Fighting The Credit Card Companies

Fighting The Credit Card Companies

A few weeks back a House Judiciary Committee held a hearing on proposed legislation that would prevent credit card companies from imposing transaction fees that are unfair. The law, if approved, gives you the right to negotiate “reasonable” fees with these companies. As it stands now, credit card companies set the non-negotiable fee.

This particular legislation was aimed at Visa and MasterCard, which collected $42 billion last year in interchange fees. Interchange is the fee you pay every time a credit card or debit card is used to pay for a transaction. The interchange fee Visa and MasterCard charge is rising at an average of 17 percent per year.

Every company has a right to make a profit, but only 13 percent of the interchange fee the two companies charge is actually needed to process a transaction, according to a 2006 report. As you might guess, with technology steadily increasing by the day, the cost of processing a credit card transaction is steadily decreasing. Yet, you keep paying more.

In a nutshell, Visa and MasterCard are forcing merchants to pass these exorbitant fees on to consumers, most of whom have no idea what interchange fees are because the two companies prohibit you from disclosing it on receipts. The average U.S. family is projected to pay $427 in hidden credit card fees this year. That is up from $378 last year, and nearly triple the $159 famlies paid in 2001.

As the price of gasoline, food and utilities rises, your customers are thinking twice about eating in a restaurant. Meanwhile, you're feeling the same economic pressures, and raising menu prices can be a make-or-break decision. Getting rid of unfair credit card fees won't save the day, but it can't hurt.

You can see why the National Restaurant Association is pushing hard for this bill to pass. It would require credit card companies to negotiate a fair deal with merchants. And if you can't make a fair deal with the companies, the law would require a three-judge panel appointed by the Department of Justice and the Federal Trade Commission to arbitrate an agreement.

There's an old line from the movie Wall Street: “Greed is good.” It certainly is if you run an oil or credit card company.

Bloggers, We Will Bury You

That's the headline on managing editor Bob Krummert's latest newsletter, which you'll find at [4]. He's writing about the growing tide of anonymous bloggers who are taking cheap shots at restaurants. A number of chefs, he points out, are fighting back, including Mario Batali, who months ago posted an online article titled “Why I Hate Bloggers.”

You now have new options, including hiring an independent company to manage your online reputation by becoming actively involved in the outcome of search engine results about your operation. Check out the newsletter.