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.
