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Too harsh? Sure, a little. It might be more accurate to say: "Iowa local government official to small businesses: I don't care enough to know the difference about the details of how you have to deal with an exorbitant and unfair fee that we both pay by dint of operating a merchant credit card account."

Well, that wouldn't be quite so catchy! But there is some real irony here -- that local official whose ignorance of the credit card industry that's irked me, is in fact a county Treaurer. A job title where one should, you'd think, know better; I explain in the extended entry.

From Radio Iowa:

The two websites that allow Iowans to pay their property tax and renew their car licenses on-line have lowered the fee for the service. Polk County Treasurer, Mary Maloney, says you can now handle those transactions on-line with an e-check for 40 cents. ... Maloney says many people want to pay by credit card, but they have to pass on the interchange fee. Maloney says other merchants can add the interchange fee to the cost of their product, but treasurers can't do that.


Where does he get off saying it's so easy for merchants to pass on the cost of the interchange fee? There are very few small businesses that can easily pass on the fee. They tend to be the kinds of stores that sell a lot of ONE thing: Gas stations and liquor stores are the most commonly-cited examples.

I can believe the Treasurer's office has to eat this fee. I don't know all the details, but as I've learned in my work for -- raising awareness about merchant issues, including this fee -- the rules behind the fee are incredibly complicated. So I wouldn't pretend to know how they affect state and local government offices, and I would rather they not pretend to know about what they clearly don't.

That's why I'm livid. Anyone who has a merchant account is in the same boat. How the Polk County Treasurer's office gets away with misleading people about this fact is beyond me. What's annoying is that I KNOW it's obscure, which means that people hear about the issue very infrequently and only very briefly at any one time. A little bit of misinformation goes a long way.

If this issue is totally new to you, and you're interested in the ongoing fight of merchant account holders with Visa, MasterCard and the credit card industry, I'd recommend starting with my first diary on the issue. You might also be interested to brush up on the astroturfing the banks carry out to get their way, and hear what Chris Dodd has done about it this year.

P.S. I linked the Wikipedia article on the Interchange fee above, but here's the key section from that article:

Regulators in several countries have questioned the collective determination of interchange rates and fees as potential examples of price-fixing. Merchant groups in particular, including the U.S.-based Merchants Payments Coalition and Merchant Bill of Rights, also claim that interchange fees are much higher than necessary,[6] pointing to the fact that even though US technology and efficiency has improved, interchange fees have more than doubled in the last 10 years. Issuing banks argue that reduced interchange fees would result in increased costs for cardholders, and reduce their ability to satisfy rewards on cards already issued.

Merchant lawsuits claim that interchange fees in the U.S. are out of line with falling technology costs and similar fees charged outside the United States, resulting in higher prices, lower profits and harm to the consumer. The lawsuits allege that these high fees represent collusion and price fixing among the bank card networks and their card issuing banks, in violation of antitrust laws. Bank card networks disagree, claiming interchange fees represent an effort to balance incentives to issuing banks to issue more cards with better rewards against the need to bring an optimum number of card-accepting merchants into their credit card systems.

Say what? Oh well. When you're shopping this Christmas, don't forget that you could be paying less for those presents, if you could get a cash discount on items and that you knew you could do it. The lack of choice in the system seems acceptable now because it's the way the system has gone on for so long. Maybe in 2008 we'll see how those lawsuits pan out, and maybe Congress will get serious about doing something about it.

Originally posted to Interrobanger on Wed Dec 12, 2007 at 11:07 AM PST.

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Comment Preferences

  •  No interchange fees on this tip jar (8+ / 0-)

    Don't worry, no surcharge. But no discount, either.

    je suis marxiste, tendence groucho

    by Interrobanger on Wed Dec 12, 2007 at 11:07:52 AM PST

    •  You only have to pay 2-2 1/2% (1+ / 0-)
      Recommended by:

      if you get the right Merchant Account.

      I use YourPay and it works really well.

      Perhaps someone should clue in that Treasurer...

      I'm supporting Edwards, but Mrs. Polecat is supporting Obama. Naturally, you can guess which one of us is over 35.

      by polecat on Wed Dec 12, 2007 at 11:16:29 AM PST

      [ Parent ]

      •  Even that is more than it should be (1+ / 0-)
        Recommended by:

        Don't forget that the banks claims about the fee. For the reasons noted in that Wikipedia entry, it's unbelievable the fee keeps going up. Of course, they use it to pay for rewards programs -- a cynical, self-defeating vicious circle if I've ever seen one.

        Thanks for the note! I will look into YourPay.

        je suis marxiste, tendence groucho

        by Interrobanger on Wed Dec 12, 2007 at 11:23:10 AM PST

        [ Parent ]

  •  The treasurer's statement actually makes sense. (0+ / 0-)

    This is government, remember. She can't spend anything unless it's budgeted. She ESPECIALLY can't add any kind of "surcharge" or additional fees to the bills.

    So, call the county commissioner, or whatever equivalent you have, and get him to add a few bucks to the treasurer's budget next year for interchange fees!  They'll probably be happy to-- gives 'em something to brag about to the constituents, for not a whole lot of money.

    •  I'm not too clear on the details of the local gov (0+ / 0-)

      Which is why I'm not proposing a change. Ideally they SHOULD be able to do something about it. Just what bugs me is the treasurer seems to think merchants have it so much better. We don't.

      je suis marxiste, tendence groucho

      by Interrobanger on Wed Dec 12, 2007 at 11:51:23 AM PST

      [ Parent ]

  •  Government makes the rules (0+ / 0-)

    Naturally, the rules suit the government.

    My county also passes on the plainly-stated fee.

    Just pay by check.

    I know I will get a property tax bill the first post office business day of each November.

  •  Government types think passing on costs is easy (0+ / 0-)

    Actually, it is just as difficult as raising profits. The customer only sees a price, not a reason.

    If it was easy or even possible to raise profits, most commercial space would bear signs "former tenant retired with __ million dollars."

  •  I am paying for my gifts with gold (0+ / 0-)

    Take that interchange fees, and h/t to Ron Paul.  I've also been thinking about about throwing down some euros a la Jay-Z, but anything paper makes me nervous.

    Come to think of it, carrying around gold bricks isn't smart either.

    Oh, that's right... THAT'S WHY I LIKE TO USE MY DEBIT CARD.  FOR EVERYTHING.  That these fees are screwing over small businesses isn't cool.  And, you are right Interrobanger, the technologies have improved, but the cost is the same.  THat is backwards to all other advancements... imagine if the price for computers and cell phones never dropped.  It would be as silly as it is absurd.

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