As a longtime retailer, I find the discounts and feed charged to the merchant gradually rising – not because the card issuer’s costs are rising, but because they can get the higher fees, and the merchants can’t do much about it.
Bramble Berry’s fees have risen exponentially in the last 10 years, routinely topping 4% of the transaction if the customer is using a premium card or particularly lucrative reward card.
Visa announced in 2006 that it would go IPO and be a publically traded company. Mastercard is already a publically traded company, selling at over $200 per share, with most analysts saying it will outperform the market in 2008.
Well, at least someone’s making money off of my $4. And, it might as well be me … next time I save $1000, you can bet I’ll be looking into buying shares in this monopoly.
Shrock also singled out the difficulty in dealing with fraudulent cards, by stating:
The rules are set up so that the merchant generally takes the fall for accepting a card in good faith that proves to be a fraud. The fraudlent transaction is simply charged back against the merchant, who may be penalized by higher fees if he has too many such “chargebacks.”
Sadly, I don’t see a way around this. PayPal (which we started taking at the end of 2007) fees are higher, the system byzantine and difficult to work with and is not a legitimate version of Visa and Mastercard in terms of reporting ease. No one pays with checks or money order any more – why would you? Visa and Mastercard are much more convnient.
But, someone’s paying for this convenience and it’s not the consumer – it’s me. The vendor. At a rate of $4 for every $100 I take in.