Credit-Card Fees Targeted by Retailers Who Say Banks Overcharge

[Joanne98]

By Jonathan D. Salant

Nov. 29 (Bloomberg) -- The subprime mortgage crisis is giving department and convenience stores and gas stations a new argument in asking Congress for power to negotiate the fees banks charge them to process credit-card transactions.

Retailers such as Target Corp. say banks make so much money from the fees that they give credit cards to people who can’t pay their debts, just as they provided mortgages to homeowners who can’t afford them.

“It’s another version of subprime lending,” said Mallory Duncan, chairman of the Merchants Payment Coalition representing trade groups for 2.7 million gas stations, drug stores, supermarkets and other retailers. “The system should be fixed before we are in a position of having to bail out more banks.”

Duncan, a registered lobbyist, is senior vice president and general counsel of the National Retail Federation, whose board members include Delray Beach, Florida-based Office Depot Inc., Cincinnati-based Macy’s Inc., and Plano, Texas-based J.C. Penney Co.

The merchants want an antitrust exemption so they can band together to negotiate with banks over the so-called interchange fee, usually between 1 and 2 percent of the purchase price, that a retailer’s bank pays the cardholder’s bank each time a customer swipes a credit card. The retailer’s bank then collects the fee from the merchant. Consumers don’t see the charge, which merchants say is built into their prices.

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http://www.bloomberg.com/apps/news?pid=20601087&sid=aOD5I8T6SQLM&refer=home

[DJ13]

1. Thats funny coming from Target

Every time I shop there Im bombarded with "would you like to apply for a Target credit card today and save 10%?" by the cashiers.......

[Joanne98]

3. Don't apply for it. The big CC companies will raise your interest rates if you do.

[glowing]

4. They charge 23% for credit cards... but they don't have a way of stopping the

approval of credit.. its already rigged into the system.. if people are defaulting on their target cards, then the store is going to go out of business.

[glowing]

2. And its a huge part of the business. The credit card business is a gold mine.

Fees for transactions, interest charged.. they just make money... eventually, everyone will quit paying and they will be in a world of hurt. I wish everyone would wake up tomorrow and stop paying their bills.. bring everything to a screaching hault and then perhaps we would get something for our lives in the USA.

[Joanne98]

5. I've noticed some small businesses around my house have stopped taking CC's

Sign's say check or cash only. Maybe there's a movement afoot!

[dixiegrrrrl]

6. Here too, small town, some merchants don't take cards.

Not even debit ones.
Cash or check.
Chinese restaurant here ( not very good food) takes only cash.
that may have more to do with them/taxes than cost of credit card.

[glowing]

7. They charge 3% for the transaction.. and you have to then pay another company

for processing the transaction.. the hotel I work at uses chase.. so you lose on every sale. A lot of small businesses have a minimum purchase price to use the c.c. some have a less price for using cash.. my mom goes to a gas station up north.. the price is reduced for cash customers... so it saves them to use cash, and pays the station a bit more.. saving on the transaction fees.

I have to admit, I'm a swiper... debit that is. I don't like the idea of carrying around money for groceries and gas.. someone might rob me, and I don't have money for food and gas for the week... at least with the debit card, I can call and cancel the card and not lose the money for needs. Its more of a safety issue with me... if everyone had the means to provide their needs and wants, I wouldn't have to worry so about safety. I wish the world would just be a little more peaceful and fair.. but the world was designed long before I got here.. the only thing we can do is try and peck away at it.. hoping more people wake up.

[htuttle]

8. An interchange fee of 1-2% is a best case for a huge retailer

Most smaller retail shops and gas stations pay much higher rates than that. And that's only part of the fees. There's also payment gateway rates and others that can easily add up to an additional 3-4% or more all together. Everyone gets a little vigorish.

At a lot of smaller places, if you use a debit or credit card for a transaction of less than $5, there's a good chance that they are losing money on the sale.