and can't recall the last time that I used my DC for anything except an ATM withdrawal.

[Delawaredave5]

I love the comment from Mastercard -he's talking about new regs - but they've been constructing their own "fee monopolies" themselves...

MasterCard general counsel Noah Hanft said, "This type of price control is misguided and anticompetitive, and in the end is harmful to consumers."

[chinaco]

Hyperbole, exaggeration, and lies from the industry.

The world has changed. We are doing more electronic commerce and the regs have not caught up.

IMO - If currency is going to move toward electronic $... the govt needs to get more involved. Too much opportunity for abuse! In the end, some people are keen on attacking our government... but I see the bureaucrats as the lesser of two evils.

Businesses have a profit motive. That is fine, but they often do not look out for the collective good all participants. They creep the margin of acceptability slowly and over time till one day we wake up and they are sticking it to everyone. In this case siphoning off excess profit.... it is not unlike a tax on transactions. Anyone who doubts those oligopolies will push until a limit is established does not understand how business works! Take until you can get no more! How do you think those CEO's get rich in their, all too often, short tenure!

I am not sure where the line needs to be drawn between govt regs and private industry... but I think the banks and credit card companies (transaction clearing houses) have crossed it.


The rewards... that game has already been exposed. There is a huge concentration of credit cards issued by a small number of very large companies. But there are smaller operators also.. They try to entice people to using their cards to make even more purchases for the rewards... because it generates big fee income for them... in the end you pay for those fees through markup on goods and services. Whether you pay cash or use the card. Shell game!

I will state it: for financial institutions today.... it is all about fee income! Many of those fees were conjured up to show growth and to engineer a stable bottom line for large investors (income smoothing)!


As Consumers... we are getting scr3wed.

[ERD50]

Quote:

Originally Posted by chinaco IMO - If currency is going to move toward electronic $... the govt needs to get more involved. Businesses have a profit motive. That is fine, but they often do not look out for the collective good all participants.

Chinaco, the key word there is oligopoly. That IMO, is the problem. I think you need to read/re-read Adam Smith. Business serve their customers through their own self interests. It works pretty well. But an oligopoly or monopoly is not a free market.

As far as Congress setting the rules, Well, let's see an example of that:

Senate panel ban on stock for appointees but not itself seen as double standard

Quote:

Gordon R. England's appointment to a top Pentagon post in 2006 came at a high price. The Senate committee overseeing his confirmation demanded that he give up lucrative stocks and options he held in companies that do business with the military. ... But the senators who sit on the influential panel are allowed to own any assets they want. And they have owned millions in interests in these firms. The committee's prohibition is designed to prevent high-ranking Pentagon officials from using inside information to enrich themselves or members of their immediate family. But panel members have access to much of the same inside information, because they receive classified briefings from high-ranking defense officials about policy, contracts and plans for combat strategies and weapons systems.

Quote:

.... Congressional experts say that such a prohibition on lawmakers would deter good candidates for office and that politicians would grow out of touch with their constituents by not sharing in the ebbs and flows of the market. Financial disclosure is supposed to bring transparency to congressional investing.

Hyperbole, exaggeration, and lies from the industry Congress.

Quote:

Originally Posted by chinaco As Consumers... we are getting scr3wed

Yes, and I wouldn't hang any hopes on Congress saving us from this.

-ERD50

[chinaco]

Quote:

Originally Posted by ERD50 ... Hyperbole, exaggeration, and lies from the industry Congress. ... -ERD50

Let's call it a draw... both have a bad track record.

But one pays the other! Follow the money to find the organizer of most business does it the govt looks the other way or worse paves the way for it to happen (on purpose)... the politicians just reciprocate on the quid pro quo.

[harley]

Quote:

Originally Posted by chinaco Hyperbole, exaggeration, and lies from the industry. The world has changed. We are doing more electronic commerce and the regs have not caught up. IMO - If currency is going to move toward electronic $... the govt needs to get more involved. Too much opportunity for abuse! In the end, some people are keen on attacking our government... but I see the bureaucrats as the lesser of two evils.

I guess this is where you and I have to agree to disagree. Businesses at least have the incentive of profit to keep them honest. The bureaucrats have no skin in the game, and nothing at all to keep them honest. And Congress actually has reverse incentives, being for sale to the highest bidder. And that never seems to be the little guy (us) that you seem to assume they are working for.

[chinaco]

Quote:

Originally Posted by harley I guess this is where you and I have to agree to disagree. Businesses at least have the incentive of profit to keep them honest. ...

I am not a shill for our politicians... they deserve all of the scorn people can put on them.

Without getting too far out there... Much of the collusion originates from some interested group... In this case the fin services industry... hoping to continue to profit big.

Businesses only incentive is profit. They will (most will) push the limits of the law to their advantage (at your expense). They are just doing what they do! The problem is something like this situation is buried in all of our commerce.... In the early days they enjoyed a little more discretion to take excess profits to build an industry. The industry is built.... time to ratchet back their discretion... lord knows they won't stop until somebody screams about it.

If the regulators are successful in lowering the fees... no one would object to you sending VISA/MC and your bank a check yearly if you want to pay them to make up the difference.