*Never pay by credit card in a restaurant. * *The difference comes out of the servers tip.* *In most places owners can pay servers a lower salary than minimum wage because it is assumed they will make it up in their tips. In this area the minimum wage for servers is 1/2 that for other workers. * *Most people outside the industry don't know about this little scam. * * * *Bear* * * * * * * * * * * On 13 October 2011 10:02, MJ <[email protected]> wrote:
> > Steve Horwitz: > > Walmart is the bad guy here and so are the politicians who did their > bidding by passing the interchange fee caps in Dodd-Frank. Don't blame the > banks. *THIS IS HOW REGULATION WORKS FOLKS*: > > "Here's the background: Whenever you use a credit card or debit card to buy > something at a store, the credit card processor (like Visa or Mastercard) > and the issuing bank (like Bank of America or Chevy Chase Bank) both take a > cut. The store may only get $9.70 on a $10 purchase. > > How is that rate -- the "interchange fee" -- set? Until this year, it was > set by market forces. Visa and Mastercard offer stores a service that > facilitates sales and brings in more business. In return, they demand a cut > of the sale. Walmart and Joe's Corner Store aren't required to accept debit > cards or credit cards, but they do, which means that they decided the price > was worth it. > > Retailers, of course, wish the card issuers and processors would provide > this service for free. Businessmen are always looking for a better deal. The > businessmen in this case decided to employ regulatory robbery to get their > way. Led by Walmart and the Retail Industry Leaders Association, retailers > pushed for a federal cap on interchange fees. > > When the Dodd-Frank financial regulation bill came up, Sen. Dick Durbin > introduced an amendment giving the Federal Reserve the authority to cap the > interchange fee on debit cards (but not credit cards). Durbin, in the > misleading populist mold of his fellow Illinoisan, Barack Obama, painted > himself as the scourge of the special interests, because he was battling > against the banks. But some other special interests were firmly in Durbin's > corner: the big retailers." > > xxx > > *Thank Wal-Mart for your new bank card fee > *byTimothy P. Carney Senior Political Columnist > October 2, 2011 at7:30pm > > When Bank of America announced last week that it would charge $5 a month to > customers who make purchases with their debit card, customers railed against > the bank. > > Many conservatives and libertarians said the anger should be aimed at > Congress and the Obama administration, which, through last year's Dodd-Frank > financial regulation bill, effectively outlawed the old debit card business > model, spurring Bank of America to make this change. > > But the real culprit is Walmart and the retail lobby, which used government > to squeeze banks and fatten their own bottom line. Walmart won, banks lost, > and now customers are stuck with a new monthly fee. > > Here's the background: Whenever you use a credit card or debit card to buy > something at a store, the credit card processor (like Visa or Mastercard) > and the issuing bank (like Bank of America or Chevy Chase Bank) both take a > cut. The store may only get $9.70 on a $10 purchase. > > How is that rate -- the "interchange fee" -- set? Until this year, it was > set by market forces. Visa and Mastercard offer stores a service that > facilitates sales and brings in more business. In return, they demand a cut > of the sale. Walmart and Joe's Corner Store aren't required to accept debit > cards or credit cards, but they do, which means that they decided the price > was worth it. > > Retailers, of course, wish the card issuers and processors would provide > this service for free. Businessmen are always looking for a better deal. The > businessmen in this case decided to employ regulatory robbery to get their > way. Led by Walmart and the Retail Industry Leaders Association, retailers > pushed for a federal cap on interchange fees. > > When the Dodd-Frank financial regulation bill came up, Sen. Dick Durbin > introduced an amendment giving the Federal Reserve the authority to cap the > interchange fee on debit cards (but not credit cards). Durbin, in the > misleading populist mold of his fellow Illinoisan, Barack Obama, painted > himself as the scourge of the special interests, because he was battling > against the banks. But some other special interests were firmly in Durbin's > corner: the big retailers. > > Melissa Merz, a former press secretary for Durbin, lobbied for Walmart on > the financial regulation bill, as did former Durbin legislative aide Donni > Turner. The Durbin alumna were both at the Podesta Group, and the firm's > lobbying filings indicate both lobbied on "Senate financial services > regulatory reform legislation." > > At the same time, these retail lobbyists were helping fund Durbin's > campaign. Daily Caller reporter Jonathan Strong wrote "one month after the > Dodd-Frank financial reform bill passed, both of those former aides, Melissa > Merz and Donni Turner, attended an Aug. 10 fundraiser for Durbin hosted by > the Podesta Group. A group of lobbyists mostly from the Podesta Group gave > Durbin $5,000 on Aug. 10 and a $5,000 check from Walmart's PAC cleared > shortly afterward, on Aug. 27." > > The returns to the retail industry were huge. As the Federal Reserve > prepared its rules setting the maximum per-purchase interchange fee, a Home > Depot executive told investors on a conference call "Based on the Fed's > draft regulations, we think the benefit to the Home Depot could be $35 > million a year." > > That $35 million Home Depot gain is a $35 million loss for banks and > credit-card processors. Their interchange revenue was central to the > business model that allowed banks to offer free checking and free debit-card > use. > > That business model is now illegal, and so Bank of America has switched to > the model they find second best. If they can't make the stores cover the > costs of debit cards, make the consumers pay a share. The American Bankers > Association calls Bank of America's $5-a-month charge "the Durbin fee." > > Durbin, needless to say, doesn't like being blamed for this highly > unpopular new fee. He blasted B of A for instituting the fee, calling it > "unfair." Other liberals say B of A is just making excuses for fleecing > their customers. But Bank of America was always free to charge a monthly fee > to debit card customers. It didn't because it thought it could get more > customers by charging the stores instead. > > Debit-card users don't have the lobbying clout of Walmart and the retail > industry. Bank of America customers can't get together and hire Durbin's old > staffers. > > It's the standard tale of government intervention in the economy: The guy > with the best lobbyists wins, and the little guy -- this time, the consumer > -- loses. > > Timothy P.Carney, The Examiner's senior political columnist, can be > contacted at * > [email protected]*<[email protected]>. > His column appears Monday and Thursday, and his stories and blog posts > appear on ExaminerPolitics.com <http://examinerpolitics.com/>. > > http://campaign2012.washingtonexaminer.com/article/thank-wal-mart-your-new-bank-card-fee > > -- > Thanks for being part of "PoliticalForum" at Google Groups. > For options & help see http://groups.google.com/group/PoliticalForum > > * Visit our other community at http://www.PoliticalForum.com/ > * It's active and moderated. Register and vote in our polls. > * Read the latest breaking news, and more. > -- Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more.
