I am going on the prior post having an unfortunate word in it's title, an ugly, ugly word.
This subject goes to the main topic of this section. QUOTE
When grocers decide to accept Visa and MasterCard in their stores, they must agree to abide by all Visa and MasterCard rules and all future rules, said Miller. Visa and MasterCard can change the rules at any point and are not obligated to inform the merchants, FMI said in a statement commending Welch and Shuster.
Also, Duncan warned that credit-card companies are in an "arms race" to increase interchange fees and urged passage of the legislation, which would put rules governing the fees under the jurisdiction of the Federal Trade Commission (FTC).
"There is an arms race to create cards with higher fees and more bells and whistles," he said. "The market checks that would normally exist to curb this escalation in fees are diminished because the card companies know that every merchant is required to take these expensive new cards or lose their ability to accept any cards."
The Welch-Shuster bill would require credit-card companies to disclose interchange rates, terms and conditions and give the FTC authority to review interchange and prohibit any practices that violate consumer protection or anti-competition laws. Merchants would be allowed to give cash discounts and set minimum credit card purchase amounts, and could choose which credit cards to accept.
The bill "would allow the most expensive cards to be refused, and while we expect that few merchants would actually refuse cards if this were passed, it would make the card companies think before they reflexively introduce cards with higher fees," Duncan said.
"Most consumers don't know it, but every time they swipe a rewards card with its miles and concierge services, they are driving up the price of everything they buy even higher," he said. "This particularly hurts less-privileged Americans who don't have rewards cards or can't get cards at all because Visa and MasterCard rules effectively require that everyone pay the credit-card price even if they are paying with cash, check, debit card or even food stamps."
He added, "There is no regulator that reviews whether credit-card company rules are unfair, deceptive or anticompetitive. This legislation would deal with this absence of oversight by directing the [FTC] to review card company rules and prohibit practices that meet that description. That is the minimum level of protection that this market needs to begin to function properly."
Interchange is a fee averaging 2% that Visa and MasterCard banks charge merchants each time one of their credit cards is swiped to pay for a purchase. But Duncan explained to the committee that the rate can range from as low as about 1.5% for an ordinary card to 3% or more for "gold" and "platinum" cards that offer rewards like travel miles or concierge services. In recent years, card companies have created an escalating series of rewards cards—each carrying more rewards but also higher fees—and "upgraded" millions of consumers. The higher-fee cards cannot be turned down by merchants because of Visa and MasterCard's "Honor All Cards" rule.
Visa and MasterCard rules effectively force merchants to pass the fees on to consumers by requiring them to be included in the advertised price of merchandise and making cash discounts difficult; the result is that the average household paid an estimated $427 in higher prices last year, up from $159 in 2001, NRF said.
Also, Duncan warned that credit-card companies are in an "arms race" to increase interchange fees and urged passage of the legislation, which would put rules governing the fees under the jurisdiction of the Federal Trade Commission (FTC).
"There is an arms race to create cards with higher fees and more bells and whistles," he said. "The market checks that would normally exist to curb this escalation in fees are diminished because the card companies know that every merchant is required to take these expensive new cards or lose their ability to accept any cards."
The Welch-Shuster bill would require credit-card companies to disclose interchange rates, terms and conditions and give the FTC authority to review interchange and prohibit any practices that violate consumer protection or anti-competition laws. Merchants would be allowed to give cash discounts and set minimum credit card purchase amounts, and could choose which credit cards to accept.
The bill "would allow the most expensive cards to be refused, and while we expect that few merchants would actually refuse cards if this were passed, it would make the card companies think before they reflexively introduce cards with higher fees," Duncan said.
"Most consumers don't know it, but every time they swipe a rewards card with its miles and concierge services, they are driving up the price of everything they buy even higher," he said. "This particularly hurts less-privileged Americans who don't have rewards cards or can't get cards at all because Visa and MasterCard rules effectively require that everyone pay the credit-card price even if they are paying with cash, check, debit card or even food stamps."
He added, "There is no regulator that reviews whether credit-card company rules are unfair, deceptive or anticompetitive. This legislation would deal with this absence of oversight by directing the [FTC] to review card company rules and prohibit practices that meet that description. That is the minimum level of protection that this market needs to begin to function properly."
Interchange is a fee averaging 2% that Visa and MasterCard banks charge merchants each time one of their credit cards is swiped to pay for a purchase. But Duncan explained to the committee that the rate can range from as low as about 1.5% for an ordinary card to 3% or more for "gold" and "platinum" cards that offer rewards like travel miles or concierge services. In recent years, card companies have created an escalating series of rewards cards—each carrying more rewards but also higher fees—and "upgraded" millions of consumers. The higher-fee cards cannot be turned down by merchants because of Visa and MasterCard's "Honor All Cards" rule.
Visa and MasterCard rules effectively force merchants to pass the fees on to consumers by requiring them to be included in the advertised price of merchandise and making cash discounts difficult; the result is that the average household paid an estimated $427 in higher prices last year, up from $159 in 2001, NRF said.
This is a bill I of course endorse. It would break the monopoly of the CC's and make for a more competitive environment. This rule would give the merchants power to say no, and this power alone would change the costs associated with the cards. The processors would respond by making the fees more friendly for all. The banks want to encourage wide credit card use, they would not let this bill slow the use down, they would respond. The merchants and consumers would benefit by cheaper processing. The power of the merchants to set minimums would make the processor reduce the per swipe fee that is only high for the small merchants. This would enable them to afford the lower priced purchases. It is a win, win. Unless you are a processor.
As to the extra rewards fees, this is a marketing effort by banks to get you to use their cards. More like a ponzi scheme. You could say it is to encourage cards in general, but these fees are just being imposed on the merchants, and it offers little if any benefit to them. If the banks want to encourage the use of their cards, they should eat the marketing costs or at least get merchant approval. Now banks are starting to charge the card holder for their use also- double dipping. There needs to be at least some pricing pressure on these banks, we all win.
I know most people reading this would disagree with me, but I think most people in general will like this law, especially when the aftermath means lower costs credit usage.
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