US Fed mandates drastically lower debit fees

maybe credit card interchange rates will be next

[wingslevel]

See here:

[nytimes.com...]

the V/MC and large bank cartel took a serious blow yesterday. debit card fees will be coming down by about 75%.

lets hope that the similarly absurd credit card interchange fees are next in line.

[bakedjake]

lets hope that the similarly absurd credit card interchange fees are next in line.

You must not enjoy your credit card with cashback or rewards very much. How about your no annual fee card? What do you think pays for those? This legislation is pro-business but anti-consumer. Prices will not fall because of this.

I'm all for lower merchant fees too, but the government arbitrarily mandating a price for services rendered is not the way. Beware of the law of unintended consequences.

One better way to solve this problem might have been to order the clearing companies' to remove their abusive contract language that disallows discounting for non-credit/debit sales.

[RhinoFish]

it can feel good to think about the big boys getting kicked in the arse by the govt, but my mind knows the real key to a healthy ecosystem isn't big gov determining what's "reasonable and proportional to the cost of processing the transaction".

the govt should act to foster competition, so prices are forced lower through innovation and competitive pressure. just regulating profit away, damages the ecosystem, and also puts us next in line to be regulated.

[Greenbeetle]

They will find another way to get their money.

[wingslevel]

my problem with the cashback and other rewards cards is that the fees get built into the interchange fees and rammed down the merchant's throat - that's us - we have no seat at the table to negotiate - kind of taxation without representation - i wish there was a non-government solution, but the major issuers and networks are behaving like OPEC - that's not really a free market dynamic either....

[dpd1]

As much as I hate card companies, I think it's very dangerous to be making major changes in stuff right now. Whether they deserve to be there or not, everybody is in a precarious position right now. I don't think it's good to be messing with stuff yet.

[enigma1]

The thing is, you run a private company you charge as much you want for a product depending on the payment method. So charge more if they pay by cc, its that simple.

[LifeinAsia]

my problem with the cashback and other rewards cards is that the fees get built into the interchange fees and rammed down the merchant's throat - that's us - we have no seat at the table to negotiate - kind of taxation without representation

Exactly! If merchants were given the opportunity to refuse to process cards with higher fees, then the consumers would complain to the CC companies that no one accepts their cards, which may (or may not) force the CC companies to lower those fees.

So charge more if they pay by cc, its that simple.

It's not quite that simple... In the U.S., some states prohibit charging a surcharge for paying by credit card. Visa/MC also prohibit the practice. Companies get around it by offering a "discount" for cash purchases.

[wingslevel]

if i could charge "as much as i want" for my product, i wouldn't be on this board right now - maybe on something large that floats in the virgin islands

[wingslevel]

[clearing out lots of frustrations...] another beef of mine is that, with the interchange fees, it is very hard to control your costs as a merchant - my fees vary from site to site and month to month - the interchange fees are higher for international, business and other rewards cards - but - i have no way of identifying these when they order on my site - it is just a mastercard - but, of course, as we know, all mastercards don't carry the same interchange fee - so each month, the cumulative of all my fees will vary as a percentage due to the mix of card types - kind of random

[jwolthuis]

You must not enjoy your credit card with cashback or rewards very much. How about your no annual fee card? What do you think pays for those?

Allow my business to not accept those cards, and lets see how much cardholders enjoy them.

"Sorry, you need to use the *other* Visa card in your wallet to enjoy my lower prices."

[Wlauzon]

Merchant fees have been growing slowly for years, to the point where it is a signifiant expense - some cards now are over the 3.5-4% range.

The real problem is that the CC companies have piled on everything from flyer miles to Barbie dolls onto cards for their users - and someone has to pay for that. Until merchants can pass on those fees to consumers, I don't see any changes coming.

[enigma1]

In the U.S., some states prohibit charging a surcharge for paying by credit card. Visa/MC also prohibit the practice.

I can assure it is simple. It is a transaction between a customer and a merchant and how it is finalized is only up to these two parties. I can charge more for a specific card type or for all cards or charge more one customer than another. Pretty much the same as I charge for different shipping carriers.

This is not about "equal opportunity"

[LifeinAsia]

I can assure it is simple. It is a transaction between a customer and a merchant and how it is finalized is only up to these two parties.

If only that were true! The transaction is also between you and your merchant processor and between the merchant processor and the credit card company. And if you ever want to get paid, add your bank to the mix. There are rules and regulations that govern each relationship.

I can charge more for a specific card type or for all cards or charge more one customer than another.

That may be in violation of one or all of the cards that you accept. I suggest you read the Terms of Service for your processing. As previously mentioned, is also illegal in some states. If you're outside the U.S., then local laws may be different.

[jwolthuis]

I can charge more for a specific card type or for all cards or charge more one customer than another...

Besides violating the TOS of Visa/MC, how do you charge more for Visa Purchasing Card than a Visa Credit Card? You have the credit card number and expiration date, but you don't find out the interchange rate until you receive your credit card statement at the end of the month.

[bwnbwn]

Process a debit charge on your card it is deducted right then and there. Now the merchant has to wait 3 days for the merchent services to deposit it into your account. Have you ever wondered the amount of intrest these leaches are making. Debit card processed should be batched in the merchant account that same day not 3 days latter or 5 days if the card was processed on wednesday.

[enigma1]

If only that were true! The transaction is also between you and your merchant processor and between the merchant processor and the credit card company.

I do not follow you. There is no regulation to how much I charge a customer for a product or service. The moment the customer checks out the total for the order is made visible. It's up to him whether to pay for what I want or not.

[enigma1]

Besides violating the TOS of Visa/MC, how do you charge more for Visa Purchasing Card than a Visa Credit Card?

You have setup the cart so the payment and shipping is selected first then the total is calculated on your eshop. There is no issue because the total displayed is what the customer is going to pay. No hidden extras and no violations. And even between cards, the cc numbers distinguish the card type.

[jwolthuis]

You have setup the cart so the payment and shipping is selected first then the total is calculated on your eshop.

So the customer must pull out their Visa card and type in the numbers, before they even know the total of their purchase? Wouldn't they want to know how much they're paying first, before they enter their card information?

[enigma1]

So the customer must pull out their Visa card and type in the numbers, before they even know the total of their purchase?

Yes isn't that btw how most of the carts operate? First you select shipping, payment, coupons etc then you see the confirmation page.

So there is nothing new here. And the aforementioned "regulations" do not apply.

[jwolthuis]

No, most carts show a subtotal first. Once the customer enters a ship-to address, they see a final total including shipping. All of this happens before the credit card number is entered.

I don't think I've run across any cart that changes the total due after the credit card number is entered.

[enigma1]

Its totally transparent. The subtotal is displayed then the customer has to select payment and shipping and/or other options that affect the grand total. Insurance or coupons may apply to other charges and the whole process does not mislead the customer because the final confirmation page shows the final cost of the order after everything is ordered. That's before the payment gateway connection so there is nothing hidden.

There is another debate about the MAP products which is similar to this one. Again there is nothing to force a merchant how he will charge customers other than being transparent. There is a plethora of discount or surcharge methods that can apply based on the customer checkout selection, combination of products, shipping address etc.

[jwolthuis]

... the customer has to select payment and shipping and/or other options that affect the grand total.

My point exactly. I've never seen a cart where selecting one specific payment method over another would cause the grand total to change.

[LifeinAsia]

There is no regulation to how much I charge a customer for a product or service.

Other than MAP and any sales taxes or VAT, there is none that I know of.

But the whole point you're missing is that there DO exist regulations that state how much you may NOT charge (in other words, you may NOT charge a customer more for using a credit card or for charging different prices for different cards).

[enigma1]

in other words, you may NOT charge a customer more for using a credit card or for charging different prices for different cards.

Yes I can charge if I want to, for different cards and/or different payment methods or whatever else. It's really up to whatever agreements you make in the first place. I don't remember signing something specific for how much I can charge customers for a product with a "service" I carry. Payment gateways make a profit on how much I sell and it's not their business if I offer discounts or impose surcharges on a case by case basis. And there is nothing you can do about it.

I've never seen a cart where selecting one specific payment method over another would cause the grand total to change.

It's not something you see often but is there and can be easily implemented.

[HRoth]

There's nothing any of US can do about it, but if your processor finds out you are charging different amounts for the same product based on which card the customer is using, you will be on the credit card blacklist and you won't have to worry about making profits at all. Fees are a cost of doing business. They're deductible on one's taxes as such. Every single purchase is not going to have the same profit margin as the next. That is why there are phrases in business such as "loss leader."

I remember a few years ago stopping at a gas station in a one-horse town in upstate NY where the owner had a hand-lettered, cranky sign up saying that anyone using a credit card would be charged 25% more. I used my card to buy 30 cents worth of gas.

[rachel123]

It's not something you see often but is there and can be easily implemented.

As a shopper, if I am not allowed to see the final grand total prior to entering my cc number, as a general rule I abandon the sale. It's happened once or twice in the last few months.

Perhaps your analytics tells you something different, but I would never implement something like this without a monstrous amount of data assuring me that it wouldn't absolutely kill my conversions.

[LifeinAsia]

Yes I can charge if I want to, for different cards and/or different payment methods or whatever else. It's really up to whatever agreements you make in the first place.

Yes, you can do whatever you want. Until you get nailed and get blacklisted by Visa/MC permantently for violating their policies.

I don't remember signing something specific for how much I can charge customers for a product with a "service" I carry.

Whether you remember or not is irrelevant. What you are doing is
against Visa's policies and illegal in 10 U.S. states [usa.visa.com]. I can just imagine someone going before a judge and trying to use "Oh, I forgot murder is illegal" as a defense...

I remember a few years ago stopping at a gas station in a one-horse town in upstate NY where the owner had a hand-lettered, cranky sign up saying that anyone using a credit card would be charged 25% more. I used my card to buy 30 cents worth of gas.

New York is one of the states prohibiting the practice. You should have disputed the extra charge when you got your statement. :)

[enigma1]

You should have disputed the extra charge when you got your statement.

Are we talking about ecommerce or not? The cc statement will list the amount charged for the total for what you bought not some hidden extras coming after. I believe you are missing my point completely. It won't be an additional charge after the purchase. Stopping and buying gas doesn't sound like ecommerce. Perhaps you need to post a different example.

if I am not allowed to see the final grand total prior to entering my cc number, as a general rule I abandon the sale

I believe most sites ask for all details before they get you to the confirmation page where the final total is listed. Extra costs like "handling", "insurance", "tax", "shipping" are all part of the same order and varies. And is up to the customer to decide if he wants to buy something with the associated costs. But the method is identical to implementing a discount coupon.

Think about it the other way around. Do you seriously believe is illegal if you apply an automatic discount to a customer based on using a certain combination of checkout options? The surcharge in that link shows a surcharge on the merchant's invoice? If that would be the case you would dispute pretty much every purchase because you wouldn't like the extra costs added to the sub-total. Because the link posted reads "What to Do if You Are Charged Checkout Fees". And for most online orders there are checkout fees. Shipping is a checkout fee. Insurance is a checkout fee. Handling is a checkout fee and so forth.

Can you answer these points?
1. Can the merchant charge differently customers for the same product?
2. Do you think is illegal if additional charges added to the subtotal for an order? That is any additional charge.
3. Do you think private business are regulated by the gov for prices on products/services they sell/offer?

It's interesting when I see the cc companies or gov not caring about customers complaining on phantom products or services like with penny auction sites, where there is fraud directly involved, paying and get nothing, but they rant about checkout fees online, something they have no business over whatsoever.

I can just imagine someone going before a judge

There won't be a case first of all to go before a judge. Because what's the basic argument, you don't want to pay the total for an order but only the subtotal? Or you were charged more than another customer or you did not get a discount? How can you tell this is not already happening with the additional commission costs included in the checkout with say shipping/handling on an order you place?

[HRoth]

The merchant can't charge the holders of some cards more than those without those cards, nor can s/he charge people who pay cash less than those who use a card. Who says? The issuers of the cards that the merchant signs a contract with when s/he agrees to take cards. Or you think you don't have to abide by a contract you signed because you haven't been caught breaking it? What the heck kind of business practice is that?

Yes, private businesses that engage in interstate commerce, which is what an ecommerce business is by its nature, do come under the purview of the federal government. Private businesses are also regulated by state laws, even municipal ones. Did you decide that since you haven't been caught, those laws don't apply to you?

If you hide charges in "handling" fees, you have decided to engage in foolish business practices by not centering your expenses where they belong. But there is no way you can know before charging a customer whether they are using a rewards card or not. I think that perhaps you are not actually a merchant if you believe that you can do that, especially in light of your idea that shopping carts can easily insert extra charges based on the type of card. I have never heard of such a shopping cart in ten years of taking cards online. Nor would I want one, even if it were allowed. Can you imagine how a customer would feel to use a rewards card one day in your shop and get one price, and then come back and use a non-rewards card and find out the price is different? They would think you were a skeev, and they would be right.

LifeinAsia, I actually called Visa and reported that gas station later that day. Whether they did anything about it, I don't know. I felt some satisfaction knowing he probably ended up in the hole with my transaction.