Visa, Mastercard may allow retailers to charge customers more to use credit card in lawsuit settleme

[dkf]

Retailers will be able to charge their customers more for paying with credit cards under the terms of a multibillion-dollar settlement announced late in the day Friday.

MasterCard, Visa and major banks, including JPMorgan Chase and Bank of America, agreed to pay more than $6 billion to settle accusations that they engaged in anticompetitive practices in payment processing.

The settlement is the culmination of a lawsuit brought in federal court on behalf of roughly 7 million merchants in 2005.

Merchants said that the companies engaged in price-fixing to charge high fees for processing credit and debit card payments.
In addition, the merchants claimed, the payment processors unfairly banned stores from compelling their customers to use less expensive methods of payments like cash and checks.

http://www.mercurynews.com/business/ci_21071618/visa-mastercard-may-allow-retailers-charge-customers-more?refresh=no

[MadHound]

1. Another reason not to use credit cards,

Cut them up and throw them away, your life will be so much better.

[no_hypocrisy]

2. Unintended consequences:`

1. Less payments by credit cards (read, less profit on late fees, interest)
2. More payments by:
a. Cash
b. Checking accounts

[dkf]

6. OR...more indebtness for people without savings.

Wow is it going to be a bummer to live on credit cards or what?

Maybe retailers will have to be more check friendly though. My check got rejected by home depot because they said there were too many checks written on the account. Well Duh I was doing a renovation of a house. Turns out they couldn't even see the balance, just knew there was activity.

[HiPointDem]

25. if people can't use credit, how will they become more indebted? loan sharks?

[OneTenthofOnePercent]

7. The stores don't care about any of that... they are the ones that want to charge extra.

Credit card companies already know the consequences you outlined. They specifically forbid preferentially charging more for credit transactions for those very consequences - to make credit card spending more convenient. Credit card companies WANT their credit card purchasers to pay same-as-cash.

It is the RETAIL STORES that want to charge you/me more for using our credit cards. When you hold a retail credit account to accept credit payments, a small percentage or fee is charged to the business for the ability to process credit payments through the creditors (Visa, Mastercard, AmEx). Since the rules forbid charging customers for credit purchases, the retail stores are left to pay this credit processing bill - eating into their profits.

It appears that the GREEDY retail stores can now have you and me pay their creditor fees for them. Lucky us. I don't care if it's a national chain store or a local mom-&-pop store... if I'm at a register and see they are trying to charge me a "fee" for using a card, I'll walk out the store and leave all my shit right there at the register for them to restock. Fuck them.

[kestrel91316]

8. As a small business owner I am very happy to now be able to tack on

$2 to every purchase paid with plastic to cover the fees the processors charge me. I'd much prefer cash anyway. Credit cards can be reversed and then you have to FIGHT for payment, and checks can bounce. Cash is king, especially for us itty bitty guys.

[OneTenthofOnePercent]

9. I've seen alot of stores spout the "cash is king" line and all it means to me is...

easier to fudge numbers and underpay business taxes. I've worked at a few small business that would gladly offer a few percent "cash discount". Why? In addition to dodging a credit transaction fee, it becomes EXTREMELY easy to simply not pay taxes on that transaction. I was flat out told this by the managers and owners of the places.

I even asked my father (a small business owner that I was never involved with) when I learned of this practice... he confirmed it was 100% true and "off-the-book" sales are always preferred. Even when the costumer asking gets their small "cash discount", his businesses "off-the-books" profit margin is even higher. He said this is essentially the same thing as paying employees cash "under the table", except the customer is (unknowingly) paying the business under the table.

I will say this, if I have to go to a store thinking about paying in cash... then my purchase amount may be less because I'm unwilling to spend more than I have on me.

[kestrel91316]

15. Cash is legal tender for all purchases per US law. I take a dim view of anyone who opposes it,

because they tend to be busybodies who want to know where every single non-corporate person spends every fricking penny they have.

I report all my income. I give every client a receipt.

Are you seriously claiming that all cash gets left unreported??? Because that's a slanderous lie against all the HONEST business owners out there.

[Zalatix]

28. Not all business owners abuse the system, but this loophole leaves the system open for abuse.

[marybourg]

27. Except that the customer is more likely

to make an impulse purchase if s/he can charge it than if s/he has to part with actual cash money. That's what merchants discovered in the 60s at the dawn of widespread credit card use. That's why they were happy to pay a fee to have the cards processed. And that's what you and all other merchants will rediscover if the rules change.

[Swede Atlanta]

29. I disagree with your premise that it is the GREEDY retail stores......

that are trying to charge the consumer more.

A business has various costs - inventory, staff, utilities, insurance, retail space and the cost of providing a convenient method of payment for their customers.

Credit card companies milk both sides of the credit card payment. They charge the retails up to as much as 6% (believe Amex charges that for some retailers) and then charge interest to the cardholders on balances. I don't have any statistics but I would assume that most cardholders carry at least some balance.

So, let's say a business prices a shirt at $50.00. That price must cover the cost of the inventory and all of the other costs including the cost of the payment transaction.

Let's assume the credit card rate is 3%. The store incurs a cost of $1.50 for every shirt they sell. Let's say they sell 20 shirts a day. That is $30.00 simply to accept credit cards for the convenience of the customer.

I have always maintained that merchants should be able to charge more for credit card transactions. The charge should not be excessive but should compensate them for the additional cost including administrative charges.

[dipsydoodle]

3. They should be able to so do

to recoup Visa and Mastercards fees. Why should retailers suffer lower revenue.

[WillowTree]

19. Because the ability to pay by credit card attracts customers.

[dipsydoodle]

21. But the retailers do have that choice.

Some of us here are old to remember when there were no such things as credit cards. We managed.

[bemildred]

4. Good.

Almost as big a racket as "Health Insurance".

[SoCalDem]

5. Cash discount is a good thing.

I usually shop locally, and I always ask for, and usually get a cash discount..

It's especially good when car-shopping & furniture shopping.. Show them the actual cash & they will always make a deal

[FarCenter]

10. Will merchants charge differently for credit, signature debit and PIN debit transactions?

[dkf]

11. Apparently they can charge up to a percentage calculated yearly.

Under this settlement, retailers will be able to “surcharge” up to a cap that is established yearly according to this simple formula:

The sum of the system-wide average effective U.S. domestic Visa Credit Card interchange rate plus average network fees (defined to include network set fees to acquirers or merchants associated with the processing of a transaction or with the acceptance of the network’s brand) as of the Preliminary Approval Date or as subsequently adjusted in accordance with this bullet.


http://www.forbes.com/sites/danielfisher/2012/07/14/6-billion-visa-settlement-frees-consumers-to-pay-more/2/

[Romulox]

13. Who would shop at such at store? Likely they will take advantage of geographically isolated people.

I don't know any middle class people <50 who carry substantial amounts of cash. Mostly the very poor engage in the cash economy, at this point.

[FarCenter]

16. Most local gas stations give a dime discount for cash

Which is around 3% discount for cash.

So it pays to use cash unless the credit card has a 5% cashback reward for gas stations.

[Romulox]

23. Ah, but there are other (hidden) costs. What about about the time it takes to go to the bank?

What about the time it takes to pay the cashier? What about the risk of theft that comes with carrying cash around?

I get 2% cash back at gas stations, so the 1% savings isn't worth the hassle to me.

[FarCenter]

17. This might pose an interesting challenge to American Express and Discover.

[Romulox]

12. Hooray! Higher fees for consumers! nt

[WillowTree]

20. Exactly.

[Fortinbras Armstrong]

14. Ever tried renting a car without a credit card?

Essentially, you can't.

[bemildred]

18. Prepaid card ... nt

[RebelOne]

22. Car rental companies will take debit cards.

I know because I checked with rental companies in my area, such as National and Hertz.

[dkf]

24. Watch out how much they take from your account.

When you first give the card they estimate so many days of rental. That may bounce other items. Then at the end of the transaction they reverse it and use the correct amount. If you run close to 0 balance this is a great way to get messed up.

At least this used to be the way they did it.

[Mika]

26. Same thing at gas stations. eom