Shift to Premium Credit Cards Increases Merchant Interchange Concerns
The Merchants Payments Coalition says that "increases in credit card interchange rates announced by Visa last week average only 0.6 percent, but the $36 billion in total interchange fees consumers paid in 2006 will probably increase close to 20 percent this year" because of the movement of cardholders to premium credit cards that have higher interchange fees associated with them.
"The average increase in interchange rates doesn't tell the full story because it doesn't reflect credit card companies' efforts to m ove consumers to premium cards, the growing use of plastic, or the automatic raises Visa and MasterCard receive through inflation and increases in consumer spending," Mallory Duncan, senior vice president and general counsel of the National Retail Federation and chairman of MPC, said. "Interchange fees are already taking too much money out of consumers' pockets. Visa and MasterCard should be lowering interchange rates, not raising them."While the increases in rates may look small, overall interchange collections have soared in the past half-decade. Visa and MasterCard collected approximately $36 billion in 2006, up 17 percent from 2005 and 117.5 percent since 2001, according to MPC estimates. Annual increases since 2001 have ranged from 15.8 percent to 17.3 percent.
"Visa and MasterCard would like consumers to believe that interchange is only going up a tiny fraction of a percentage when it's really going up in double-digit numbers and far faster than the rate of inflation or consumer spending," Duncan said. "These fees are ultimately paid by consumers, but working families can't afford these kinds of increases."
Stumble It!
Well. Visa credit card company is increasing its rates. But why don't you think that the services are not improved accordingly? with my Visa card i feel protected every time i pay with it. What's more i enjoy additional programs and lavish rewards. As to working families, they can always opt to cancel the card, can't they?
Posted by: selena | April 19, 2007 at 02:41 AM
I am loyal to MasterCard. They have a reliable and popular contacless payment product -- PayPass, Visa does not. MasterCard has a wireless (mobile phone browser) global ATM search product---MasterCard NearBy. MasterCard has a dedicated automated ATM Search Telephone number for global ATM's -- 877 FIND ATM. MasterCard is in trial for mobile phone payments with Citibank, Nokia and Cingular --- Visa is not. These alone are justification for interchange rate increases as nearly all are available to all US MasterCard holders.
Anyways don't costs on everything rise over the years. People are coming down hard on the payment processors -- Visa, MA, AXP, Discover, when what about your lawn care guys who use to charge $40 to cut your grass and now charge close to $100 a visit--the grass is the same, it takes them the same time to do it, they just pay their guys more salary so the cost is passed on to you. It is just inflation and the rising underlying cost of doing business. If you don't like it, switch cards or use cash or check but of course you loose out on the reward benefits and protections as 'selena' mentions.
Posted by: N. S. | April 19, 2007 at 12:57 PM