TELL CONGRESS TO SUPPORT THE CREDIT CARD FAIR FEE ACT - HR. 5546
Merchants Continue to See Steep Increases in Credit Card Fees
Posted May 8 2007 12:07 pm | Comments (19)
Both Visa and MasterCard have recently changed their interchange rates and categories. Visa even acknowledged that the change represented a 0.6 percent increase in the overall interchange rate average. While that may not sound like a huge increase, it translates into millions of dollars in additional fee income as card purchases, many made on pricier high rewards cards, will likely eclipse the $2 trillion mark this year. So even a slight increase in the interchange rate translates into millions more for the card companies and their member banks even though there is still no clear reason for the rate hike in the first place.
In fact, the National Association of Convenience Stores (NACS), which keeps data on the costs of card acceptance in the convenience and petroleum marketing industry, reported in April that the cost of card acceptance for their industry increased from $5.4 billion in 2005 to $6.6 billion in 2006. That's a 22 percent increase in fees for their industry in just one year! With the new 2007 rates, one can only imagine what the tab will be in 2007. What they do know is that the card companies make more in fees from the convenience store and petroleum marketing industry than the industry itself will make in pre-tax profits. According to NACS, pretax profits for the industry were only $4.8 billion in 2006, marking the first time card costs exceeded industry profits. You have to wonder what's going on here.
If you're experiencing the same pressure from the ever increasing cost of accepting card payments, or unreasonable rules dictated by Visa and MasterCard, we'd be interested in hearing your story. Click on comment and let us hear from you.
Comments
At one of our stores for one month our credit card fees are $14,792.08. This store has a GROSS income of $19,927.32. That leaves a little over $5000.00 to make payroll, pay utilities,rent, insurance, building repairs. Needless to say we lost money. The credit card charges are more than double the labor expense for this store. We can’t win with the ever increasing credit card fees and ever shrinking gas margins. Something has got to be done or we will see less and less Americans operating stores and then the government will get to suffer with us because the “new americans” don’t report all of thier sales and payroll taxes, which impacts everyone.
We also have a chargeback issue. If someone uses pay at the pump and chooses credit, they can have the transaction charged back and we have no recourse to take to fight the chargeback.
Posted May 8 2007 12:07 pm | Comments (19)
IN 7 YRS OUR SMALL BUSINESS HAS SEEN CREDIT CARD FEES GO FROM LESS THAN 2% PER TRANSACTION.. PERIOD.. NO OTHER CHARGES AT ALL TO 3.25% PER TRANSACTION PLUS A PER TIME CHARGE PLUS A YEARLY FEE PLUS A MONTHLY FEE EVEN THOUGH TOTAL TRANSACTION AMOUNT HAS TRIPLED
Every time we get a crdit card offer in the mail that offers -free- something, I know its me thats paying for it
Posted May 8 2007 12:07 pm | Comments (19)
At the present time we are makeing a dime on our gas and fuel. Of that dime six cents goes to the credit card companies and four cents for gross profit. In the event we get a check that’s is not rubber or that old fashion stuff they call cash we do a little better. But as a hard working American I don’t see how we are going to continue to keep jobs for our employees and our families with four cents. The profits from inside the store will go just so far to cover the overhead and the taxes, yes taxes. I did say I am an American.
Posted May 8 2007 12:07 pm | Comments (19)
Check out a company called http://www.pesystemscorp.com
The are independent from any processor and work with merchants to lower their credit card fees.
Posted May 8 2007 12:07 pm | Comments (19)
While Visa and MasterCard receive the lion’s share of merchant processing fees, many merchants pay a much higher margin to their processor than they should, too.
Pricing structure: A bundled rate structure is always beneficial to the merchant processor and not the merchant. Visa and MasterCard have over 300 different categories between the them - if a merchant only sees 6-8 categories like discount, mid-qualified and non-qualified, that merchant can expect that rates are rounded up and that they are paying a premium for their services.
Qualifications: Credit cards that are processed improperly are assessed a higher rate. Many merchant processors do not assist their merchants in properly qualifying sales.
Special Programs: Visa and MasterCard have multiple programs in place that offer discounts to certain types of merchants. These programs can save merchants as much as 60% or more depending on their profile. Most merchant processors do not actively notify their customers of these programs because they do not benefit the processor.
Savings realized by processing credit cards efficiently are usually much greater than the difference between any two merchant processor’s “discount” rates. Merchants that investigate their program thoroughly will have an opportunity to pay as little as possible to Visa, MasterCard and their merchant processor.
Posted May 8 2007 12:07 pm | Comments (19)
We also are in the retail fuel business…most of our sites are pay at the pump…with $3.00 retail gasoline the credit card companies collect from $.09 to $.12 cents per gallon for every gallon we sell….our margins if we stay competitative are only $.07 to $.09 cents per gallon…we can’t stay in business with the cost of equipment and labor…Something has to be done…
Posted May 8 2007 12:07 pm | Comments (19)
Usary rates in Illinios are 9 % .I was not paying attention and then my rate was at 29 % with Chase .i talked to a young man in the bank locally and he said to talk to another # they sent a form letter stating after 6 mo. of payments they would reconsider. I have had an account with them for 30 years I have never been a problem payer. I NEED HELP. we have a lot of labor problems up here and I have had problems with people in my personal financial business with that bank. They bounced a lot of checks one time and did I get anything but a letter of apology—- TAKE THAT TO THE BANK. How do I get someone to pay attention and lower those rates and drop some fee’s.
Posted May 8 2007 12:07 pm | Comments (19)
Hi
Thank You for this web site it helped me.
I used a promotion check from a creditcard. There were fees that I did not know about so I returned the money I used not including the fees.
NO where on the promotion did it say there were extra fees. For 2 months I tried to settle this on my own but the creditcard company said that is their policy they can’t help me. While the interest kept going up each month. So I paid them all the fees and interest fees. I went on this site and e-mailed my Congress.
Like it said Tell the Congress you angry.
So I did and in about 6 weeks I received a refund check from the creditcard company. YEA
Thank YOU ALL
Posted May 8 2007 12:07 pm | Comments (19)
Dear All,
There is something that most of you are missing. When you sign up for a Merchant Account, you are not contacting Visa or MasterCard. You are talking to individual processors. Companies like First Data, Cardservice International, Heartland, and Paymentech are all processors. True, Visa and MasterCard charge their Interchange fees, but a lot of the fees are charged by the individual processors.
Of the percentage that you are being charged, less than .10% goes to visa and MasterCard (.095% to MC and .0925% for Visa), no matter what card you charged. the banks receive most of the rest, which they justify based on the fact that they have to deal with the customer not having the money to cover the bill and they have to extend this line of credit to the customer.
While we all sit here and complain about these exorbant costs, please take into consideration that the credit card industry is responsible for more than 40% growth in retail sales. It is a proven fact that stores which accept credit cards do between 40% to 75% more business than their cash-and-check only counterparts. If you had the option to run a store with $20,000 incoming every month and no Interchange fees, or to run a store with $30,000 incoming every month, and an average of 2.25% going towards Interchange, what would you choose? You would be paying $675 to do $10,000 worth of extra business.
The reasons why businesses which accept credit cards do better than others is because people spend more when it’s not their own money. If you have $100 in cash, you aren’t likely to spend all of it, because you can see the money leaving your wallet. If there’s a credit card involved, most customers don’t think twice about spending hundreds, or even thousands, of dollars. Credit card debt is at all time highs for a reason. People are spending money they don’t have. If this wasn’t available to them, you- the business owner- wouldn’t be doing too much business.
Another little issue I have is how the attack on Visa and MasterCard is justified by the fact that they have the lion’s share of the industry. Did you know that american Express charges a standard 3.25%, no matter what? For charities, they lower that rate to 2.25%, which is still .5% higher than Visa and MC charge for qualified transactions. Discover has a different system. The larger the transaction, the lower percentage they take. Their rates START at 2.52% for transactions of $20 or less, and drop to 1.69% for sales over $150. 1.69% is still higher than Visa’s qualified fee.
Now for the individual cases. To the business owner who paid over $14,000 on $19,000 worth of credit card sales, I have a very simple solution for you. Switch yuor processor. You paid about 75% of your sales to these fees, and it didn’t go to Visa and MasterCard. You may have a problem if you are a branded gas station, as the brand very often has it’s own processing and doesn’t allow you to switch. My suggestion then would be to switch brands. To the owner who’s fees are now 3.25% plus annual and monthly fees, again, switch your processor. Visa and MasterCard do not charge those fees. You are getting ripped off by your processor.
To the person who gave all that information about bundled rates, you are right- for the most part. Not always do bundled rates benefit the processor. Usually they do, but not always. The reason why merchants prefer this system, is because they can understand it. they pay one of 3-5 different rates, and that’s it. With the Interchange-plus system, they see as many as 150 different fees for the different types of cards. Most business owners don’t have the time, nor the patience, to figure out what everything is.
My final suggestional to all of you is to call up a Merchant Service Provider and try to get better rates. It won’t help the Interchange issue, but it IS a temporary solution. If anyone would like to ask me more questions or to see how much money they can save, feel free to contact me either at 866-602-0996 x6534 or at (JavaScript must be enabled to view this email address).
Good luck!
Posted May 8 2007 12:07 pm | Comments (19)
In response to the explanation as to what banks do to earn their portion of the charges, they also participate in other programs such as “Credit Protector” that in my opinion are robbing americans blind. Even though you give an eloquent explanation, programs like credit protector invalidate your position.
If you would like to learn another way in which the credit card companies are making a TON of money, please check out my website, http://www.shareamillion.com.
Page two deals with Credit Protector.
I also offer a solution to the growing credit card debt that is occurring all over the world on page three of the website.
Posted May 8 2007 12:07 pm | Comments (19)
With all due respect, Credit Protector has nothing to do with the supposed problem of Interchange and credit card processing fees. Credit Protector is a way the banks make money off the consumer, where the credit card processing issue is a complaint of the merchant. There are hundreds, if not thousands, of different ways that banks make money, and not all of them make us happy. That is a completely separate issue.
Posted May 8 2007 12:07 pm | Comments (19)
I was responding to the comment that the banks make very little on merchant services. As you say, the banks seem to make money at every step, but if every one only looks at their own situation and not the bigger picture, the banks win by dividing and conquering.
Posted May 8 2007 12:07 pm | Comments (19)
I don’t see where it says that banks make very little off of merchant services. I DO see where it says that Visa and MasterCard only make less than .10%. I DO see where it says that the banks justify the costs for extending a line of credit to the consumer. I don’t see where it says that it’s right…..
Posted May 8 2007 12:07 pm | Comments (19)
At the present time we are makeing a dime on our gas and fuel. Of that dime six cents goes to the credit card companies and four cents for gross profit. In the event we get a check that’s is not rubber or that old fashion stuff they call cash we do a little better. But as a hard working American I don’t see how we are going to continue to keep jobs for our employees and our families with four cents. The profits from inside the store will go just so far to cover the overhead and the taxes, yes taxes. I did say I am an American. Genuine Forex Trading Online
Posted May 8 2007 12:07 pm | Comments (19)
I would suggest the merchants all get together and offer our new transaction system to customers using their mobile phones as debit/credit cards and for ID authentication.
No fraud, No ID theft and low transaction fees of a few cents per transaction.
Most credit card holders also own a mobile phone, it’s easier and safer for consumers. The customer’s spend is deducted from their credit/debit account directly from the customers bank, avoiding interchange fees.
The merchant would be better off all round and you don’t require any new infrastructure. A web connection is all that is required for lower cost transactions.
There are enough merchants and the banks would be left back where they started, as banks.
Get together and you’ll take the wind out of the sails of fraudsters and banks.
Posted May 8 2007 12:07 pm | Comments (19)
I think it’s all very unfair, we deserve a better explanation. What is the real fundamental for rising the fees? I know that a small fee increase can generate millions of dollars, this is why I am doubtful about the real legal basis for that. I found something very interesting, you can see it right here http://nmhc.us/2008/04/28/no-fee-balance-transfers-save-you-hundreds-of-dollars-a-year-in-interest/, I believe this might be a reliable option for those who complain about high fees.
Posted May 8 2007 12:07 pm | Comments (19)
With the continuing slump of housing sales causing more defaults and foreclosures, and job growth continually shaky, consumers need help from their debt.
Posted May 8 2007 12:07 pm | Comments (19)
If the banks wont start using no fee balance transfers I think that people will start saving money in their socks again.
Posted May 8 2007 12:07 pm | Comments (19)
I suppose I should consider twice now applying for the right credit card. I should get a financial advice because I intend to apply for a credit card at [url=http://www.mycapitalonecard.com]http://www.mycapitalonecard.com [/url] and it would really help to know what are the most important aspects to consider.
Posted May 8 2007 12:07 pm | Comments (19)