Talk:Interchange fee

message: "According to Diamond (DTPI), a management and technology consulting firm, only 13% of interchange costs go to processing, which is the fee’s original purpose, while about 44% goes to paying for reward programs and 35% covers cost of funds and profit margins."
Just reading this article for the first time - where does the other 8% go?  Greg 213.86.197.188 (talk) 16:06, 12 January 2009 (UTC)
thread_title:  Rewrite needed 

message: Had issues reverting edits today (2007-08-08). That's why you see a big change. Had to paste an older copy to make sure the right copty was there. stymiee 14:21, 8 August 2007 (UTC)
thread_title:  Issues reverting edits 

message: This article has been fully protected (Wikipedia administrator-only edits) due to an OTRS / legal issue.  Non-administrators: please bear with us.  Administrators: Please contact me or Mike Godwin before making any changes.  Georgewilliamherbert 01:12, 10 August 2007 (UTC)
thread_title:  Locked 

message: I am undoing Stymiee’s changes (1) to correct factual inaccuracies of the article and (2) to restore NPOV, especially in the “controversy” section.
1. Correcting factual inaccuracies.
I will not list fact-by-fact the extent of the errors in the current article, but will point only two egregious examples (and list more later, if necessary) that demonstrate how fundamentally the entry misinforms readers.
In Stymiee’s version, the article referred to “merchant discount and fees,” and mistakenly tells readers that “‘Interchange fee’ is a term used in the payment card industry to describe a fee that bank card networks such as Visa and MasterCard require merchants to pay card-issuing banks when merchants accept their credit and debit cards for purchases.”  Both the term “merchant discount and fees” and the definition of “interchange fee” are invalid.
There is a term called “Merchant Discount Rate,” (or Merchant Discount Fee), but none called “merchant discount and fees.”  This is important, because the interchange fee is one component of the Merchant Discount Rate.  Further, when “discount” and “fees” are split with an “and” it obscures that there is only one function at work: the Merchant Discount Rate (see for example, http://www.allbusiness.com/glossaries/merchant-discount-rate/4945585-1.html)  In fact, no less an authority than Wikipedia states “Interchange fees are charged by the merchant's acquirer to a card-accepting merchant as component of the so-called merchant discount rate (also referred to as "merchant service fee").” http://en.wikipedia.org/wiki/Credit_card 
As to the definition of Interchange Fee, many banks, including Harely Financial, state “Interchange fees make up a part of your merchant discount rate.”  http://www.harleyfinancial.com/FAQ%20Harley%20Financial%20Services.htm
Testifying before Congress in 2006, former FTC Chairman Timothy J. Muris (certainly an authority) summarized the total financial transaction between a customer, a merchant and each of their banks thusly: “The issuer then pays the acquirer, minus an amount called the "interchange fee," which is set by MasterCard and *521 Visa, and posts the charge to the consumer's account. The acquirer then credits the amount charged to the merchant's account, less another fee for its services. The total difference between the amount that the consumer pays and the amount the merchant receives is called the "merchant discount."”  http://republicans.energycommerce.house.gov/108/Hearings/02152006hearing1774/Muris.pdf 
2. Restoring NPOV, especially in the controversy section.  
In Stymiee’s version, the counter-argument to the merchants amounts to “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.”  This is only part of the Issuing banks’ claims, the full (i.e. encyclopedic) argument is, as is now stated, “Issuing banks. . . .argue that reduced interchange fees would result in increased costs and fewer choices for cardholders, and that merchants are simply attempting to shift costs to consumers – costs that are a part of doing business, just as rent, salaries, or the cost of accepting checks.”
Further, for the same reason that the Merchant’s Payment Coalition and the Merchant Bill of Rights are mentioned as “particular” “[m]erchant groups,” I have re-instated “the Electronic Payments Coalition” as an ally of the “issuing banks.”  All three of these specific interest-groups have a stake in this argument and readers who want to understand the scope of the controversy must be aware of all three groups’ activities.  To that end, I have also un-deleted the Electronic Payments Coalition’s Web site to the External Links section so readers can visit both sides’ Web sites.
Below is the transcript from the previous editor’s rationale for correcting Stymiee’s work.
-----
I feel that the changes I made are consistent both with the explicit rules of Wikipedia and are in keeping with the spirit of the Wikipedia mission.  My edits further the following Wikipedia values (taken from http://en.wikipedia.org/wiki/Wikipedia:The_perfect_article): 
 
•  acknowledges and explores all aspects of the subject; i.e., it covers every encyclopedic angle of the subject.
  
My angle on the subject, which includes the activities and viewpoint of the Electronic Payment Coalition (EPC) is certainly part of the “controversy,” which is where I made most of my edits and EPC’s Web site (which I linked to in the “external links” section” is certainly relevant to people looking for external sources of information—at least as relevant as The Merchant’s Bill of Rights.
 
•  is completely neutral and unbiased; it has a neutral point of view, presenting competing views on controversies logically and fairly, and pointing out all sides without favoring particular viewpoints. The most factual and accepted views are emphasized, and minority views are given a lower priority; sufficient information and references are provided so that readers can learn more about particular views.
 
 
Words like “secrecy” are logical “poison pills;” they assume nefarious (or at least ulterior) motives.  “Transparency,” which I used, is a more neutral term.  
 
Prior edits deleted essential parts of the controversy; in a section dedicated to explaining an ongoing controversy, I am presenting one side’s documented argument, that “merchants are simply attempting to shift costs to consumers – costs that are a part of doing business, just as rent, salaries, or the cost of accepting checks,” which I state is an argument, not a fact (that is, it is a verifiable fact that one sides make the argument I present and that that argument is a part of the controversy—thus it belongs in the “controversy” section of this article).
 
•  is precise and explicit; it is free of vague generalities and half-truths that may arise from an imperfect grasp of the subject.
 
 
I wrote “Some countries, such as Australia, have established price controls in this arena. . . .” Prior edits stated “Some countries have established significantly lower interchange fees. . . .”   My language is more precise and explicit.  I name a country and detail why they have a different interchange fee I do not use words like “significantly” or “marginally” or “nominally” lower; what does “significantly lower” mean?  10 percent lower?  50 percent lower?  My language is more precise and explicit.  
•  is well-documented; all facts are cited from reputable sources, preferably sources that are accessible and up-to-date.
 
 
By linking to the EPC, I am adding to the cache of verifiable facts.  People can go to the EPC for their side of the argument and to read the assembled statistics available on the site.  I will add more citations in following edits.
I also believe that my edits are in keeping with the spirit of Wikipedia.  For example, much of the "overview" section (before my edits) represented an argument and not verifiable statements of fact.  In my deletion of certain passages, I tried to keep the article focused on verifiable, accurate statements of fact about the Interchange Fee, preserving both sides in the "controversy" section.
An example of this is that the article stated "Interchange fees are set collectively by the financial institutions which are stakeholders in Visa (currently an association of banks and other credit card issuers and acquirers) and MasterCard (a public company). Many of these banks issue both credit and debit cards. JPMorgan Chase is the largest issuer of both."  In truth, interchange fees are negotiated, not set, (see, for example, http://minneapolisfed.org/pubs/region/06-06/interchange.cfm, "Sears and large grocery chains, have <B>negotiated</B> special interchange fee deals."   
Not relevant to the article are the following paragraphs, which serve more to vilify the payment card industry and do not help readers understand what the Interchange fee is, nor its history nor the ongoing controversy that surrounds it.  
GBYehuda (talk) 22:18, 31 January 2008 (UTC)
thread_title:  Trying to avert an edit war with Stymiee, correct facts and restore NPOV. 

message: I would like, formally, to declare a true with Stymiee.  Given the fact that he reverts without leaving notes on the talk page and that he seems to have a history of un-Wiki-like behavior as this post to his talk page from Calltech (http://en.wikipedia.org/wiki/User:Calltech) on 23 December 2006 attests:
(being quote)
Please do not add inappropriate external links to Wikipedia. Wikipedia is not a mere directory of links nor should it be used for advertising or promotion. Inappropriate links include (but are not limited to) links to personal web sites, links to web sites with which you are affiliated, and links that exist to attract visitors to a web site or promote a product. See the external links guideline and spam policies for further explanations of links that are considered appropriate. If you feel the link should be added to the article, then please discuss it on the article's talk page rather than re-adding it. See the welcome page to learn more about Wikipedia. Thank you.
(Source: http://en.wikipedia.org/w/index.php?title=User_talk%3AStymiee&diff=188013876&oldid=96099797) 
(end quote)
Stymiee: please contact me directly on my user page about our editorial differences before you abrogate the 3RR.  
I am also seeking comment on my changes through other channels and expect to have entries to this talk page forthwith.
GBYehuda (talk) 11:26, 1 February 2008 (UTC)
thread_title:  Calling for a truce with Stymiee and seeking third party intervention.   

message: I have asked for a truce and discussion.  Stymiee simply reverts the text without providing any argument.  I am contacting George William Herbert, who locked this article in the past, to protect it again from Stymiee's vandalism.
GBYehuda (talk) 12:39, 1 February 2008 (UTC)
thread_title:  Stymiee has reverted twice in six hours.  Will he revert again? 

message: Styimee has now reverted 3 times without leaving any comment.  I ask that if he reverts again, the page be locked and/or he be banned.
I have left copious notes on his talk page, on this discussion page, and with an administrator.  All he does is hit "revert," which leaves Wikipedia's article biased and its readers misinformed.
GBYehuda (talk) 14:14, 1 February 2008 (UTC)
thread_title:  Stymiee has now reverted 3 times w/o comment.  If he reverts agian, I ask for his banning 

message: I ask that be be banned.  —Preceding unsigned comment added by GBYehuda (talk • contribs) 14:47, 1 February 2008 (UTC)
thread_title:  Stymiee has now violated 3RR 

message: I ask that be be banned. stymiee (talk) 14:50, 1 February 2008 (UTC)
thread_title:  GBYehuda has now violated 3RR 

message: The content currently in this article is the same as the content approved when the article was locked last August. This is the content that should stay until mediation is completed.  —Preceding unsigned comment added by Stymiee (talk • contribs) 15:29, 1 February 2008 (UTC)
thread_title:  Correct Content 

message: Key Questions:
Whose definition of the "interchange fee" is more accurate and represents NPOV?  
I have backed up my assertions, but the other editor hasn't back up his own. 
Whose arguments belong in Controversy?
I believe that all sides' arguments should be stated in full and as the sides themselves present them.  The other editor wants to reframe one side's argument and shorten it, leaving out relevant information.
What groups' sites belongs in External Links?
I believe that all groups related to the issue belong in external links.  The other editor wants to exclude relevant parties.
* without evaluating the entire issue, Stymee's version seems to use a lot less neutral language than the other version.  --Rocksanddirt (talk) 20:38, 1 February 2008 (UTC)
thread_title:  Request for third parties to evaluate interchange fee accuracy and NPOV 

message: I have changed only one sentence, added no links, and put this article more in line both with other Wikipedia entries (Credit Cards for one) and references already posted to the page, particularly, Visa Interchange Rates, which states:
Merchants do not pay interchange reimbursement fees; merchants pay "merchant discount" to their financial institution. This is an important distinction, because merchants buy a variety of processing services from financial institutions; all of these services may be included in their merchant discount rate, which is typically a percentage rate per transaction.
I understand that Stymiee may have issues with links that I have thought added to the article, but certainly keeping the definition of a term consistent throughout Wikipedia cannot be seen as adding bias (and, putting in no links, my change cannot be link-spamming).
I have also asked the original writer of Credit Card, User talk:Gwernol to weigh in on the issue.
GBYehuda (talk) 01:05, 3 February 2008 (UTC)
thread_title:  Made minor change, asked for more input 

message: The following sentence appears in the article: "While the credit card market in the United States continues to grow, exceeding $1.3 trillion annually, the number of card-issuing banks has shrunk."  -Some further unit of measurement is needed to clarify what the $1.3 trillion represents.  Is it total sales? Purchases? Gross income? In short, 1.3 trillion dollars of/from what?  —Preceding unsigned comment added by Supervox2113 (talk • contribs) 03:30, 28 February 2008 (UTC)
thread_title:  Units Needed 

message: <P>
I have four sources that describe the interchange fee as a component of larger structure.  Do you have any sources that say otherwise?
My sources say that the Interchange fee is charged from one bank to another.  Do your sources say otherwise?
My sources say that some companies, like Wal-Mart, have negotiated their own interchange fee.  Do your sources say otherwise?
<P>
This is an issue with which I am very familiar and on which I do not want to mislead people.  I have left in all language about how much of the Merchant Discount Rate interchange fees comprise.  I have not stripped out any language, in fact, I have added quite a bit and certainly covered all of your points in other parts of this article.  If you want me to agree with your edits, please answer the three questions above with sources and citations.<P>
You may not like what some sources say, but Wikipedia is not a forum for editors' individual thoughts or opinions, it is a place to reference other sources and compile what experts in the field say.  That is what I have done.  What you have done is add your veiwpoint.  If you don't address my sources' arguments, I will continue to edit your changes.<P>
Thanks,
<P>
GBYehuda (talk) 11:01, 14 March 2008 (UTC)
thread_title:  Livefeeordie: Please bring your sources and answer these questions directly. 

message: OK, that was getting too contentious, so I had to step back. If it's important to you that "component" be there, fine. My objection began with your edits that sought to portray interchange as "one component" of the merchant discount rate. If yo do not disagree that it is by far the largest, then we have no real quarrel. Same goes for the bank-to-bank transaction, of course this is how it works.
But the Wal-Mart claim needs better sourcing before it becomes enshrined as fact. Yes, James Lyon said it was so, but his source is not clear. It hasn't been publicly reported, so I think it needs another source. However, it's been publicly floated as possible, so I think this revision is a good compromise.
You may very well disagree but I think this is the best version yet. --Livefeeordie (talk) 23:22, 6 April 2008 (UTC)
thread_title:  After a breather, an attempt to refocus 

message: I just removed this paragraph:
Recent research suggests that interchange fees were originally designed as a way to permit issuers greater revenue while not running afoul of usury laws.Adam J. Levitin, Priceless?  The Economic Costs of Credit Card Merchant Restraints, 55 UCLA L. Rev. (2008)  A 3% interchange fee would translate into 36% in APR based on an assumption of a 30-day extension of credit.   This alone would have violated most states usury laws when interchange was created in 1971, but by structuring interchange, a pass-thru fee on merchants (and ultimately consumers) to appear to be an interbank fee, card networks were able to evade usury laws and still offer issuers sufficient compensation to induce them to join networks.  
I read the 70-page article as well as the referenced abstract and it did not mention usury that I could tell (disclaimer: I am not a lawyer).  If another editor wants to make this argument (and I've not heard it before), that's fine, but please reference a source that talks about it.
Also, Mr. Levitin's writings are arguments, they are not accepted facts and should not be purported to be as such.  Even if Mr. Levitin  had written that "interchange fees were originally designed as a way to permit issuers greater revenue while not running afoul of usury laws," I would not think that the proper way to start the sentance would be "Recent research suggests that" so much as "One scholar argues that. . . "
GBYehuda (talk) 16:04, 22 April 2008 (UTC)
thread_title:  Adam Levitin's Law Review article 

message: A suggestion for the page. There is a very informative paper published by the consulting firm Diamond which explains where the interchange model is likely to go from here. Below is a suggested new section incorporating this article, perhaps after the controversy section. I will leave it to others to review and add if appropriate, because I am closely involved with the subject.
:==Future of interchange fees==
:Some industry observers are looking beyond the current interchange model, predicting that legal and regulatory challenges to the system will lead to the unbundling of the interchange fee from merchant discount pricing.
:According to Diamond, a management and technology consulting firm, only 13% of interchange costs go to processing, which is the fee’s original purpose, while about 44% goes to paying for reward programs and 35% covers cost of funds and profit margins. According to Diamond, interchange costs are “paid for by merchants without directly benefiting them or their customer relationships. In fact, these rewards programs drive consumers to payment choices that are the most expensive for merchants." 
:According to Diamond, the current interchange pricing structure is unsustainable, and increased legal and regulatory challenges “will result in greater transparency to the components of the interchange model, and ultimately, to the unbundling of interchange pricing.” A New Business Model for Card Payments 
--Merchantswiki (talk) 14:55, 15 May 2008 (UTC)
replies: text: Added the middle paragraph and included the source, but the rest is too crystal ball without corresponding news developments. --Stargat (talk) 16:57, 26 May 2008 (UTC)
thread_title:  New section: further interchange discussion 

message: Being from Europe, I just read this article.  It is fine, except that there is suddenly a section "Outside the US" although the previous paragraphs did not refer explicitly to the US.  Would it be possible to integrate the section "Outside the US" in the other sections? Alternatively, the first two sections should be renamed to make clear that they are about the USA. --SmilingBoy (talk) 13:59, 8 September 2008 (UTC)
thread_title:  United States vs Outside the US 

message: I hear the overdrawn rate is about 45%PA  —Preceding unsigned comment added by 193.35.248.119 (talk) 14:47, 12 May 2011 (UTC)
thread_title:  Please could someone add the charges that are excersized in South Africa 

message: An anonymous edit from June 10th added the following to the introduction without any mention in the discussion page: "On June 8th, it was announced that the amendment pushed by Sen. Jon Tester (D-Mont.) that would have delayed implementation of a law that caps the fees banks can charge merchants for swiping debit cards picked up 54 votes, with 45 voting against. It fell six short of the 60 needed to break a filibuster. The six-month Senate fight over debit card swipe fees is finally over. The banks lost."  I intend to delete the last two sentences, on the grounds that the conclusion that they draw is not necessarily factual, depending on how broadly one interprets "the battle."
If we interpret "the battle" broadly, we should consider that more procedural moves by the majority are possible, such as adding this legislation as a rider on other legislation that the minority might not be willing to filibuster, big banks might be able to offer rewards debit cards through smaller banks that are exempt from the fee caps, there will be elections in 2012, etc., so that "battle" is not necessarily over.  On the other hand, if we define, "the battle" narrowly to refer only to this one act in legislative history of a less common type of payment card (debit cards) in just one country, then that should be clarified and the statement should be moved form the initial summary into a subtopic area later in the article, if it is even notable enough to warrant the verbosity.  Either way, I don't think the analysis in those last two sentences is warranted in the initial summary.
The more factual first two sentence are informative, although perhaps someone more experienced at wikipedia edits than I may see fit to move them to a more specialized subtopic in the article.  Adam J Richter (talk) 00:27, 12 June 2011 (UTC)
thread_title:  Deleting "the banks lost" etc. 

message: "For cash withdrawal transactions at ATMs, however, the fees are paid by the card-issuing bank to the acquiring bank (for the maintenance of the machine)".
Many of these costs are past on to consumer. The article is too 'neutral'  Both the issuing and acquiring banks are in it for huge profits and they don't get the profits from each other but from the consumers and small merchant capitalists.  — Preceding unsigned comment added by 98.239.250.100 (talk) 19:53, 14 November 2013 (UTC)
thread_title:  Mosts costs past on to consumer 

message: Dr. Shy has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:
We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.
Dr. Shy has published scholarly research which seems to be relevant to this Wikipedia article:
*Reference : Oz Shy, 2012. "Who gains and who loses from the 2011 debit card interchange fee reform?," Public Policy Discussion Paper 12-6, Federal Reserve Bank of Boston.
ExpertIdeasBot (talk) 15:43, 24 June 2016 (UTC)
thread_title:  Dr. Shy's comment on this article 

message: Hello fellow Wikipedians,
I have just modified one external link on Interchange fee. Please take a moment to review my edit. If you have any questions, or need the bot to ignore the links, or the page altogether, please visit this simple FaQ for additional information. I made the following changes:
*Added archive https://web.archive.org/web/20110727192417/http://marketplace.publicradio.org/display/web/2010/10/04/pm-visa-mastercard-settlement-means-more-flexibility-for-retailers/ to http://marketplace.publicradio.org/display/web/2010/10/04/pm-visa-mastercard-settlement-means-more-flexibility-for-retailers/
When you have finished reviewing my changes, you may follow the instructions on the template below to fix any issues with the URLs.
Cheers.—InternetArchiveBot (Report bug) 18:49, 14 November 2017 (UTC)
thread_title:  External links modified 

message: In the "merchant fee" section, the first sentence is grammatically incorrect and evidently incomplete.
Can somebody correct it? MarkGoldfain (talk) 17:11, 11 July 2023 (UTC)
thread_title:  Problem with the "merchant fee" section.