Dec 302010
 

Whenever you buy something from Wal-Mart using your Visa CCard, Visa will charge Wal-Mart a transaction fee. These fees usually cost Wal-Mart about 2.5% of the total transaction amount. But they can vary between 1% to 3% usually depending on which type of CCrd is being used, (air-miles, points, platinum, etc)

Stores who accept CCs, like Wal-Mart, can either let these fees cut into their margins, or they can raise their prices by the same amount so their customers (you and I) end up paying for the CC fees indirectly without realizing we are. Either way, the CC companies get their money and the merchants and consumers pay the price. But these fees are almost never disclosed to the public. So the Better Business Bureau and the governments in both Canada and the US are planning to take steps to limit the amount of fees CC companies can demand from their partnering retailers, which will limit the CC companies’ revenues. When this news was announced earlier this month MasterCard’s stock dropped more than 10%.

Nothing is set in stone yet but the downside for us (CC users) is that we may see higher annual fees for using a CC. After all, Visa, as a business, needs to make money somehow to balance its books and if it can’t get enough money from retailers anymore it’ll be forced to look elsewhere. Or it may have to cut services, eg: no more cash back.  Is it a good idea for the Gov’t to regulate the credit card industry this way?

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