The credit card scam continues

posted by Jeff | Sunday, September 12, 2010, 12:49 PM | comments: 2

There's a lot of action in the press about how banks screw people with credit cards, and how people get fee-ed to death. Well it isn't one-sided at all, as merchants are getting screwed as well. If you're a low-volume, online merchant like me, it's even worse.

Take for example a single CoasterBuzz Club membership, at $25. Here's what it looks like:

  • 3.66% discount rate: -92 cents
  • transaction fee: -44 cents (average)
  • That brings it down to $23.64. Now divide the other monthly fees by the total number of transactions (let's say 20, for roundness, since it depends on the time of year), and subtract another $1.50.

So before I even print a membership card or put a stamp on an envelope, it's down to $22. When I started the club in 2001, the total fees averaged about 70 cents per membership at the old $20 annual rate.

The latest is a monthly $12 fee to ensure that merchants comply to security standards. You know what that involves? The merchant going to a Web site to say that it's compliant. Twelve bucks. Every month. That's total bullshit, as statistically speaking, the physical in-person use of your credit card is far riskier than online.

When does it end? I can't believe some enterprising law firm hasn't figured out how to sue these assholes, particularly since it amounts to price fixing, since all of the card companies (Visa, MC, Discover, AmEx) are in on it. It's staggering. What's particularly ridiculous about it is that it should be cheaper than ever to move money around, since it's so electronic.



September 12, 2010, 1:16 PM #

Almost sounds like PayPal is a better deal. Not as "professional," but it'd be $1.03 on $25.


September 13, 2010, 10:27 PM #

I suggest this is only the beginning. The financial reform bill was about as effective as the kid who stuck his thumb in the dike. Bankers are always working new ways to generate income and subsequent profits. Their actions need not be logical or supported by any business need beyond the bottom line. Regulations are viewed as minor inconveniences that they will quickly find a way around. My real concern is the bigger picture of what is continuing to brew on Wall Street. We haven't learned a thing from the recent near collapse other than the regulators don't get it and the lawmakers are still owned by Wall Street.

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