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The great thing about giving to charity is that you give what you can, even if it's a small amount. I didn't always think of it this way. I used to think that my donations wouldn't matter unless I could give large amounts of money. And in fact, I didn't give anything until Hurricane Katrina. Before that I was in school, and what little money I had was earmarked for Ramen. Could I have given a dollar or two for various causes? Yes, but I figured it wouldn't be worth it. And so I waited until I was done with school, and ensconced in a job with a livable wage, until I started giving back. And even now, I'm only making enough that it's 25 here or 50 there.

So that's why I'm upset to see that now Red Cross is now requiring a minimum donation amount before it will accept your donations over the web.

But I am not upset with Red Cross. And you might recognize that sign as one similar to the ones you see next to the cash register at coffee and sandwich shops and independent convenience stores. They're all facing the same problem...

The problem of course, are the staggering fees that come with any merchant account, known as interchange fees. Here's what I wrote about the subject in February, as an early attempt to explain what's a very complicated subject:

When you use a credit card either online or in person, your bank has to talk to the merchant's bank. Similar to ATM fees, this is not a costless transaction (although it is much cheaper than they let on). So think of this like an ATM fee that the store pays instead of you. But as we know, any business always passes on costs to its customers, and so those fees end up embedded in the cost of the goods we pay.

Now, if you're thinking ahead you may have already asked: Well, why don't they just offer a discount if you're using cash? Good point! I'm glad you asked. And I'll tell you why not: because in the thousand-plus page agreements that merchants have to sign before they can accept Visa or Mastercard. Also in that document: it's highly highly against the rules for merchants to tell customers about the interchange fee they pay.

The banks that issue the credit cards -- Citibank, JPMorganChase, BofA, just to name a few -- also make it very difficult for store-owners to break out that fee as a cash discount or credit card surcharge. And they also don't want retailers setting a minimum purchase amount to use their card, even though using a card can incur transaction fees up to $2 -- making the purchase of small items on credit financially detrimental to the store.

So do they have the same rules against what Red Cross is doing? I don't know. And considering how jealously Visa and MasterCard guard the hundreds of pages that make up the rules of their merchant agreements, it's pretty much impossible to find out. But what's clear is that even a non-profit charity such as the Red Cross is not exempt from that huge interchange fee.

If you can cut anyone some slack, wouldn't it be them? Apparently not. Bank profits and credit card reward programs take first precedent. Over wildfire victims, over military families, over sick children, over survivors of disasters worldwide.

Good job, guys. Glad to know you care.

Originally posted to Interrobanger on Tue Oct 30, 2007 at 01:25 PM PDT.


Should credit card issuers relent on interchange fees for non-profit charities?

73%51 votes
20%14 votes
5%4 votes

| 69 votes | Vote | Results

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Comment Preferences

  •  Tip jar (11+ / 0-)

    Although tips should really go to wildfire victims. Maybe we could get somebody to put pledges on these things. Just thinking out loud here...

    je suis marxiste, tendence groucho

    by Interrobanger on Tue Oct 30, 2007 at 01:25:44 PM PDT

  •  Visa has been running commercials... (3+ / 0-)

    promoting it's 'Blink' feature where at some merchants you can just wave your card over a sensor and it registers.  It's faster than cash, with no signatures or receipts.  This can be used for any purchase, no matter how small.  I'm wondering if the merchant agreements make these small transactions profitable, or if the retailers are getting reamed whenever they allow these small transactions to go through on credit cards.

    For charities such as the Red Cross the banks really ought to give them a break, dontcha think?

    "Some men see things as they are and say 'Why?' I dream things that never were and say, 'I need to quit drinking!'" - Greasy Grant

    by Greasy Grant on Tue Oct 30, 2007 at 01:35:08 PM PDT

  •  Frankly I'm outraged (5+ / 0-)

    There is something immoral about making profits off of charitable contributions.  These guys definitely make enough money off of their predatory lending to begin with and all their other fees that target people with bad credit.  I wouldn't be surprised if they use the money they get from this to send credit card offers to old people who have trouble reading small print.

    •  It's just business. (2+ / 0-)
      Recommended by:
      Catte Nappe, Justanothernyer

      Should Home Depot stop charging charities for supplies?  Or should OfficeMax stop charging for supplies?  

    •  Well, the if ARC had a problem with this... (0+ / 0-)

      ...they could take people's checking/routing numbers instead and accept ACH transactions, since the fees are typically much lower. The only problem with this is that most people don't like giving out this type of financial information online.

      Yes, the fees for credit cards are pretty high. Part of it is peace of mind on the donater's end for the limited liability from unauthorized transactions--something that doesn't exist for direct bank account withdrawals.

      In conclusion, if you don't want to pay the fee, mail them a check. It's not like there aren't other options--these places just realize that the convenience of people being able to donate online makes them more likely to do so, period, hence is worth the cost. There's nothing to be outraged about, since other options do exist.

  •  Interesting (0+ / 0-)

    because there is a highly visible gas station in Ann Arbor that clearly posts two prices for regular unleaded gasoline - one (lower) price for cash and another, higher price (I think it's between 5 and 10 cents/gallon) for credit card purchases.  I don't know who carries enough cash around any more to take advantage of the lower prices.

    •  Gas is one of the few exceptions (2+ / 0-)
      Recommended by:
      redcardphreek, myrealname

      Where it's easier to offer the discount (or surchage, same difference). Because gas stations are generally selling a lot of one product, it's feasible to break out the two prices. Liquor stores sometimes do this, too.

      But even a simple convenience store carries enough items there are perhaps millions of different possible prices, and the interchange fee would have to be calculated at the counter, each time. This is prohibitive, and so no one does it.

      As I said, it's very complicated. Just the way the credit card industry wants it.

      je suis marxiste, tendence groucho

      by Interrobanger on Tue Oct 30, 2007 at 01:54:42 PM PDT

      [ Parent ]

    •  I laugh at people who use ATM to buy gas at (2+ / 0-)
      Recommended by:
      Naniboujou, myrealname

      ARCO and some other places.  The price per gal. is cheaper than other stations, but ARCO tacks on a 35 or 50 cent ATM transaction fee.  So if you have a small car that takes less than say 10 gallons to fill, you're effectively paying more per gal. than the station down the street with a higher price, but that takes credit cards.

      My Karma just ran over your Dogma

      by FoundingFatherDAR on Tue Oct 30, 2007 at 01:59:26 PM PDT

      [ Parent ]

  •  Launch a Donation Barrage! (1+ / 0-)
    Recommended by:
    burrow owl

    Wow, what a potentially damaging bit of information to use against a political opponent who takes donations over the internet!  I'm sure that political campaigns are charged the same sort of fees by the banks.  Just think what could be done if opponents of a candidate started making $0.01 campaign contributions which would cost the recipient campaign about $3.00 per transactions.  Would it be possible to negate some of those big fund raiser efforts by a candidate by having thousands of opponents making multiple penny donations to bleed the target campaign of funds.  When does the next rolling barrage commence?

    "Love the Truth, defend the Truth, speak the Truth, and hear the Truth" - Jan Hus, d.1415 CE

    by PrahaPartizan on Tue Oct 30, 2007 at 01:51:03 PM PDT

  •  I don't donate to Red Cross for other reasons (1+ / 0-)
    Recommended by:

    (namely their horrendous response to CA fire victims in the past), but a group that size should be able to absorb CC fees as a "cost of doing buisness."  However, it would be nice if the CC companies could reduce fees for smaller deserving charities that need every dollar, though I don't know where the dividing line should be between large and small charities.

    My Karma just ran over your Dogma

    by FoundingFatherDAR on Tue Oct 30, 2007 at 01:53:49 PM PDT

    •  The NFP sector is huge. (0+ / 0-)

      A lot of business would be foregone if they cut these deals.  CC companies should be judged by the same criteria as any other corp - it seems they're being judged more harshly just because they do regular business w/ charities.

    •  Not to hijack the diary (0+ / 0-)

      But can I ask for more details on why you object to the Red Cross?  I've been a volunteer for many years, and ever since Katrina, I've been hearing a fair number of complaints such as this.  I'm trying to figure out if they are an organization I want to keep giving my time and money to.  Nothing I've heard from any firsthand experience has deterred me so far, but that's not to say it couldn't, so please, if you don't mind, share.

      Frugal Fridays, where the cheap come to chat.

      by sarahnity on Tue Oct 30, 2007 at 03:30:52 PM PDT

      [ Parent ]

      •  I know people who object (1+ / 0-)
        Recommended by:

        to their ban on gay men donating blood.  Everyone should be treated to the same quiz, and testing.  

        That said, I do give them money.  But I understand my friends' resentment.


        by mem from somerville on Tue Oct 30, 2007 at 04:22:08 PM PDT

        [ Parent ]

        •  I agree with that resentment (1+ / 0-)
          Recommended by:

          But that is an FDA requirement for all blood banks.  It's not the Red Cross' policy and they can't change it.

          Frugal Fridays, where the cheap come to chat.

          by sarahnity on Tue Oct 30, 2007 at 04:41:08 PM PDT

          [ Parent ]

          •  Also (0+ / 0-)

            The Blood Services, Health and Safety (first aid classes, etc) and Disaster Services are all disjoint divisions.  My understanding is that there is no co-mingling of funds between these groups.  The money the Red Cross gets from selling blood goes into medical research, not disaster relief.

            Frugal Fridays, where the cheap come to chat.

            by sarahnity on Tue Oct 30, 2007 at 04:44:19 PM PDT

            [ Parent ]

            •  None of that is apparent to the average Joe. (1+ / 0-)
              Recommended by:

              And even if it is the FDA says "no gay men" you would think the Red Cross could wield some pressure and try to change that.


              by mem from somerville on Tue Oct 30, 2007 at 04:50:58 PM PDT

              [ Parent ]

              •  blood services (1+ / 0-)
                Recommended by:
                mem from somerville

                The Red Cross got spanked hard back in the 80s and 90s for failing to implement measures to keep the blood supply safe in a timely fashion.  They ended up completely reorganizing the entire way that blood is collected and processed, but not before some federal judges got involved and some serious sanctions were imposed.  I think they are not in any position to wield any pressure in this matter.

                I agree that the Red Cross could be more open and transparent about how they work and what they do, but the truth of the matter is that most people are not that interested.  They don't want to know the intricate details of funding and organization structure.  I'm doing my part to educate people when I can, but I'm about as lowly a peon as you can find in the organization.

                Frugal Fridays, where the cheap come to chat.

                by sarahnity on Tue Oct 30, 2007 at 05:08:00 PM PDT

                [ Parent ]

      •  Mostly has to do with the San Diego chapter (0+ / 0-)

        response to the Cedar Fire.  They raised funds under the auspices of them going directly to the victims of that fire, but then kept the funds for "future needs."  Some Cedar victims did not get the help they were told they could get from ARC.

        "The Red Cross continues to release detailed figures of its aid expenditures after October's fires in an effort to rebuild trust lost three years ago when spending scandals forced an overhaul of its management."

        The appearance is always that it was a problem in one local office and that it was corrected and will not happen again.  But 2001 in San Diego was not the first time or the last.  

        Something similar happened to the funds earmarked for earthquake relief after the 1989 Loma Prieta Earthquake in the San Francisco Bay Area.  Of $52 million in funds donated for earthquake relief in San Francisco, only $22 million was actually spent there

         Over the years there have been similar reports of the ARC 1) not giving help to people who needed it ( saving the $ instead) and/or 2) putting up volunteers in plush hotels while turning away people who need help.
         Also complaints after 9/11 -

         These problems may be on a chapter by chapter basis, and may have been cleaned up since.  But for now my $ is going elsewhere.

        My Karma just ran over your Dogma

        by FoundingFatherDAR on Tue Oct 30, 2007 at 06:21:32 PM PDT

        [ Parent ]

      •  To clarify my response - (0+ / 0-)

        obviously the ARC needs to save a certain amount of funds for future services and "unknowns", but the complaint is that the organization either told the public outright, or somehow led them to believe, that funds collected for disaster X would be directed to victims of that disaster, not put in a slush fund.  If they're going to skim off a percentage of what they collect for any particular disaster, they need to be honest with the public about how much.  They also need to be more honest with the victims, and not promise them assistance then turn their backs on them.

        My Karma just ran over your Dogma

        by FoundingFatherDAR on Tue Oct 30, 2007 at 06:33:22 PM PDT

        [ Parent ]

  •  here's an idea... (1+ / 0-)
    Recommended by:

    Interchange fees in general suck.  But in this case, they really suck.  I am trying to think about how could this situation could be improved... maybe incentify the redux of fees through, oh, I don't know, a hike in "social-cost-fees" from consumers?

    It seems like this could be a great PR campaign for them... "We are waving the Interchange Fees in favor of X charity."

    Why don't they get it?  I hope they catch on.

  •  Ack! (2+ / 0-)
    Recommended by:
    sarahnity, lemming22

    I clicked the wrong button!  I meant to vote "yes".  Aargh.  So subtract one "No" vote and add it to "yes".

    •  That's OK (1+ / 0-)
      Recommended by:
      1864 House

      I voted Yes, but the more I think about it I'd change it to No, so it all balances out.  

      It would be nice if they did relent on the fees and they could even could even take this as a charitable tax deduction, I would think, but it is business and there's no reason why they should treat non-profits any different than their other customers.  Should all businesses give a discount to non-profit customers?  Well, maybe so, but should credit card companies be held to some higher standard?  I'm not so sure anymore.  

      Frugal Fridays, where the cheap come to chat.

      by sarahnity on Tue Oct 30, 2007 at 03:22:20 PM PDT

      [ Parent ]

  •  It's not like I was planning to donate to the ARC (0+ / 0-)

    any time soon, anyway. You do remember Katrina, don't you?

    •  Guess we all have our own reasons (1+ / 0-)
      Recommended by:

      not to donate.

      Here's mine . . .

      President George W. Bush, Honorary Chairman of the American Red Cross, . . .

      Any organization that makes monkeyboy honorary anything ain't getting my money . . .

    •  Can I ask (0+ / 0-)

      what specifically about the Red Cross response to Katrina made you decide they weren't an organization you want to support?

      Frugal Fridays, where the cheap come to chat.

      by sarahnity on Tue Oct 30, 2007 at 03:32:55 PM PDT

      [ Parent ]

      •  This is just based on memory, but two things: (0+ / 0-)

        unequal response in LA and MI, as well as a long delay to help NOLA. Second, ARC tried to get reimbursement from the government for its expenditures.
        I gave money to be spent on a crisis, not to fill their coffers.

        •  Where do you think their coffers go? (0+ / 0-)

          The Red Cross responds to lots of disasters that get little or no media coverage.  I've said this here before, but the kind of work I do is to respond to single family disasters (usually house fires) that rarely even get mentioned in our local paper.  They also respond to disaster in Puerto Rico and other US territories that usually result in very little fundraising from the mainland.  All of these responses have to be paid for by donations.  Yes, they use every big media disaster they can to raise funds.  I've never seen any evidence or report that those funds are going anywhere but to fund disaster relief efforts.  Maybe not the same disaster that was in the paper when you sent in your check, but relief efforts nonetheless.

          As for the unequal response in LA vs MI, I don't know what you are referring to, do you have some references I could read?  And as for the response time in New Orleans, I think they have been working to implement new procedures to improve that, but keep in mind, there is no way they are going to send volunteers into an unsafe situation.  If it's not safe to drive into a disaster area without an armed guard, I don't think it's reasonable to send in civilian workers.

          I'm not saying they are a perfect organization that never does anything wrong and doesn't ever deserve to be questioned, but I do think that a lot of the complaints about them that I have heard are unfair.

          Frugal Fridays, where the cheap come to chat.

          by sarahnity on Tue Oct 30, 2007 at 04:20:18 PM PDT

          [ Parent ]

          •  The Bush-friendly leadership also mattered. (0+ / 0-)

            I'll take another look at the issue ---not right now though.
            Thanks for the response

          •  Actually I agree with a friend who refuses to (1+ / 0-)
            Recommended by:

            donate, saying it is the Government's job to provide for citizen's when disaster strikes.
            I'm much more inclined to donate to the IRC than the ARC in the future.

            •  There are lots of controversies with IRC as well (0+ / 0-)

              I think you should donate where you are comfortable, and I think the IRC does a great job, but be aware there are people that complain about them as well.  One thing that I wish were different is the way they respond to disasters.  With the ARC, they are required to respond to every disaster in the US, big or small.  The IRC sends a response if they get donations.  If no checks come in for a specific disaster, they may not go.

              The ARC is a quasi-governmental organization.  They are chartered by the Federal Government and they must respond to all disasters, but they aren't funded by the federal government (although they may be reimbursed for some expenses by federal, state or local agencies sometimes).  

              As for Bush, it's in the Red Cross bylaws:

              The President of the United States shall, upon acceptance, be the Honorary Chairman of the Corporation.

              I really don't see holding that against them.

              Frugal Fridays, where the cheap come to chat.

              by sarahnity on Tue Oct 30, 2007 at 05:02:15 PM PDT

              [ Parent ]

  •  Anyone know (0+ / 0-)

    if there was any legal action taken against these fees by a business and the outcome?

  •  This is fallout from the housing bust (0+ / 0-)

    Because they are no longer making huge profits from mortgages they have turned to credit cards to make up the difference.
     In fact, they are now more actively trying to get credit card holders, including some of the same people being foreclosed on.
     I've read about this from several sources now.

    The 2nd Red String Conspiracy

    by gjohnsit on Tue Oct 30, 2007 at 03:22:30 PM PDT

  •  Nope (2+ / 0-)
    Recommended by:
    sarahnity, 1864 House

    As a small business owner, I've dealt with the price of doing business for nearly ten years, credit card fees.  As much as I want charity to have the most money of what is donated, they are using a service, and the credit card business isn't a charity. Additionally, besides profits, paying these fees actually cover fraud that is systematic with credit cards. That's where a lot of the cost in the system is nowadays.

    If you want the Red Cross to keep all the money that you want to donate, it's simple, send them a check.

    •  But the cost of processing a check (1+ / 0-)
      Recommended by:

      will include someone's time to open the mail, record it, make a deposit, and possibly pay a fee at a bank to deposit the check. If the person who wrote the check made a mistake in their register, tack on a bad check collection fee for the business/charity. It will end up being far more than the cost of the interchange they would have paid by accepting a credit card. A few cents to have your credit card desposits swept into an account starts to sound like a bargain when you think of the alternative.

      I'm no fan of big credit card companies, but this is not the huge and horrid rip-off it's being made out to be.

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