Visa and MC are about to put their stamp on the death of the economy
09-30-2011, 02:09 PM
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Visa and MC are about to put their stamp on the death of the economy
VISA and Mastercard are planning to sharply raise the debit card transaction fees for small purchases for merchants, according to an analyst note. A $2 cup of coffee incurs about an 8 cent fee currently, but under the new policy, the fee will hike to 23 cents.
The Federal max cap on debit card fees is 24 cents. So banks are effectively treating the ceiling as the floor.
The move will "kill the economics for small ticket debit purchases and influence a shift back to credit cards," Janney Capital Markets analyst Thomas McCrohan wrote in a note to clients, as reported by the AP.
Credit cards are not covered under recent regulation that put a cap on the fees merchants can be charged by banks to process debit card transactions.
McCrohan warned that if the price jump goes through, it "will almost certainly lead to a merchant revolt against the card networks."
This should encourage the proliferation of more signs mandating minimum purchase amounts when using a plastic card. And you can be sure the overall transaction costs will get passed on to your wallet.
The Retail Industry Leaders Association told Consumerist that the Federal Reserve's 24 cent fee cap is almost double what the Reserve had initially proposed, and was six times higher than what the Reserve's own data showed was the actual transaction processing cost.
"Unfortunately the Federal Reserve ignored its own data when it finalized implementation rules, weakening the congressionally-approved reforms and giving license to Visa and MasterCard to raise -- not lower -- the fees some merchants face," said RILA President Sandy Kennedy. "RILA will continue to fight to fix the broken swipe fee system and bring transparency, competition and relief to all retailers and their customers."
The interchange fee regulations go into effect this Sunday, October 1st.
As always, there's no fee for using cash.
http://consumerist.com/2011/09/visa-...merchants.html
The Federal max cap on debit card fees is 24 cents. So banks are effectively treating the ceiling as the floor.
The move will "kill the economics for small ticket debit purchases and influence a shift back to credit cards," Janney Capital Markets analyst Thomas McCrohan wrote in a note to clients, as reported by the AP.
Credit cards are not covered under recent regulation that put a cap on the fees merchants can be charged by banks to process debit card transactions.
McCrohan warned that if the price jump goes through, it "will almost certainly lead to a merchant revolt against the card networks."
This should encourage the proliferation of more signs mandating minimum purchase amounts when using a plastic card. And you can be sure the overall transaction costs will get passed on to your wallet.
The Retail Industry Leaders Association told Consumerist that the Federal Reserve's 24 cent fee cap is almost double what the Reserve had initially proposed, and was six times higher than what the Reserve's own data showed was the actual transaction processing cost.
"Unfortunately the Federal Reserve ignored its own data when it finalized implementation rules, weakening the congressionally-approved reforms and giving license to Visa and MasterCard to raise -- not lower -- the fees some merchants face," said RILA President Sandy Kennedy. "RILA will continue to fight to fix the broken swipe fee system and bring transparency, competition and relief to all retailers and their customers."
The interchange fee regulations go into effect this Sunday, October 1st.
As always, there's no fee for using cash.
http://consumerist.com/2011/09/visa-...merchants.html
09-30-2011, 08:14 PM
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The local news reader actually proposed cash as an alternative to a debit card as I was driving home today and this story came up. I thought of the ivory tower college intellectual line immediately: "Wait, I thought only criminals use cash!"
What you SHOULD do is find a credit card that gives YOU cash, and use that to buy everything and pay the balance off in full at the end of the month. We use an American Express that pays up to 3% (down to 1%) for buying everything. There is an annual fee but the money we pay them is WAY less than what they pay us, just for buying everything we would normally. When you look at it this way, cash actually costs you money.
In an amusing twist, my work place will not take AMEX because they are way easy on buyers and not on sellers when a dispute arises.
What you SHOULD do is find a credit card that gives YOU cash, and use that to buy everything and pay the balance off in full at the end of the month. We use an American Express that pays up to 3% (down to 1%) for buying everything. There is an annual fee but the money we pay them is WAY less than what they pay us, just for buying everything we would normally. When you look at it this way, cash actually costs you money.
In an amusing twist, my work place will not take AMEX because they are way easy on buyers and not on sellers when a dispute arises.
09-30-2011, 08:49 PM
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MANY places won't take AMEX because they charge higher transaction fees. It's like 3.5% as opposed to Visa/MCs 2.5-3%.
I agree with Stocker - I use a credit card for 98% of everything I spend money on. The only things I don't are mortgage, water bill, and car insurance and car loan(b/c they charge to pay by CC). I use it as if it's a debit card, only spend what I can pay for, I just don't actually pay for it til it's due. In return I get airline miles (you can do cash back if you want). I have over 310,000 airline miles available to me that never expire, and it only takes ~25,000 for a one way ticket. Last month alone I got over 9,000 miles with a 50% credit card bonus included.
WHY use a debit card? Just swap it with a CREDIT card and treat it like a check book - keep track of all transactions and make sure you don't spend more than you have in the bank. Get paid for using it rather than paying!
I agree with Stocker - I use a credit card for 98% of everything I spend money on. The only things I don't are mortgage, water bill, and car insurance and car loan(b/c they charge to pay by CC). I use it as if it's a debit card, only spend what I can pay for, I just don't actually pay for it til it's due. In return I get airline miles (you can do cash back if you want). I have over 310,000 airline miles available to me that never expire, and it only takes ~25,000 for a one way ticket. Last month alone I got over 9,000 miles with a 50% credit card bonus included.
WHY use a debit card? Just swap it with a CREDIT card and treat it like a check book - keep track of all transactions and make sure you don't spend more than you have in the bank. Get paid for using it rather than paying!