I want to express my thanks to James Wilson of Pahrump who inspired me to write this post. Jim had commented to a prior post that “According to my doctor in Pahrump, his malpractice premiums amount to less than 1% of his gross. Charge cards assess slightly more than that per transaction.”
Merchants want to negotiate credit card fees they’re charged by banks.
When you go to your local convenience store to buy a jug of wine or six-pack of beer or even a loaf of bread and hand the clerk your Bank of America Visa Card or debit card to pay for it the bank charges the merchant an “interchange” fee of 1 – 2% of the purchase.
That cuts into the merchants profit margin of course and increases the bank’s profits. Merchants don’t like it. They’re fighting back. Banks increased their income by $48 billion in 2008. That isn’t chicken feed.
The Government Accountability Office is doing a study of the fees, as required by a law signed by President Obama in May that bans many unfair credit card industry practices. Can you imagine a Republican Congress or the Bush Administration enacting and enforcing such a law? I didn’t think so.
The merchants want the right to band together to negotiate the fees with the banks, which they say they are currently not able to do. Sort of unionizing themselves to combat the banks. Had to throw that in because Republicans don’t like unions.
One bill before Congress, introduced by House Judiciary Committee Chairman John Conyers Jr. (D-Mich.) [Wikipedia] [VoteSmart] [OpenSecrets], would allow merchants to enter into collective bargaining agreements with banks when setting fees.
Sen. Richard J. Durbin (D-Ill.) [Wikipedia] [VoteSmart] [OpenSecrets] has introduced a similar companion bill.
A third bill, by Rep. Peter Welch (D-Vt.) [Wikipedia] [VoteSmart] [OpenSecrets], would make it easier for merchants to steer customers to other forms of payments and let them set minimum and maximum amounts for credit card purchases.
Notice that all three of these guys are Democrats, too.
They are trying to help these little mom and pop businesses make a living. That is a good thing.
European countries, Canada and New Zealand handle interchange fees. Merchants in those countries generally pay lower interchange fees. The study found that if American merchants paid the same swipe fees as those in Australia the past four years, the net savings would total $125 billion.
Kind of like the health insurance industry here in the United States. The banks control things and make the money doing it. Don’t forget the banks gets the bailout money and mom and pop gets the shaft.
Merchants across the country and the card industry are waging a fight for public support. The merchants say the fees are excessive and eat into their already small profit margins, forcing them to pass on the cost to consumers. The card issuers say they are providing merchants a much-needed service as more Americans choose to pay for their purchases with plastic. Both sides have created YouTube videos, bought newspaper ads and released studies to prove their points. Large national chains such as 7-Eleven have embarked on petition drives. [Source: Washington Post]
Anyone want to place a bet about which side the Republican Party Leadership will back? I will place my bet on the party to which the banking industry gave the most financial contributions.
I readily admit I don’t like banks and I don’t like insurance companies. That Jim’s doctor pays less than 1% of his income to his malpractice insurance carrier demonstrates that the hoopla the Republican Leadership raises about tort reform is hyperbole. I may be influenced by their animosity toward trial lawyers as being responsible for the high cost of medical care, since I once was one.
But I also realize that the Republican Leadership uses the trial lawyers as a handy group which they can blame. But that is politics.
Bankers, and by that I mean the CEOs, Executives, members of their Boards of Directors, those folks live in a different world than you and I. I call them the “Country Club Set.” The spend their working days atop the tall skyscrapers in New York, Chicago, Los Angeles. They don’t become customers of the mom and pop stores. They don’t even know any mom and pop people. You wouldn’t encounter them on the golf courses, or at the Country Club, or in first class on an airplane. To them you represent a money source to feed their profits, increase their salaries, stock options, bonuses and stock prices. They are the aristocratic elite, you are just a faceless member of the great unwashed masses.
Next time you are in the Bank of America or Wells Fargo Bank, rush up to the manager and give them a great big hug and ask them to convey your love, respect, admiration and best wishes to their CEO.
You’d probably get arrested by one of Tony DeMeo’s deputies and tossed into Nevada’s mental hospital—if Nevada has one.
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I’ve written not just my elected representatives, but the President’s office as well regarding credit card fees charged by the banks. I got glowing letters back about how they passed this wonderful “CARD” bill earlier this year that will make things so much better. UH …. I don’t think so. The only thing CARD does is make the banks send us letters in understandable English before they once again raise their rates. It does absolutely nothing to curb rates being charged to either businesses or consumers. When banks can get money from the government at less than 1%, yet they’re allowed to charge consumers more than 20% in interest and fees, as far as I’m concerned … the big banks have become nothing more than legalized loan sharks!
.-= Rockspot´s last blog ..Loan Shark Rates on Credit Cards =-.