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Part of the $7.25B settlement that merchants reached with credit-card networks and card issuers...

Part of the $7.25B settlement that merchants reached with credit-card networks and card issuers means that merchants can charge a higher rate (as a "checkout fee") for consumers using a card for payment. After hours: V +1.7%; MA +1%. (Statement from MasterCard)
Comments (21)
  • perfect timing- sales slowing, consumers, even high end, are pulling back so - hit them with more fees
    13 Jul 2012, 07:06 PM Reply Like
  • As usual, the little guys get the shaft. Thanks for giving me a reason to use a debit card and hide the credit card.
    13 Jul 2012, 07:07 PM Reply Like
  • Why do you use a debit card rather than a credit card? Nobody has ever been able to explain the benefit of debit cards, unless you lack spending discipline.

     

    If you pay off your credit card each month, there is no reason to use your debit card and using credit cards may give you airline miles etc.
    13 Jul 2012, 08:20 PM Reply Like
  • Well, the problem historically is that Visa and Mastercard prohibited merchants from passing the charges for using a credit card onto the customers using the cards. This led to a reverse bidding war where processers bid up credit card charges to extreme levels. So every time you slid your credit card through a slot, I would have to pay for your choice of payment, even if i was using cash.

     

    This settlement appears to end all that. Now when credit fees are raised, customers will see what they are paying for the service, and opt for other forms of payment. This should put downward pressure on the amounts paid.
    13 Jul 2012, 09:12 PM Reply Like
  • Why are V and MA up in the aftermarket if there may be a reduction in swipe fees?
    13 Jul 2012, 09:18 PM Reply Like
  • Bad news is a lot better than holding them before the settlement and having no idea how bad it's going to be. Add to that the effect of the overall market being up after hours.
    13 Jul 2012, 09:48 PM Reply Like
  • Probably because the deal isn't worse than expected. Plus this is nice:

     

    According to the Electronic Payments Coalition, a group of banks, credit unions and payment card networks, any credit card surcharges will be limited to the amount of money the merchant pays to the credit card company.

     

    So if a retailer is charged $.35/swipe by Visa, the most it can pass on to you is $.35.
    14 Jul 2012, 03:21 PM Reply Like
  • Also, seems like the big states may be preventing surcharges anyways;

     

    In states where the law currently prohibits credit card surcharges, merchants will not be able to pass on the cost. Ironically, this case is before a U.S. District Court in New York, one of the ten states where surcharges are verboten. The others are California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma and Texas.
    14 Jul 2012, 03:22 PM Reply Like
  • I think you guys might be missing the big picture here. If stores can charge an extra half-percent or whatever above cash prices, it will be an incentive to use cash over credit cards. Now, with everyone readjusting expectations to lower return on investments (and as Bill Gross says, even worrying more about return OF investments), some will begin paying more attention to things like this.

     

    For example, over the last 20 years I've scoffed at CDs more often than not. I've taught my son there are more attractive savings vehicles. About six months ago my credit union was offering a CD at 3 percent. It was the first CD I bought. What's telling is that I had been looking at them, or wouldn't have known this offer was in place.

     

    If shopping with credit cards becomes more expensive than shopping with cash, a lot of people who do shop within their means (i.e., only using the credit card for convenience, because they otherwise could have that cash in their pocket) will simply return to handing over greenbacks. I know I will.
    15 Jul 2012, 10:14 AM Reply Like
  • Only those that can do the math.
    15 Jul 2012, 09:38 PM Reply Like
  • How is a credit card with interest better than a debit card with no interest?? You must have a pocket full of zero interest credit cards with no fee's.

     

    If that's the case, then the only difference between the two is time.
    Debit card is immediate reconciliation, and a thirty day delay for credit card rec plus fee's.

     

    Here is a tip:
    If you don't have all of the cash in your back pocket to purchase what your after, you cannot afford it. :)
    13 Jul 2012, 08:39 PM Reply Like
  • That's my point. I pay off my credit cards every month so I pay no interest but gain airline miles. With credit cards, I don't need to keep track of my checking account balance and I just pay my credit card bill from my brokerage account where I earn interest.

     

    To me, paying by debit card implies that one lacks discipline as there is no reason to use them otherwise. Am I missing some other benefit of debit?
    13 Jul 2012, 08:50 PM Reply Like
  • That's exactly how I run my life. (well, the financial/spending side). I did just did a major remodeling of the master bath (I did all the work myself, just to show you how cheap I am, took me four months), paid for everything with a credit card, on top of all other household expenses, and made enough cash back in points to pay expenses at the yearly lake vacation. Pay the cards off in full, use Quicken to keep track of every penny spent, and the internet to download transactions and pay the credit card bills.
    13 Jul 2012, 09:42 PM Reply Like
  • "With credit cards, I don't need to keep track of my checking account balance"

     

    If you have fiscal discipline you don't need to keep track of account balances with debit cards either. The issue here is not that.

     

    Here is precisely how it works:

     

    There are places (i'm specifically thinking about some gas stations I use) that charge lower prices for using a debit card. Rather than asking every merchant what their policy is, using a debit card automatically guarantees you opt-in to the lower price, and moving forward it will again as credit card premiums become more common.

     

    However, up until this situation, using credit and paying off your balance on the last day of your billing cycle was effectively an interest free loan on cash balances that could sit in your bank earning (admittedly nominal) interest for the 30 days in your billing cycle.
    14 Jul 2012, 11:25 AM Reply Like
  • Are those lower rates always stated at gas stations?
    14 Jul 2012, 05:48 PM Reply Like
  • In my area, several gas stations advertise a cash price per gallon. I don't know if those prices pertain to debit cards. I would guess all that do offer these special prices advertise it, because it allows them to put a lower price out on their placard. Probably what is happening is people are paying a higher price per gallon with a credit card and don't realize it - unless they happen to notice the little price in foggy gas pump window is different than the huge placard price.

     

    The debit card criticism has always been that because it has a direct link back to your bank account, there's a security risk involved. I know the banks have done things in recent years to minimize that risk, but the stigma remains among upper-middle-class and up. Credit cards can be lost, and the most the card company will hit you with is $50, regardless of whatever charges are run up. Most of the time, they will waive that charge altogether.

     

    Maybe this hit on credit cards - and don't kid yourself, it is a hit on credit cards - will cause people who have been using their credit cards as charge cards, paying it off every month and thus avoiding interest payments, to take another look at debit cards. Either that, or they'll just start using cash in 2013.
    15 Jul 2012, 10:25 AM Reply Like
  • Ikea gives a 3% discount for using debit cards or cash. Note the word discount.
    15 Jul 2012, 09:43 PM Reply Like
  • I believe it's 1%, not 3%. Unless that's changed recently. I get 1.5% cashback on my card, so it still ends up being better for me to use my credit card there.
    15 Jul 2012, 10:41 PM Reply Like
  • Great news for V and MA
    Long V
    14 Jul 2012, 12:34 PM Reply Like
  • Do you know what the investor expectations were for a settlement? I know V just stated that there will be no impact to guidance so I assume it was better than expected.
    14 Jul 2012, 12:44 PM Reply Like
  • Reason to use American Express
    14 Jul 2012, 03:13 PM Reply Like
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