How Bernie's Small Donors Are Making Credit Card Companies Rich

[SidDithers]

https://www.politico.com/news/magazine/2019/11/25/small-dollar-online-donors-politics-credit-card-processing-072949

Low-dollar, repeat contributions are a great talking point for campaigns. They’ve also resulted in a massive financial windfall for credit card processors.

Bernie Sanders and Elizabeth Warren have eschewed big-dollar fundraising events to support their 2020 campaigns, instead turning to their grassroots supporters for small-dollar contributions. It’s central to both candidates’ appeal: the idea that everyday people, not big financial institutions or wealthy and powerful interests, are financing—and benefiting from—their efforts.

Donors have responded in droves— donating tens, hundreds or even thousands of times, in amounts as small as $1. But what these grassroots supporters may not realize is that, in making small, repeated contributions, they have, in aggregate, delivered a huge payday for the middlemen, often large banks and financial institutions that process those payments.

snip

When you give a dollar to a political campaign using your credit card, a portion of that money is paid to a range of companies—the bank that issues a donor’s credit card, the campaign’s bank, the credit card company, etc.—and is generally taken as a percentage of the donation, plus a fixed amount per transaction. Even ActBlue, which advertises a flat fee of 3.95 percent, gets charged a per-transaction fee behind the scenes, though the organization would not give exact amounts.

And as contributors make smaller but more frequent contributions, those per-transaction costs have a disproportionate impact.

To illustrate the point, Zucker gave a commercially reasonable rate—similar to Stripe's or PayPal’s—of 3 percent plus 30 cents per transaction. Imagine a single donor makes a $1,000 contribution to a candidate under that scenario: The campaign would get $969.70, and the processing middlemen (Visa, Wells Fargo, and so on) would take $30.30. But that balance changes radically if the campaign has a thousand different supporters make tiny online donations of a $1 apiece. In that case, the existence of per-transaction fees means the credit card processors would take $330, while campaign would get only $670 — even as it would be able to tout a low average donation size.

Sid

[betsuni]

1. K&R

[TexasTowelie]

2. A great math lesson. K&R!

[RandySF]

3. I hope no one is going into serious debt with contributions.

I remember a lot of college kids gave everything they had to Bernie in 2016.

[Thekaspervote]

4. This!! Hope those college kids... now hopefully employed realize student debt relief sanders

Is touting is an empty promise

[Joe941]

12. It will be worth it once college is free.

[boomer_wv]

22. So...

Never then?

[Blue_true]

76. .....

What is life without dreams?

[MH1]

77. Nothing worth anything is ever "free"

I doubt Sanders is really offering free college, even if that's what his more cult-like followers hear.

On the other hand, I haven't paid attention to him since 2016, so maybe he really is dangling complete bullshit.

[NurseJackie]

6. Kinda like playing the lottery to wipe-out one's college debt, I suppose, maybe?

[Voltaire2]

5. Only billionaires need apply.

Most idiotic attack this year. Of course this garbage was vomited out at least twice last year. So not even original.

By the way the Obama campaign in 2008 developed the small donar fundraising infrastructure. Please take your complaints there.

[betsuni]

7. Obama won. He didn't run on populist ideas that don't have votes and attack other candidates.

Bernie knows the votes aren't there yet. 2010:

"I would say that in the Senate, there are at most 10 votes for a single payer plan. In the House I have no idea but it's a small minority. It's absurd to say, 'Mr President, go forward and make your bill single payer when you've got 10% of the Congress supporting you.'"

When one can't run on policy, some people will run on negative attacks on character, insinuating the candidate is corrupt because of billionaires bribing them. Obama received a record amount of donations from people working on Wall Street, also benefited from Super PACS. As Hillary Clinton said:

"President Obama took more money from Wall Street in the 2008 campaign than anybody ever had. And when it came time to stand up to Wall Street, he passed and signed the toughest regulations since the Great Depression, with the Dodd-Frank regulations."

What are you even talking about? Please take your complaints there.

[beastie boy]

13. I fail to see the reason behind your outrage. This is not an argument, it's a simple lesson in math.

Last edited Fri Jan 3, 2020, 10:23 AM - Edit history (1)

And as a scientific fact, it is undeniable that a significant portion of donations to Bernie go in the pockets of millionaires and billionaires.

In response, you may argue that this is acceptable. You may argue that others do it. You may argue that Bernie is unaware of this. And yes, you may argue, as you did, that it is Obama's fault. But calling the OP "the most idiotic attack this year" and "garbage" only shows how weak your ability to defend Bernie on these grounds is.

[NYMinute]

17. Whataboutism!! but.. but.. Obama .... but...but... Hillary

This is the tactic I am used to hearing from RW sources. Seeing it on DU is astonishing.

[Voltaire2]

31. I see. So the fact that basically everyone

running is also using ActBlue to raise millions of dollars from “small donars” is irrelevant. Bernie is doing so it’s bad.

Sort of pathetic but whatever

What would you suggest? Checks? Cash on the mail?

[NYMinute]

49. The point is that only Bernie's people are breaking down the donations

into little pieces just to run up the total donations score. There are tweets from the campaign encouraging that.

[InAbLuEsTaTe]

59. IF IT'S GOOD ENOUGH FOR HILLARY, IT'S GOOD ENOUGH FOR BERNIE!!

Bernie/Elizabeth or Elizabeth/Bernie 2020!!
Either way, they're stronger together & can't be bought!!
Jump on the Bernie Bandwagon & join the revolution!!

[NYMinute]

66. REALLY? rEaLlY??

[guillaumeb]

52. Now that puts an interesting spin on this story. eom

[InAbLuEsTaTe]

60. DOESN'T IT THOUGH!!

Bernie/Elizabeth or Elizabeth/Bernie 2020!!
Either way, they're stronger together & can't be bought!!
Jump on the Bernie Bandwagon & join the revolution!!

[guillaumeb]

67. In my view, we should be issues oriented.

But we know how these discussions can go.

[InAbLuEsTaTe]

69. YES WE DO!! TRU DAT!!

Bernie/Elizabeth or Elizabeth/Bernie 2020!!
Either way, they're stronger together & can't be bought!!
Jump on the Bernie Bandwagon & join the revolution!!

[InAbLuEsTaTe]

58. THIS x 1,000,000,000!!!

Bernie/Elizabeth or Elizabeth/Bernie 2020!!
Either way, they're stronger together & can't be bought!!
Jump on the Bernie Bandwagon & join the revolution!!

[dansolo]

8. So it is an empty gesture that results in less money going to the campaign

I don't think this point is emphasized enough. What is especially galling is that Bernie is encouraging this behavior just so he can pad his donation numbers.

[SidDithers]

74. Yes...

that's the point.

With $1 donations, only about 2/3 goes to the Bernie Sanders (I-VT) campaign. The other $0.33 goes to the bank.

Now, if I wanted to support a candidate, I'd want as much of my donation as possible to go to the campaign.

But maybe Bernie gets more value from being able to bleat that his campaign has the highest number of donations and the lowest average donation of the campaigns.

Sid

[lapucelle]

75. yES trUE dAt!!!!

[Humanist_Activist]

9. Not sure of your point unless its simply that poor people shouldn't participate in contributing...

at all.

All candidates ask people to donate what they can, and unless you are discussing how the credit card companies fleece the public, which is true. What is your argument?

[Hassin Bin Sober]

11. It's a Rovian attempt by Politico at taking a strength and turning it to a perceived weakness.

Anyone who runs a business - wether it’s a charity, not for profit, or for-profit - knows people will spend/donate more and more often when you make it quick and convenient.

Banking/transaction fees are a cost of doing business. They more than pay for themselves in increased donations.

You know what else costs money? Wine caves and expensive fundraising parties. Our own local popinjay likes to brag about how candidates wine and dine him all the time with hotels and flights included. Fundraising costs lots of money. I have a friend who runs a fundraising company that caters to schools and other not for profits. It’s big business running parties and charity auctions. They don’t do it for free.

You know what else costs US ALL the most money? When our elected officials have to pay back bundlers, like the CEO of Comcast, for their bundled contributions. We pay through the nose for decreased regulation, fast-tracked monopolies, and weakened consumer protections.

[beastie boy]

14. This is the classic "everybody does it" defense, followed by a deflection.

But everybody else has not made the millionaires and billionaires their main target. And you are welcome to start your own thread on how bundlers cost us money, hopefully completre with facts and figures showing exactly how much money they cost us. But you cannot deny a simple lesson in Finance 101 which the OP brought up.

[LanternWaste]

24. A week's pay says you'll be unable to see the irony in your having said that.

[NYMinute]

18. Encouraging donors to break up their donations into little pieces

only to raise the "total number of donations" hurts the campaign. Sometimes, record breaking with "we have 5 million plus donations - more than anyone ever" means the people's money is wasted in making the bankers rich.

The math is irrefutable. Make peace with facts.

[Hassin Bin Sober]

34. The math is irrefutable. Bernie raised the most by far and has the most cash on hand.

It seems some are having a hard time making peace with those facts.

[NYMinute]

50. He also was the top candidate making the bankers have a windfall. nt

[Hav]

19. No one said that

It's not about criticizing donating 5 or 10 dollars because you cannot afford more.
It's about the idiocy of splitting up your 2800 dollars into hundreds of tiny donations to mimick people who are less wealthy. All you achieve for pretending to be part of a "grassroots campaign" is enriching your bank.

[FBaggins]

10. Not really

Tens of millions of dollars is significant for any presidential campaign... but ~3% of that plus $.30/transaction (split amongst dozens of banks) is insignificant to the banks.

Donating $5 to the candidate of your choice is financially inefficient... but no more so than buying a coffee at Starbucks... and they do a comparable amount of business in a single day.

[MichMan]

15. Donating $1 to a political campaign is ridiculous. Especially multiple times

[SidDithers]

28. Yup...nt

Sid

[NYMinute]

16. K&R nt

[aidbo]

20. Pffft, as if you actually care about this.

Credit card usage volume in the USA was nearly $1 trillion just in the 4th quarter last year.

Sanders’ $35 million out of $1,000,000,000,000 = 0.000035 or about 0.0035 percent. If that $1 trillion was a 1 gallon bucket, then Sanders contribution to that bucket would be 0.03 teaspoons. A literal drop (actually much smaller than a drop) in the bucket.

People make very minor purchases all day every day using credit cards. Dwarfing anything that Sanders does.

The American people are making credit card companies rich.

There’s your math.

[Hav]

21. But when you make your minor purchases,

at the checkout you don't say split it up in 1$ transfers. That would be moronic and some stores have limits for that reason.
That was the point. Not that the 35 million as a whole obviously incurred fees.

[aidbo]

23. People make $1-$2 purchases with credit cards all the time.

The number of 1-2 $ credit card swipes every day dwarfs what Sanders or even all the candidates transactions combined make.

[Voltaire2]

42. It's a generational disconnect.

I know lots of people who just carry id, a phone and a credit card, some just id and a phone.

Really this whole thread is why ok boomer is a thing.

[aidbo]

45. It's just about as stupid an argument as..

..”oh you want Amazon to pay more taxes and yet you use their services”

[Voltaire2]

47. Yup

At least make an effort to debate the substantive differences between candidates instead of gotcha horseshit.

[aikoaiko]

25. NPR suggested I donate 10 per month --- those dirty CC loving bastards.

[SidDithers]

27. Did you donate $1 ten times a month to help NPR make it look like it had more donors/donations?...nt

Sid

[InAbLuEsTaTe]

61. YEAH, NEVER GONNA LISTEN TO NPR AGAIN!! LMFAO!! GOOD ONE!!

Bernie/Elizabeth or Elizabeth/Bernie 2020!!
Either way, they're stronger together & can't be bought!!
Jump on the Bernie Bandwagon & join the revolution!!

[at140]

26. How can credit cards give me 3%, 5% money back on purchases?

My Bank of America card gives me 3% money back on various categories, currently it is restaurants for me because of kids visiting for holidays. I don't think restaurants pay 3% to credit card companies, do they?

My GM card gives me 5% credit on ALL purchases upto $10,000 during the year, and can accumulate for 7 years. So I can accumulate $3500 credit for purchase of a new GM car. Every 7 years we buy a new car, and after making the best deal with the dealer, I fish out my GM card and get $3500 subtracted instantly. Already used this credit 3 times during last 21 years.

[MichMan]

29. Because they are hoping that people charging to get cash back rewards will carry a balance

and the amount of interest paid will more than cover the cash back rewards

[at140]

40. Aha...that makes sense,

but I always pay off balances on due date, except a couple of times in 20 years I just plain forgot to pay and got socked with penalty. But 20 X 12 X 4 = 960 payments on time, so not bad.

[Gothmog]

30. Actblue is also getting a ton of transaction fees

[Voltaire2]

32. Call Joe Biden right now and tell him to stop

using ActBlue.

[Gothmog]

33. Biden is not encouraing his donors to make multiple small contributions

I am a maxed out donor for Biden and I did it in two contributions

[Voltaire2]

35. There are a lot of people who can't donate more

than a small amount at any time.

But you do need to get Joe’s website changed to make it clear that they don’t want small donations, only big ones. I suggest that their ActBlue page remove all donation levels below 1000.

[Gothmog]

36. Joe is accepting support from all donors

[Voltaire2]

41. But those small donations are very bad.

You just explained that. So should Biden stop this bad thing from happening?

[revmclaren]

37. You get right on that.

Send off a letter to the Biden campaign suggesting that. I'm sure they will give the idea all the consideration it deserves.



ONLY!!! 2020 and beyond.

[Humanist_Activist]

38. It's great you are rich enough to do that. Others aren't as lucky. Nt

[aidbo]

46. Can you point to where the sanders campaign did as you are implying?

I mean I saw where mayor Pete had a contest for who could make the smallest donation but I’ve never seen Sanders asking for people to break up donations.

[corbettkroehler]

39. The 2005 Bankruptcy Bill Which Biden Supported And Sanders Opposed Makes Banks Even Wealthier

This important fact is conveniently overlooked.

[Hassin Bin Sober]

43. Bazinga!

[Joe941]

44. bingo!

[Voltaire2]

48. No shit.

But that was actual policy not ridiculous nonsense, so it doesn’t matter.

[InAbLuEsTaTe]

62. WELL LOOKIE HERE... BOOOOOOOOMMM!!!

Bernie/Elizabeth or Elizabeth/Bernie 2020!!
Either way, they're stronger together & can't be bought!!
Jump on the Bernie Bandwagon & join the revolution!!

[TexasTowelie]

82. A complete deflection off the topic of the OP.

I'm not surprised though.

[corbettkroehler]

84. Hardly - By Your Logic, Raising Money From Billionaires Should Be Preferable Because They Give Cash

My point was 100% germane but I gladly will rephrase it for your benefit.

The criticism of Bernie's fundraising technique of small-dollar donations, in which other candidates specialize, too, by the way, because it drives up credit card merchant processing fees is specious at best but, more importantly, borderline scurrilous.

[Uncle Joe]

51. One of the stupidest can't see the forest for the trees articles that I have read in years.

Thanks for the thread SidDithers

[InAbLuEsTaTe]

71. That's an understatement Uncles Joe!!

Bernie/Elizabeth or Elizabeth/Bernie 2020!!
Either way, they're stronger together & can't be bought!!
Jump on the Bernie Bandwagon & join the revolution!!

[machI]

53. Who regularly makes small purchases with plastic? It is young people of course.

Coffee at Starbucks - just swipe the card. Eating at a fast food joint - just swipe the card.

Young people are going to make the difference in this election, and they are supporting Sanders more that any other candidate.

[TwilightZone]

55. That's not just limited to young people.

Anyone who has ever worked in retail (or the CC industry) knows that using credit cards for small purchases is something that happens among all age groups.

[TexasTowelie]

83. Where have I seen this before?

Young people are going to make the difference in this election, and they are supporting Sanders more that any other candidate.

Despite the numerous times I've read similar statements, I'm hard-pressed to remember when it was ever true.

[matt819]

54. Sorry, but this is nonsense

Credit card usage costs recipients money. This is not new, nor is it news. It sucks, but if you accept credit cards, you’re gonna pay for the privilege. Unless you want small donors to give envelopes of cash or money orders, then this is the only option. Maybe campaigns can negotiate rates. But this issue is a red herring, if it even rises to that level.

[SidDithers]

56. The point is no that credit card companies make money on donations...

it's that Bernie stans have made a big deal about splitting their donations into tiny amounts, thereby driving down Bernie's average donation, and driving up the number of donations made.

One $27 donation would cost about $1.11 in fees (3% plus $0.30 per transaction), leaving $25.89 for Bernie Sanders (I-VT).

Same $27 split into twenty-seven $1 donations will cost about $8.91 in fees leaving only $18.09 for Bernie Sanders (I-VT).

I feel that donation structuring like that is dumb as shit. YMMV.

Sid

[Hassin Bin Sober]

63. Yet Bernie had the most cash on hand at last reporting. Seems to be working.

Most cash raised
Most cash on hand
Most individual donors
Most individual donations

[TwilightZone]

65. And he'd have more if he wasn't trying to inflate meaningless total # of donation numbers.

No one cares about the total number of donations outside of Sanders and some of his supporters.

When they're artificially inflated, there's even less reason to take them seriously.

[Hassin Bin Sober]

81. Bullshit.

40,000 new donors (not donations) on the last day of the year. That doesn’t happen with mailed checks (or wine caves).

I can’t take anyone seriously who would whine about transaction fees when the fundraising has been so successful.

[InAbLuEsTaTe]

73. We The People on Main Street know Bernie has OUR backs instead of the elites on Wall Street..

That might splain Bernie's significant advantage in raising campaign contributions.


Bernie/Elizabeth or Elizabeth/Bernie 2020!!
Either way, they're stronger together & can't be bought!!
Jump on the Bernie Bandwagon & join the revolution!!

[Hav]

64. I cannot understand why people don't get that

It has been explained countless times already.
Instead, some go on about that people make small purchases all the time or that this is directed against less wealthy donors. I don't get how some just cannot understand something that should be so simple to comprehend.

[matt819]

68. Okay

So the suggestion is being made that this is a deliberate plan to enrich the credit card processors?

In any case, a silly diversion.

[SidDithers]

72. No, it's not a deliberate plan to enrich the banks...

it's an unintended consequence of Bernie supporters' stupid donation structuring.

Do Bernie's donors know that their micro-donations end up giving a higher % to the banks? Probably not. From the article in the OP:

Donors, however, appear to be making a less-informed choice. An October Newsy-Ipsos poll found that nearly half of donors didn't know processing fees were taken out of their donations. At least 44 percent said knowing the connection between donation size and fees could change how they donate.

“If your goal is to reduce the amount of money that you’re paying credit card companies with your donations, then you want to limit the number of donations you make,” Zucker said. The more donors combine smaller donations into larger, less frequent contributions, he said, “the more those campaigns are going to have at the end of the day.”

Susan Wisner, a Sanders supporter who has already donated small amounts to his campaign dozens of times this cycle, said she had no idea that slices of her donations were going to credit card fees.

“Never knew they took that deduction,” Wisner said. Now that she knows making many small donations—instead of a large one—increases the cut going to processing fees, she said she may change the way she donates. She said she plans to tell her friends to do the same. “I'll pass it along.”

How much extra is Bernie paying in credit card fees because of donation structuring? Who knows? But it's not nothing. Maybe Bernie doesn't care. Maybe he's got so much money that he doesn't have to worry about maximizing his donations.

Sid

[InAbLuEsTaTe]

70. Pretty much all Bernie bashing is nonsense!!

Bernie/Elizabeth or Elizabeth/Bernie 2020!!
Either way, they're stronger together & can't be bought!!
Jump on the Bernie Bandwagon & join the revolution!!

[Me.]

57. Any KickBack Donations From The Companies To Him?

[JoeOtterbein]

78. Where are the mocking jokes when we need them?

Or, why can't Bernie get the big mega donors tapping out their donation limit at one time?

Sad argument at best. Talk about a stupid Politico article!

[lapucelle]

79. How incredibly ironic. Less money for the candidate,

more money for the billionaire banks.

[Hoyt]

80. Not a Sanders fan, but I fail to see the problem here. Sanders is still

getting a lot of donations from folks without a bunch of money. I think his promises are unattainable, but I admire fact a lot of non-mononied folks support him.