Credit card fees: Visa & Mastercard deal may not help stores recover charge fees & costs

What appeared to be a clean 'n' sweet credit card fees deal may have opened a can of worms, in some States, and with convenience stores [low value transactions.]

Stores and e-tailers may not find it easier to charge shoppers fees for paying by credit card as a result of a $7.25 billion class action settlement with Visa and MasterCard, which might delay or sabotage its approval, an analyst said on Monday. And larger retailers are saying that they don't want to make extra charges.

The Proposed Visa Card and MasterCard settlement

The proposed settlement between retailers and the two biggest credit card companies would resolve class action stores' claim that Visa and MasterCard conspired with major banks to fix swipe fees, the amount paid to process debit and credit card payments.

In addition to a $6.05 billion payment and temporary $1.2 billion swipe-fee reduction, the deal would also allow stores to start charging so-called checkout fees to customers who pay with MasterCard or Visa credit and debit cards, to defray their costs From Visa, MasterCard and Banks for using credit cards.

But retailers might not in reality get much help from the deal in offsetting the credit card swipe fees by charging customers more.

The settlement's much-touted credit card surcharging provisions actually have no real usefulness to merchants.
Because buried in the fine print of the agreement are provisions that undercut the stated intent of the settlement.

For instance, if retailers force customers to pay more for using Visa or MasterCard, they essentially must charge consumers more when they pay using other credit card networks, such as American Express, according to Bouregois' analysis of the proposed settlement.[not part of the claim or settlement]

But American Express prohibits merchants from implementing policies that discriminate against its cards, like discounts designed to steer customers to different forms of payment. Although this may be unlawful I feel.

The credit card settlement is also subject to approval by a federal judge.

The surcharge rules will also not apply in the 10 states that prohibit that practice, including Texas, California and New York.

Credit Cards increase sales

This could undermine the settlement if merchants voice their objections to this provision during fairness hearings prior to the court's final approval.
Some stores have said they will not impose extra fees for paying with plastic, even if they can.
One of the largest U.S. retailers, Target Corp., issued a statement Friday saying it did not intend to impose checkout fees, and calling it "bad for both retailers and consumers."

The National Association of Convenience Stores believes the deal does not address convenience stores merchants long-standing concerns over how Visa and MasterCard set credit card swipe-fee rates.

Credit Cards Fees: Retailers have a few options

The settlement would give retailers a couple of different options should they choose to pursue checkout fees.

For instance, stores could choose not to assess the fees, or if they did, they could re-examine their agreements with competing credit card issuers or even drop those other cards altogether, he said.

The settlement agreement should now give freedom to merchants to make those choices that they think are in the best interest of their business and their customers.

Because the value merchants get from MasterCard acceptance is far in excess of the actual cost of acceptance, so merchants would not have to impose credit card use checkout fees, as the costs have been taken care of.
Source: Mr Mortgage

Credit card fees: Excessive surcharges to be banned

The Reserve Bank of Australia is urging business owners and operators to get ready for the ban on excessive credit card fees, to come into effect in January 2013

Taxis, Restaurants, Tourism and e-tailers are the worst offenders of credit card excessive charges

A Reserve Bank of Australia ruling to limit credit card surcharges to a "reasonable cost of card acceptance" will come into force on January 1st 2013.
The RBA had noted a large rise in the number of businesses levying card charges, with taxis, restaurants, tourism operators and e-tailers among the worst offenders.
The RBA says large businesses are the most common surchargers, but the proportion of small businesses that charge for card use has grown from about 4 per cent in 2005 to 25 per cent today.

The National Australia bank already working with Business Owners

NAB's David Gall says business owners will need to speak with their bankers. "Businesses that accept cards need to know what the cost of accepting cards is and the reasonable cost of surcharging," he says.
Processing costs can vary dramatically but are typically between 0.5 per cent and 2 per cent of the transaction cost.
NAB has introduced a more transparent credit card billing approach for its 120,000 business customers and Gall says it has been well received.

 "Merchants now receive a monthly breakdown of the fees charged by card issuers, allowing them to understand exactly how their monthly bill is made up" he says. The RBA will accept submissions about its surcharge plans before Friday. 

 It has received concerns that some businesses are using credit card surcharges to slug customers,rather than recoup the cost of accepting cards.

Green your credit card at your local ATMs and shave your debts

With new credit cards ATM transaction charge changes proposed by Greens Senator Bob Brown, you could soon save hundreds on all those "foreign" Bank ATM fees.
And the only one's who'll complain about it our those who profit from this rort.
The real cost of credit card fees and charges
It is estimated that this alone will save Australia's bank customers  $600 million a year in direct fees.
When you add all the interest that is then extracted from bank customers, and then honour fees because this may put accounts over their limit, we are looking at over a billion dollars saved under legislation to be introduced in Federal Parliament next week banning $2 ATM fees.
Total fees and charges reductions targeted in the introduced legislation by Greens Senator Bob Brown can be as high as $5 billion a year charged in bank fees and charges.
Bob Brown claims this will put an end to profiteering by banks on mortgage fees.
The Greens' new Bill called the "Banking that serves the Community" Bill allows basic fee-free accounts, fair price mortgages and up-front disclosure of exit fees on mortgages.
Bob says that he feels that the proposed laws will put the power back in the hands of bank credit card customers and be a welcome force in keeping banks honest.

The most recent data from the Reserve Bank shows that there were more than 25 million cash withdrawals at foreign ATMs in February, representing $50 million in added credit card fees.
The proposed Bill also requires banks to show that any exit fees from mortgages reflect a reasonable cost and do not just act to chain customers to lenders.
Mr Mortgage home loans supports these changes.