Chart of the Day: Bank credit card fees induce big antitrust lawsuit
This story seems to be breaking out. Here’s how the Street.com puts it:
Private antitrust litigation pitting some five million retailers against Visa(V), MasterCard(MA), and 13 large banks, including Bank of America(BAC) and Citigroup(C) has slipped under the radar of many analysts and investors who follow those companies, but the case may deliver a multi-billion dollar shock to bank bulls in the coming months.
Aside from Bank of America and Citigroup, the other banks that appear to have the most at stake as a result of the litigation in the U.S. Eastern District of New York are US Bancorp (USB)and JPMorgan Chase(JPM). All four face billions in potential losses.
So why are these big name retailers suing the big banks. It’s this chart from TheStreet.com’s article that appears to be the smoking gun. Credit card interchange fees are the highest by a large margin.
Clearly those charges that go into the bank and credit card companies’ coffers are either absorbed by retailers or passed on to consumers.
This is a big case. Watch for how it gets resolved.
Also see: Will US courts take aim at credit-card interchange? by Felix Salmon
Tell me about it. frown. My total cc fees are now around 5%. It’s outrageous. I switched merchant processors a couple of years ago to save on the fees when a unit of Wells Fargo was ripping me off for 7%, but the new processor, an industry behemoth used a bait and switch with a low teaser rate to start, steadily increasing each year. I don’t want to say who the processor now is. Afraid they’ll reach into my bank account and steal even more. Nothing the little merchants can do about it.
And as for passing on the cost?
Please.
Yes they need to be considerably lower. Though I suspect that what ever administration is in power will tolerate such activities because it strengthens the banks at the publics expense, and in a way that is unnoticed by the majority.
Old news. This has been true since early 90’s at least, and the Wal-Mart/Debit card suit in the late 90’s/early 00’s
Old news. This has been true since early 90’s at least, and the Wal-Mart/Debit card suit in the late 90’s/early 00’s