Visa and MasterCard Are All-Stars When It Comes to Gouging Merchants and Hurting Consumers
WASHINGTON--(BUSINESS WIRE)--Visa’s logo is visible almost everywhere during soccer’s World Cup, but its reception may be a little frosty at baseball’s All-Star game Tuesday.
“Why in the world is this outrageous behavior allowed to continue?”
That’s because the Minnesota Twins, which are hosting the game, are suing Visa and MasterCard for gouging them every time a fan buys a ticket with a credit card.
These unfair, uncompetitive “swipe fees” hurt small merchants, cost jobs, hamper the economy’s recovery and raise the price of everything from clothes to gas to groceries to, yes, baseball tickets.
These fees run as high as 4 percent of a purchase. The cheapest tickets remaining at Minneapolis’ Target Field earlier this week – a pair as high in the bleachers as you can get, way out at the end of right field – were going for $322 apiece. If you buy the pair with a credit card, the seller will have to fork over as much as $25.76 to the bank that issued the card – for a transaction that costs the bank only a few pennies.
Twenty-six dollars may not seem like much at first glance. But these fees add up fast to around $50 billion a year for the banks, with profit margins of thousands of percent. Compare that to merchants, who often subsist on a percentage point or two of profit.
Every merchant large and small in the country has to pay these outrageous fees because Visa and MasterCard control the vast majority of the market for credit and debit cards. They each illegally fix rates so that the banks, lured by the huge fees Visa and MasterCard permit them to charge, will use the duopoly’s brands.
This unsportsman-like conduct isn’t in the tradition of the free-market system that created the world’s largest economy and that underpins our democracy: It’s more like the robber barons and trusts and financial chicanery of the 19th century, a malignant anomaly in our capitalist system.
The Twins had joined thousands of merchants and service companies in suing Visa and MasterCard in a class-action lawsuit. But like many other companies, they dropped out when the settlement offer failed to end the abuses and precluded the merchants from ever suing Visa and MasterCard again over fees, no matter how egregiously they behave.
So the Twins have now filed their own suit to end the anti-competitive abuses of the credit-card industry.
These abuses have become so intolerable that the fees are now many merchants’ second-largest operating cost after rent. Many pay out more in fees than they earn in profits on their investment and hard work. Fees here are eight times what Visa and MasterCard charge in Europe, where the markets are fairer and more competitive.
Sports have been very, very good to Visa: Surveys show more fans around the world know the brand after Visa stepped up its soccer advertising.
MasterCard, for its part, calls itself the official card of major-league baseball, though that hasn’t saved the Twins from being gouged.
But when you see Visa or MasterCard’s commercials on television now or their logo in a stadium, think about what these companies and their big banks are doing to you in terms of higher prices and to the entire economy in helping hold back the recovery. And then think: “Why in the world is this outrageous behavior allowed to continue?”
For more information about unfair swipe fees, go to the Merchants Payments Coalition website: http://www.unfaircreditcardfees.com/
The Merchants Payments Coalition - UnfairCreditCardFees.com - is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees.