CardFlash News Briefs: NCR (Silver); UNIONPAY (promotion); BRAINTREE (JotForm); and MPC (fees).
Merchants Payments Coalition is taking Visa to task asking why Visa refused to consider lowering interchange fees even if fraud is reduced after merchants invest billions in new security technologies.
The Merchants Payments Coalition (MPC) a/k/a UnfairCreditCardFees.com, says debit-card swipe fee reforms have saved consumers nearly $18 billion over the past three years and merchants have created more than 100,000 new jobs.
Visa Europe is in some hot water today with the European Union for restricting competition and raising prices for consumers with “swipe” fees. This after the European Union has been fighting Visa and MasterCard for ‘exorbitant’ swipe fees the associations charge merchants. Having brought antitrust charges against Visa Europe in April 2009, less than a week after suing MasterCard, the European Union is now anticipating fee reductions for European consumers, which- by the way- are less than one-third of the fees in the United States.
MoneyGram, a leading global money transfer company, announced it has expanded its relationship with Speedway LLC (Speedway) with the addition of MoneyGram xpress to the convenience store chain’s 1,460 locations across the Midwest. Speedway will also continue to sell MoneyGram money orders under the new agreement. The MoneyGram xpress service allows customers to purchase in-lane, a pre-paid money transfer package in a predetermined and defined dollar amount. These packages can then be redeemed online at moneygram.com/xpress or by phone at 1-800-987-9859 to complete the money transfer. Recipients of transfers originated via the MoneyGram xpress service can pick up their funds at any MoneyGram agent location that offers money transfer services.
The Smart Card Alliance Contactless and Mobile Payments Council will
continue educating on chip card technology security benefits in the
hopes of reducing fraud in the U.S. payments industry. Resources on this
continued education include a position paper, End-to-End Encryption and
Chip Cards in the U.S. Payments Industry. With contactless cards and
acceptance terminals already widely deployed in the United States, the
paper discusses the fraud-reducing benefits of contactless chip cards.
The embedded dynamic cryptogram with each transaction stops card
counterfeiting, a major source of fraud, the increasing adoption of
which builds on infrastructure already in place to meet interoperable
EMV standards. The Contactless and Mobile Payments Council is made up of
over 120 individuals from 45 organizations, who welcome its new Chair,
Charles Walton of INSIDE Contactless, new Vice Chair, Ron Pinkus of
Giesecke & Devrient and new Secretary, James F. Lock III of JPMorgan Chase.
The Smart Card Alliance and Mobile Payments Council have rolled out new
tools for merchants
to maximize ROI when accepting contactless and mobile payments.
Merchants can now access a model for accepting contactless payments.
The model asks merchants to enter data specific to their business, such
as revenue, store information, payment transaction information,
transaction speed, expected changes in
transaction volume and speed after contactless payments are accepted,
and implementation costs. With this information, the model then
calculates an ROI based on increase in revenue, savings from fewer
chargebacks, reduced cash handling and improved operational efficiency
and incremental costs of implementing contactless payments. Merchants
also have access to an online discussion forum to interact with and ask
experts questions and post comments about contactless and mobile payments.
The House Judiciary Committee’s passage of the H.R. 5546 “Credit Card
Fair Fee Act” of 2008 is getting a positive reception from merchants.
The Credit Card Fair Fee Act will allow merchants for the first time to
be included in the negotiating process with Visa and MasterCard,
separately with their banks, to come up with a voluntary agreement on
interchange rates and terms. Interchange fees amount to approximately
$2 of every $100 spent using credit cards. Credit card interchange fees
cost Americans $42 billion last year and inflate the cost of virtually
all retail goods, but especially skyrocketing food and gasoline prices.
Currently, credit card interchange rates are set in secret, hidden from
view, and exclude merchants from the negotiating process.
A recently conducted national poll has found 77% of voters favor the “Credit Card Fair Fee Act” bi-partisan legislation, demonstrating concern about credit card industry fees, policies, and practices. Meanwhile, 51% majorities of Republicans and Democrats “strongly” support the passage of the Credit Card Fair Fee Act while 65% say credit card companies don’t share their business values. Costing Americans $42 billion last year, credit card interchange fees amount to approximately $2 of every $100 spent using credit cards, inflating the cost of most consumers goods and services while the average American family will pay upwards of $427 in hidden credit card interchange fees in 2008.
The Merchants Payments Coalition says Visa’s announcement that it will reduce fees on gasoline transactions may actually result in higher fees for gas station owners. The National Association of Convenience Stores says the changes will raise fees for those transactions under $60 for those customers using regular Visa credit cards without a rewards program. The MPC says that on debit card transactions, the cap on interchange may only apply to gasoline purchases of more than $97.50. That is a small number of transactions, especially because Visa banks reserve the right not to give gasoline retailers anything more than $75 on a sale.
The Merchants Payments Coalition said Durbin’s Senate legislation will stop the price-fixing and create a transparent market-based process for credit card interchange fees. The MPC says late last month, Senator Durbin, along with Senators Snowe, Kohl and Specter, sent letters to Visa and MasterCard asking for a detailed explanation of the process by which they set their interchange fee rates. According to a statement by Senator Durbin, responses by the card companies failed to adequately explain how they decide what interchange rates to charge. The MPC a/k/a UnfairCreditCardFees.com, is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses.
Demonstrating adamant support for the H.R. 5546 the “Credit Card Fair Fee Act,” aiming to reduce card interchange fees, representatives of the National Association of Convenience Stores and the Merchants Payments Coalition contributed to the House Judiciary Committee Hearing for the Antitrust Task Force. The bill is being rallied as a means of ending card industry price fixing, high card interchange fees and Visa/MasterCard’s immense profit from the fees. Statistics from the MPC show over 60% U.S. convenience stores paid $7.6 billion to the credit card industry compared with a total pre-tax profit of $3.4 billion while the average family paid nearly $400 in interchange fees for 2007. Meanwhile, the American Bankers Association, Mastercard and the Electronic Payments Coalition urged Congress to oppose H.R. 5546 as an intervening price control that will eventually result in less competition, fewer consumer choices and reduced affordable payment card options. In place of a free market balance, the bill would impose price controls thanks to politically-appointed bureaucrats whom determine the rates and fees. This in turn would limit interchange revenue to electronic payments products/services, such as rewards programs, force issuers to limit credit and raise payment card fees. The global electronic payments system connects over 16,600 banks and credit unions to more than 29 million merchant locations for the acceptance of 1.9 billion cards.