1. SO JUST HOW MUCH
2.00%
1.66%
1.50%
1.50%
1.35%
1.25%
1.20%
1.10%
.79%
.75%
.50%
.31%
.30%
U.S.
Mexico
Germany
Canada
Switzerland
Israel
Hungary
Spain
U.K.
Denmark
Australia
Finland
E.U.
OF A DIFFERENCE DOES IT MAKE?
THE U.S. PAYS MORE
ON CARD INTERCHANGE FEES THAN
ALMOST ANYWHERE
ELSE IN THE WORLD, MORE THAN
DOUBLE THE FEES PAID IN THE U.K.
NO WONDER MR. PIG
LOOKS SO DARN SAD UP THERE.
So right now in the United States, a collection of over
5 million retailers are banding together to file a class-
action anti-trust lawsuit against the nation’s major credit
card companies and largest banks for strapping them
with inordinately high fees when customers go plastic.
This case is a follow-up to the Durbin Amendment,
part of the Wall Street Reform and Consumer Protection
act passed in October 2011, which capped the amount
a bank could charge merchants to process debit cards.
This new lawsuit looks to shrink that cap to what retail-
ers believe are more reasonable numbers.
What they’d like to see is a reduction from the current
2% maximum charge they pay to the rate Australia pays
at .5%, which would bring the amount paid out to banks
and card companies down by over $19 billion a year -
a savings that they can pass along to consumers or free
up for employee benefits. The effect on small business
owners could be massive.
A CREDIT CARD INTERCHANGE
FEE IS THE AMOUNT A BANK OR
CREDIT CARD COMPANY
CHARGES A MERCHANT FOR THE
USE OF A CUSTOMER’S CARD. IN
THE UNITED STATES
THIS FEE IS EXTREMELY HIGH.
Collecting on the proposed new percentage cap, banks
would have only raked in a quarter of the multi-billion
dollar profits that they made in 2011. And as our use of
credit and debit cards is ever increasing in a cashless
world, those profits will only continue to grow unless
something is done about it.
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2B2B 1996 SETTLEMENT 2012 LAWSUIT
The numbers are so remarkable that, if the lawsuit goes
through as it stands, it would break a record for the larg-
est anti-trust lawsuit in the history of the United States.
The current record-holder is a similar 1996 decision that
awarded retailers $3 billion in damages; this new law-
suit seeks far more, to the tune of $96 billion. Even set-
tling for a fraction of that, retailers will blow the old
record out of the water and set a new standard against
the unfair fees set by the banks and card companies.
WHAT DOES THIS
MEAN FOR THE BANKS AND CARD
COMPANIES? THE DIVIDENDS ARE
ENORMOUS
ON THESE INFLATED INTERCHANGE
FEES. IF THE .5% CHANGE GETS
PASSED,THE BANKS’S PROFITS
WILL FALL DRASTICALLY.
THE DIFFERENCE FROM THE CURRENT
2% RATE IS,AS YOU CAN SEE, HUGE.
US BANCORP CITIBANK B.O.A. MORGAN CHASE
$1.2B $3.0B $3.7B $5.8B
2B
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412 44 5875 773
CUSTOMER RETAILER
ISSUER ACQUIRER
A.
B.
C.
NETWORK
D.E.
A. Customer makes $100 purchase
B. Retailer submits $100 transaction for
approval
C. Card issuing bank approves, keeping
interchange fee and leaving $98 dollars
D. Retailer’s bank takes further acquisition
fee and passes remaining money along
E. Customer pays $100 and retailer must
absorb more than $2 difference in cost
HOW IT ALL WORKS
FOR CREDITCARDASSIST.COM
2011 ACTUAL FEE PROFITS (2%) VS. PROPOSED REDUCED
RETURNS (.5%), A DIFFERENCE OF 19 BILLION