Visa Gains Customers By RAISING Fees

New York Times:

Competition, of course, usually forces prices lower. But for payment networks like Visa and MasterCard, competition in the card business is more about winning over banks that actually issue the cards than consumers who use them. Visa and MasterCard set the fees that merchants must pay the cardholder's bank. And higher fees mean higher profits for banks, even if it means that merchants shift the cost to consumers.

Seizing on this odd twist, Visa enticed banks to embrace signature debt -- the higher-priced method of handling debit cards -- and turned over the fees to banks as an incentive to issue more Visa cards. At least initially, MasterCard and other rivals promoted PIN debit instead.

Read the whole story: New York Times

Comments

[Bill201]

01:23 PM on 01/06/2010

Shopping with check or cash, it doesn't matter.

While working on behalf of The Credit Card Con, we have written about how it is really those who use cash and checks that are hurt most. You deal with the increased prices because small businesses need to compensate for the interchange fees!

Cards are convenient and more people are using them...fees should be coming down!

Check out TheCreditCardCon.com for more info...

[ChangeToday]

01:01 PM on 01/06/2010

Shopped at Trader Joe's yesterday and decided to write a check instead of using my debit card. It's time to STOP using the DEBIT and CREDIT cards!!!

[xenophrenia]

08:56 PM on 01/06/2010

They are raising fees on checking accounts too - so that's not safe either. I will use PIN when I'm sure that the machine wasn't tampered with. There are swipers that can get your information and cameras hidden to get your PIN #. I don't like the idea, say, of using my PIN at a gas pump outside where it may have been tampered with. There needs to be tighter regulations on these theives that they can't worm their way around.

[ibsteve2u]

02:59 PM on 01/05/2010

There is something to be said for consumer boycotts.

The way it works now, when America just bends over with a resigned sigh for corporation "y", that corporation takes a chunk of the profits they extort and turns right around and invest it into payments for new or gently- or well-used Congresspeople.

Buying the legislation - e.g., private taxes, such as mandatory insurance for this, that or the other - they need to harvest more profits to buy more Congresspeople to buy more legislation...

The head of the snake in America is ALWAYS the money stream; interrupt it, and the snake panics...

Interrupt it long enough, and the snake dies.

[GlenRast]

12:40 PM on 01/05/2010

The solution is PAY CASH. Only use a CC card as much as it takes to keep the account active and pay it off every month when you do use it.

[Hank10303]

12:47 PM on 01/05/2010

And if they increae the rate you can call them and say THANKS BUT NO THANKS because you maintain a zero balance.

[kk78]

11:26 AM on 01/05/2010

ugh im so tired of this cr ap .. won't they just let us live our lives without it costing so dang much to live?

[Hank10303]

12:48 PM on 01/05/2010

If we lived without depending on credit we could very well live our lives without it costing us. I remember what my mother use to always tell me. Only borrow when you must and other times do without if you can.

[falco]

12:48 PM on 01/06/2010

They have to take YOUR money to have THEIR money. They have to take YOUR time so they can have THEIR time. Its a form of slavery. The good news is we are finally realizing it. Silly them, if only they hadn't gotten so greedy, many would not have noticed. But when it comes down to working 60 hours a week, sometimes an extra job on the weekends, just to put food on the table and a roof over your head, people start to notice. God provided everything on this earth for us. Some group decided to make it all their own and then turn around and rent t to us. (I say rent, lest you think you really own anything) Feudalism never left.

[No2bailouts]

11:22 AM on 01/05/2010

21 century usery
“hat tip to http://iamned-website.blogspot.com/”

[CompashCat]

10:48 AM on 01/05/2010

Live more simply.
Stash a bunch of cash in savings.
Don't use credit cards.
It isn't that hard to do.

[Hank10303]

12:49 PM on 01/05/2010

DITTO

[DebtNavigation]

10:00 AM on 01/05/2010

These cards are going to be much less ubiquitous in the coming years. Both Moody's and Fitch agree that chargeoff rates for credit cards will exceed 11% through the summer. There are going to be a lot fewer cardholders, and the remaining ones aren't going to be charging much at 30% plus rates. A lot of credit card banks will follow Advanta Bank (once the 11th largest) to the graveyard.

A debtors revolt is brewing courtesy of YouTube phenom Ann Minch: http://www.debtorsrevoltnow.com
In Mexico, the "el Barzon" debtors revolt movement threw out the 60+ year ruling party.

If you've been pushed under however, you need help now. My eBook "Debt Hope: Down and Dirty Survival Strategies" provides that help. http://www.myhopeseries.com or on Amazon for the Kindle.

It's 140 single-spaced pages with 180+ footnotes hyperlinked to source material and other help.

[Grada3784]

09:16 AM on 01/05/2010

There is a reason that John Dillinger and Bonnie and Clyde were looked on as folk heroes by some in their day and this sort of thing is it.

[Dianekkdi]

08:42 AM on 01/05/2010

My merchant machine still defaults to credit.

I was at my Vetrinarian yesterday. She has a new little gizmo that you slide checks through. It wouldn't take my check for some odd reason so neither would she. PNC seems to be an ongoing difficulty in most everything I do with it. They are a good argument for Credit Union switch. My debit card operated just fine.

I don't recommend these check machine things. They charge monthly and they glitch. They charge montly.

[lkim65]

04:31 AM on 01/05/2010

Retailers need to be more like the ones in NYC. The mom and pop businesses there (which are the majority) are cash only...no debit or credit. Saves them money and therefore, the cost doesn't get passed to the consumer.

[Graywolf48]

09:20 AM on 01/05/2010

I'm sure those retailers are missing sales. I owned a small ceramics gift shop many years ago and had to accept checks and credit or lose sales. Of course I had to raise prices due to the increased cost of business, but I gave a discount to "cash" customers. A lot of people don't like to carry cash. I pay by check or credit card. If I pay by credit card, I immediately electronically pay that charge. On bigger purchases, I'll ask the merchant if there is a discount for cash, if not I pay by plastic. Also, with cash deals I've been burned, with plastic, the CC provider will often pressure the merchant to make good. Not everything is black or white, that includes credit and cash.

[elfNW]

11:11 AM on 01/05/2010

Personally I use cash, check, or online bill payment for everything that does not almost require a credit card. Examples are online purchases, airline tickets, an rental cars by example.

The problem is not with credit cards, or their fees or interest rates, it is that people have been putting them to the wrong use. PURCHASING ITEMS THAT THEY JUST CAN'T AFFORD. If one absolutely cannot differ ones gratification until one actually has the money in hand to pay for it and so must borrow money to make the purchase there are much better avenues to borrow funds than a credit card.

[wilray]

01:42 AM on 01/05/2010

I only use debit cards - Mastercard and Visa. But for years my preferred card is a Mastercard that I sign for. Each month my card issuer throws money back into my account for purchases I've signed for. Of course this works out better for me than paying cash.

It used to be that the merchant machines would default to credit, not they default to debit. So each time, I have to switch it back to credit i.e. signing. Once at the grocers, through self checkout, I punched the touch screen for credit. However, when I tried to complete the transaction, they system asked for my pin number which I absent-mindedly input, so it rang the transaction as a debit. I learned to be on guard when ever I am asked for a pin. No pin is necessary when you sign. So I learned that when it ask for my pin to ignore it and hit the enter button, the transaction is then rung as credit, and I get my rebate.

[WaimeaWidow]

01:03 AM on 01/05/2010

Oh goodie ... I'm so looking forward to making the super-rich even richer. And I'm doubly blessed because my car is comfortable enough for sleeping in. Life is good!

[Graywolf48]

09:29 AM on 01/05/2010

You should know by now, WaimeaWidow, that the game is rigged. The house (the rich) always win. Always. It's only with government regulation that the playing field is leveled a little, but the regulations have been gone or worthless for decades. Credit reform with no interest rate caps, health reform with mandates to buy private insurance and no public option, finance reform in name only. The truth is, he who has the gold rules. I don't see that fact changing anytime soon.

[breakingpoint]

12:40 AM on 01/05/2010

So instead of Bank Robbers saying, "Stick Um Up!"

The Banks are Saying to Retailers and Consumers, "Stick Um Up!"

According to the history books they used to hang bank robbers, today they just put them in prison.

So, when do these guys start going to prison?
Can you put a corporation in prison?

Seems to me if corporations are allowed to lobby Congress we should be able to arrest the corporation just like a person no?

[lastep]

12:29 AM on 01/05/2010

VISA has to be an invention of the Mafia. They are the only people smart enough to get a "percentage" from those that use the product...........take the product.............and then make you pay when you want better stuff to take the "product".
Anyone in a small business knows exactly what I mean.

[James Shanks]

12:56 AM on 01/05/2010

As an owner of a few businesses, brick & mortar and internet/moto, I know precisely what you mean.

[CAHertzfe]

02:33 AM on 01/05/2010

I do too. I just got a letter from my merchant service provider that the Payment Card Industry Data Security Standards (PCI-DSS) fee rose from $120 to $175 per year. What the PCI-DSS is answering a questionnaire and forking over the dough. It has absolutely nothing to do with security.... its all about the FEES!!!!!