Centurion

Partial quote of article from Wall Street Journal March 15, 2007
New Tier on Visa Card
To Lift Fees on Merchants
By ROBIN SIDEL
March 15, 2007; Page C3






The nation's merchants will soon start paying more when some big spenders pull out their plastic.

Next month, Visa USA Inc. will set a new tier on its high-end "Signature" line of credit cards that will be aimed at consumers who spend more than $50,000 a year on their cards. Merchants will pay, on average, 14% more per transaction when cardholders pay with a "Signature Preferred" card compared with a regular Signature card.

Unlike other new products, Visa isn't planning a splashy campaign to promote the new tier, which is expected to offer more perks for cardholders. Instead, it will be up to card-issuing financial institutions to decide whether they will bump up customers to the new level by issuing new plastic or just adding the features to their current Signature card.

Visa has quietly introduced the product to its card-issuing financial institutions in recent weeks. The San Francisco-based card association, which is owned by thousands of banks, will launch the new level on April 14. It declined to disclose which banks will offer the Signature Preferred level.

Kagehitokiri

will be interesting to see what banks, what requirements, and what benefits..

rrgg

I'm guessing this is their response to Mastercard World Elite?

budugu

More than any thing else it is just a way to get more money from the retailers. When Visa signature was introduced it was said that the card was for households >100-250K? (i forget). Suddenly every rewards card is a signature card. Apparently the avg spending on the Signature line of cards from the article is 26K ... well below the avg on an amex card (which is not surprising as most here have said that they use visa when amex is not accepted). I think it is the banks that will decide whether to issue it or not (visa guideline is 50K annual spending). And i think banks will use it to bump the annual fee & visa will just be as happy as long as they get more from every transaction. I seriously doubt it will accomplish the goal of poaching amex customers as stated in the article.

ILUVCITIBANK

The implied trend I am watching w/ increasing frustration, as a merchant who accepts credit cards, is these card issuing companies that jack up the discount rates charged to merchants who have no way to know if a card is a "signature" card or not. When an AMEX, V, MC or Discover is presented, we take it without any way to know if its one of these "prestige cards".

So, for Visa to jack up the discount another 14% above the negotiated discount is not unlike you passing through a toll gate...and being told at the END of the tollway your rate has changed on you, even though you *thought* you knew your toll (discount fee) when you entered the tollway.

This is ominous.

rrgg

Are you implying you'd turnaway the customer if you knew the card type in advance?

Kagehitokiri

no one else does this though, do they? so you're saying this is ominous if VI starts a trend?

rrgg, people turn away AMEX for this reason..

ILUVCITIBANK

Won't turn them away; will add a "convenience fee", similar to what the IRS allows when they allow for tax payments via a 3rd party merchant who then passes along a "convenience fee".

Or, in the venacular that all credit card companies allow (because we would never charge a sur-charge, right ??)...we stipulate our advertised prices are "cash prices".

A merchant gets into trouble w/ credit card companies in at least these two ways w/ respect to adding convenience fees (there may be others): A) openly charging a SURCHARGE when a credit card is presented and calling it a SURCHARGE (this is a no-no); legally, and IAW all credit card issuers' policies, the work-around is to advertise that prices are CASH PRICES, which then implies a credit card price is different. This has been tested by lawsuit BTW and is legal and proper, and then B) by openly discriminating one card vs another. One of our customers "reported" my company to AMEX for adding this convenience fee...AMEX dutifully called me and asked me if a) "did I charge a fee" (yes), b) "did I charge a different fee for AMEX than for MC/V" (no), ..."thank you very much and thanks for being an AMEX merchant". That was the end of that call.

ILUVCITIBANK

Oh yes...this practice already takes place. So its not a "new trend", per se...but a "growing trend" I should call it.

The problem is there is virtually no way that I know of for a merchant to have any way to know what the underlying card is. I am half-guessing the mega-merchants (Walmart, Target) have squeezed this variable cost into insignificance...but for small merchants, thus far, the cc issuer calls the play.

Shame that Discover is not more powerful than it is...w/ AMEX, V, and MC in a 3-way tri-oligarchy, there is precious little competition when it comes to the "gotchas" these companies make merchants abide by. Does anyone think MC, V, or AMEX would allow ONE OF THEIR would-be FIXED COSTS vary by as much as 14% stand without resistance ? Can anyone imagine Visa International corporate HQ allowing their electricity provider...to send them a bill based on a negotiated rate plan...and then add a 14% variable cost after the fact and non-negotiable ?

Kagehitokiri

what other cards have higher merchant fees than their network standard??

fuzz

While I get frustrated at merchants who refuse to take American Express, I sympathize with merchants who agree to take a credit card (be it MC, Visa, or Amex) and now find themselves confronted with "premium" versions of these cards which carry higher transaction fees.

The merchant has no way of discriminating which card carries what fee and the credit card companies can just create higher and higher levels, with corresponding increased fees. A merchant may be able to refuse Amex because of higher fees, but cannot refuse Visa Signature while accepting regular Visa.

When confronted with a merchant who demands a minimum for credit cards, I will inform them that this is against the rules, but it rarely does any good, though once in a while I will say I plan to report them to Visa/MC/Amex.

fuzz

rrgg

Yes I know some merchants don't allow amex for this reason.

However, this is totally different. I don't see how the "cash prices" argument applies here. That argument only holds if you charge the same fee to all credit cards. If you have a merchant bank contract for VISA, then it's for all VISA. ILUVCITIBANK wants to charge extra for a specific type of VISA. How do you explain giving the "cash price" to a Gold VISA holder then if you don't give it to Signature Preferred? I'm not saying VISA is acting fairly. I just don't see how you could do this and comply with the merchant bank agreement.

fuzz

I wonder what effect, if any, this so-called "Gratis Card" will have...

http://flyertalk.com/forum/showthread.php?t=671064

http://businessweek.com/bwdaily/dnfl...ndex_companies

fuzz

Kagehitokiri

again, this will be the first card to charge an ADDITIONAL fee on top of the network fee, right?

and while that new venture by Case is interesting, i personally dont care about APRs, FOREX, merchant fees, etc as much as rewards..

anaggie

last couple of weeks of bought new changes to the CC market...does this have anything to do with the fact that the Senate hearings are going on againsty CC companies and their super highr rates that have put unfortunate people in huge debt amounts?

also the fact that recently mortgage companies and banks are starting to tighten their belts towards borrowers...due to the alarming number of foreclosures hitting the market....

I see some changes happening in the next 6-12 months which will a drastic impact on American society...

If CC companies are forced to reduce their interest rates to customers, someone else will have to pay....the merchant...which will be passsed on to the consumer so basically the same thing....or less usage of credit cards which in turn will lower consumer spending which in turn will lead to depressed economy due to the fact that the US economy hinges on consumer spending...