The New Visa settlement doesn’t solve anything.  We need some measures to ensure true free market capitalism.  There ARE some things which would help.

Although Visa and Mastercard have done a lot of good in the industry, I’m not afraid to say some negative about them.  The current lawsuit, in my opinion, is ridiculous!  Basically, the case says these two companies colluded together in violation of anti-trust laws and caused about five billion dollars in damages.  Therefore, the ruling is made not to change anything about what the companies are doing!  Something is wrong with that picture.

In the U.S. we want to remain free market capitalists.  We don’t want the government regulation like other countries have which caps the rates.  However, although the industry is not heavily regulated, neither is it truly free market either.  We have these mega companies which are colluding together to inflate their profits through card fees.  And the people involved with setting these fees, including interchange, are not the people paying them.  Merchants have no ability to control their costs.

The looming question is, “What should be different?”  When buying a car or a house, the price of the vehicle or the total pay-off for a mortgage must be known before purchase.  Similarly, at the point of sale, when the card network sends back the authorization code, I believe they should have to send back the base interchange rate with it.  Then merchants should be allowed to do whatever they want with that information.

·         Accept the Card
·         Don’t Accept the Card
·         Add a Service Fee
·         Add a Surcharge
·         Do a Cash Discount

·         Pay the Fee

When merchants can make their own choices, that’s a free market!  Right now, merchants accept cards with no idea of the cost until the bill comes at the end of the month.  For the free market to work there must be transparency of information and freedom to make decisions.

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Should I Keep Selling Cash Discounting? – The Individual Rep