Heads up on steep debit card fee increase.

[Greg Pack]

Think you're giving too much up to merchant processors now?


http://www.bloomberg.com/news/2011-...ise-fees-on-small-purchases-analyst-says.html

Visa Inc. (V) and MasterCard Inc. (MA), the world’s largest consumer-payment networks, will raise debit-card fees charged for small-ticket purchases to the full amount allowed under new rules, according to an analyst.
Visa, the world’s largest network, and No. 2 MasterCard may increase fees from 8 cents on a $2 purchase to 23 cents, Thomas McCrohan, an analyst at Janney Montgomery Scott LLC, wrote in a note. They will eliminate the so-called interchange portion of the fee, charging the highest amount allowed by rules announced in June, McCrohan said yesterday in an interview.
The change “will kill the economics for small-ticket debit purchases and influence a shift back to credit cards,” McCrohan wrote. “It will almost certainly lead to a merchant revolt against the card networks.”

Already USA technologies (eport) sent out an email:

Last week VISA and MasterCard took the unprecedented step of announcing that their bank debit card interchange rates would increase by roughly 250% for a typical small-ticket debit card transaction and making them effective October 1, 2011, leaving us little or no time to respond. This decision by Visa and MasterCard has forced USA Technologies to make the difficult decision to temporarily stop the acceptance of Visa and MasterCard bank debit cards until further notice.

Consequently, effective October 1, 2011 and until further notice, the USA Technologies' card processing network will not accept any bank debit/check or prepaid cards with a Visa or MasterCard logo.

 

[PaulLovesJamie]

Yep - just saw that email about an hour or so ago. The key statement being that Eport will no longer accept debit or prepaid cards.

Be interesting to see how this was planned & how it plays out.

 

[raisetheprice]

Nice...we use USA Tech on our ice vendors. Not much room at $1.75 per vend. What will Redbox do at $1? But maybe the leverage of not accepting debit or prepaids will stymie these changes. The carwashes are already cost heavy...let's all go up. I say top auto wash should be $20. Wish in one hand, Sh!t in the other...

 

[sparkey]

I will no longer be accepting credit cards in my self serve bays when this takes effect. I barely make any money now in self serve bays when they use credit cards.

 

[Greg Pack]

Hopefully this will cause an uproar and will change back. I'm sure the card processors are betting on retailers raising their prices to make the consumer eat it. I may have to change my strategy and go to $5 start up or something with CC.

My rates on my etowah valley self serve (when you figure in the cost of toll calls) is close to 10% now. I'm not sure how much this will make it go up to- probably over 15% or more on average. Any math whizzes out there want to take a stab at it?

I have not seen an increase in gross revenue with credit card usage, just a larger percentage of customers using it instead of cash. But now I have to pay to my the silent partner (merchant processors) in the name of convenience.

My bank has clamped down and is charging for everything now. My loans costs have not gone down appreciably, Yet they want to give me .53% in my money market account. The older I get, the more I want to tell just about every banker to go **** themselves....

 

[rph9168]

My sentiments exactly. Our industry will continue to suffer at the hands of lenders and banks.

 

[Jimmy Buffett]

I am certainly not a fan of banks or bankers but a lot of these issues go back to our good friends Barney Frank and Chris Dodd. These guys have crafted a bill that makes it extremely difficult for financial institutions to make money. They are afraid to lend and that has screwed up their whole world. They have all these people to pay and no income. That's why they are scrambling to take in any kind of fee income that they can get. Banks are in business for the same reason we are in business; to make money. These morons in Washington can't get it through their heads that making a profit is a good thing, not something evil.

 

[pitzerwm]

Even though, I have been an original investor in a local community bank and have made money with banks, I hate them, but like any business they need to make money to stay in business. The problem with people in government is that couldn't run a lemonade stand if you gave them a $1M to start with. They try to screw the business/bank to keep the voters re-electing them. But its like trying to control a balloon filled with water. Squeeze it on one side and it pops out the other. In the end WE all get screwed.

For what its worth, I bank with First Internet Bank of Indiana, and if I use my debt card in an ATM machine, they give me $1.75. I have been with them for many years and have never had an issue that wasn't fixed within minutes. If you happen to open an account with them, mention my legal name, I get a few brownie points. I believe at this time its only BofA that is charging this, but others will follow if there isn't too much of a backlash.;

Don't bother writing Frank & Dodd, neither of them have a clue or give a damn.