Talk:Interchange fee

Rewrite needed
"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)

This is actually a subject I know something about. Since it looks like it needs some work, I don't mind spending some time with this to bring it up to speed. --Livefeeordie 12:24, 2 February 2007 (UTC)

As the history shows, I've done quite a bit of work updating this page (with help of some others fixing typos). If somebody from the Biz & Econ project has a comment, I'd be interested to hear it. And the panel saying that the article is derived from another article is now out-of-date. The entire article has been rewritten and then re-edited a few times. However, I'm new-ish here and I don't know the proper protocol for changing that, so I'll refrain. --Livefeeordie 18:52, 28 March 2007 (UTC)

Issues reverting edits
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) The method for setting interchange was developed in 1973 by Andersen Consulting and was established to standardize the amount the acquiring bank paid to the issuer and allow the acquirer to retain a portion of the discount so that it could recoup some of its costs. See "The Rise of the Payment Card Industry: Mastering Two Sided Markets and Co-opetition" chapter of "Paying with Plastics" by David S. Evans.

Locked
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)

Trying to avert an edit war with Stymiee, correct facts and restore NPOV.
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 negotiated 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)

Calling for a truce with Stymiee and seeking third party intervention.
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)

I have requested that this article be reviewed to ensure it is being managed properly. I will continue to revert edits which seem to add bias or links to external sites that are biased and seen as link spam. stymiee (talk) 12:17, 1 February 2008 (UTC)

Stymiee has reverted twice in six hours. Will he revert again?
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)

I am glad you contacted them. I have also asked this article to be locked due to the vandalism from you and others. Unfortunately this article has a difficult time avoiding biased spammers.

stymiee (talk) 13:30, 1 February 2008 (UTC)

Stymiee has now reverted 3 times w/o comment. If he reverts agian, I ask for his banning
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)

I do leave comments. You clearly aren't reading them. I can only suspect you are here to spam. I will report you and seek your banning. stymiee (talk) 14:44, 1 February 2008 (UTC)

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

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

Correct Content
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)

Request for third parties to evaluate interchange fee accuracy and NPOV
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)


 * The whole issue doesn't seem to be that major. The article in its current state is not bad and quite informative. I would say that the major thing that needs to be done with it is to address the US-centric bias. And that isn't too hard to do. After a general introduction that states how the system works you need a section for each country on which there is information. Put the countries in alphabetical order. Make sure that everything that only relates to the US is in the appropriate section, not in the introduction. Itsmejudith (talk) 21:51, 1 February 2008 (UTC)

Made minor change, asked for more input
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)

Units Needed
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)

Definition of interchange fee
I have changed the definition of interchange fee so that it would be in line with the copy on Merchant account:

The discount rate is a combination of interchange fees (the wholesale rates at which banks buy Visa and Mastercard services), dues, fees, assessments, network charges and mark-ups plus other fees that can be assessed.

as well as Credit Card:

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").

In Livefeeordie's definition, the interchange fee sounds like a free-standing fee, rather than component of a larger cost of accepting electronic payment. If Livefeeordie disagrees (which I imagine is the case, since s/he changed my definition in the first place), I'd like to understand his/her argument.

GBYehuda (talk) 21:11, 4 March 2008 (UTC)


 * A few things wrong with your approach. Chiefly it is misleading to simply note that Interchange is "one of" these fees. It is the largest component by far and very much free-standing fee. The rate does not depend on the other fees which you note, and it doesn't make sense to subsume Interchange into the Merchant discount concept. Those dues, assessments, etc. are ancillary and not as controversial.


 * Second, you cannot cite a Wikipedia entry as a source. It is not a reliable third-party source, see WP:RS.


 * But you are right, Wikipedia entries should agree with each other. Therefore I have changed the other entries to be more precise. Thank you for bringing this to my attention. --Livefeeordie (talk) 11:39, 7 March 2008 (UTC)

I don't understand. Even your own source says "(Interchange fees are) The single largest component of your discount rate pricing." If you want to add the phrase "the single largest" to my sentence, that's fine. Heck, I'll do it for you. But even the sources you cite say that it is a component of the discount rate. They even use that word.

Your other sources says "If you take credit cards, you have no doubt noticed the "discount fee" on your merchant statement. Bundled in with that fee is something called an "interchange fee" . . . ." Again: what is something that is "bundled in" something else called? A component. So your definition is not correct. It is not a free-standing fee, it is--according to your own sources--a component of a larger financial structure.

Also, I was not citing those other articles as references--I have a FAQ from Harley Financial Services for that (they write "Interchange fees make up a part of your merchant discount rate.").

So here are three sources, two of yours and one of mine, that say that Interchange fees are a component of the merchant discount rate. Can you please provide a third-party source that says that (a) that interchange fees are actually and not metaphorically free-standing or (b) that they are not part of a larger financial structure? If you cannot, please don't change the definition simply because you disagree with the way your own sources characterize Interchange fee.

GBYehuda (talk) 16:22, 7 March 2008 (UTC)


 * I am puzzled by your insistence that the most important thing about the Interchange Fee is the Merchant Discount Rate. If you want to start an article about the latter, be my guest. But this article is about Interchange Fees.


 * As for Interchange Fee not being a freestanding fee, you have asserted that it is not independently set, apparently because an umbrella term exists for Interchange and other fees. Yet you have not demonstrated such. In fact, even Visa says they are the ones who set the Interchange Fee (as do other card organizations) and even they speak of them separately from merchant discount.


 * In any case, it was my mistake to introduce that source as I now realize these articles don't meet the standards of WP:RS, especially about unsigned articles being not preferred. So I have taken the time to locate actual research and scholarship from named experts, as well as the SEC filing from Visa. So I have restored my version and expanded it to address these issues, adding the stronger sources as citations. I've made similar changes over on the Credit Card section. Hope this makes sense.


 * Also, I don't want to be tendentious, but simply as a matter of formatting, you did cite another Wikipedia entry as a source, in this edit. Mistakes are correctable so it's no huge deal, but other editors will frown upon putting other Wikipedia articles between reference tags. --Livefeeordie (talk) 16:35, 11 March 2008 (UTC)

Interchange fee: component or free-standing fee?
I'm starting a new thread because I think that this is a separate issue that we should discuss. I have stated (and continue to argue) that the Interchange fee is a part of a larger financial structure, specifically, the merchant discount rate. Livefeeordie takes a contrary view, that the interchange fee is best understood completely independently of the merchant discount rate.

I will point to three sources—two neutral and one deeply biased—to buttress my argument. The first two are Livefeeordie's sources, United States Securities and Exchange Commission FORM S-1 (neutral) and "A Puzzle of Card Payment Pricing: Why Are Merchants Still Accepting Card Payments?" (biased).

The first document reads, in part, "Interchange fees are often the largest component of the costs that acquirers charge merchants in connection with the acceptance of payment cards."

The second document reads, in part, “interchange fees are a component of merchant fees charged by acquirers “ and “The interchange fee is not a price per se, but since the interchange fee is a major component of the merchant fee, its increase (or decrease) greatly affects the increase (or decrease) in the merchant fee.”

Both of these documents talk about the interchange fee as a part of a larger financial structure, which the second document names as "the merchant fee." My third source is a court finding that details how a $100 charge is split between the merchant, the merchant's bank, and the card-issuing bank:

“[On a $100 purchase, t]he acquiring bank, however, will not credit the merchant’s account the full $100. Instead, the acquiring bank will deduct a “merchant discount fee” of around three percent. Thus, the acquiring bank will credit the merchant’s account only $97, keeping $3 as a fee. This merchant discount fee is negotiable. . ..

"The acquiring bank then delivers the credit card receipt to the issuing bank, via Visa. The issuing bank pays the acquiring bank the original amount minus a fee of around two percent, or $98, because the issuing bank knows that when it presents the $100 receipt to Visa, Visa will deduct a $2 fee as well. The difference between the credit card receipt, $100, and the amount the issuing bank pays the acquiring bank, $98, is known as the “interchange fee” or “interchange reimbursement fee.”

 “At the end of the transaction, the customer. . . pays $100 to the issuing bank, plus any late fees and interest. The merchant receives $97. . . for which it charged the customer $100. The acquiring bank receives $98 from the issuing bank, credits the merchant’s account $97, and keeps $1 as a merchant discount fee.”

I think that, taken together, these documents should lay to rest whether the interchange fee is a stand-alone fee or a component of a larger financial structure.

GBYehuda (talk) 16:55, 12 March 2008 (UTC)


 * Mr. Yehuda, at this point your edits clearly constitute POV-pushing, and it is not helping this article convey information to non-experts. I refer especially to your addition of undefined "benefits the merchant receives." The same goes for your claim that merchants "do not pay the interchange fee as a free-standing charge." Of course they do; it's the only part of the transaction which is fixed. It appears that you are trying to portray the Interchange Fee as a transfer of value between acquiring and issuing banks only. These transactions are admittedly complex, and the prior version even said this, too. But do you really dispute that the merchants bear the cost of Interchange fees?


 * Similarly indefensible is your claim that Interchange is "often the largest" part. When the Interchange fee runs 70% to 90% of the fees involved in this transaction, how often is it not the largest part? Edits like this make it all the more clear that you are pushing an obscurantist agenda.


 * Further, your insistence on the word component is curious, especially since the term is inaccurate and unhelpful to this discussion. To see why, let's consult Wiktionary on the term, which defines Component (Noun) as a "smaller, self-contained part of a larger entity." Applied to the Interchange Fee, this is partly right and partly wrong. Yes, the Interchange Fee is self-contained -- after all, Visa agrees that they determine the fee separately from the Merchant Discount Rate. Overall, it is wrong because it has a different relationship to the overall Rate. I think you know that the Interchange Fee is non-negotiable; in fact, the Merchant Discount Rate is dependent on the Interchange Fee, not the other way around. This shouldn't be controversial. The word component is misleading, and shouldn't be used.


 * The version that existed prior to your edits already included the credit card industry's point of view, but you seem to insist on making it the dominant point of view. I insist that you stop it and leave this entry where it was before: A straightforward explanation of interchange fees without loaded phrases and marketing-speak. Let me suggest again that you create a page for this concept and stop trying to make the Interchange Fee more complicated than it actually is (and it is obviously a complicated subject). So please, leave the Interchange Fee alone. --Livefeeordie (talk) 19:19, 13 March 2008 (UTC)

I have not brought up, until now, the possibility that one of us is POV-pushing, or being anything less than upfront. However, a google search of "Livefeeordie," reveals that you have previously written:

I probably don't need to tell you the credit card industry is out of control -- if you noticed, Chris Dodd was holding hearings about this just last week. The interchange fee is the biggest credit card fee of all. It's charged to merchants, not consumers. So you might say "big deal."

But the real catch is that we pay it whether we use cash, check, debit, or credit. So if you're the type who says "just don't use them!" it isn't that simple. More amazingly, it's against the rules for merchants to tell consumers about it, or offer a cash discount -- that's a rule Visa and MC insist on. So the fee is built into all of the prices across the board.

I would say that it's obvious you have an axe to grind and you're using Wikipedia as your whetstone.

I was a college professor for 10 years, so I know what "component" means. And so do the experts that both of us cite. And I have shown every single one of them uses the word "component," so why shouldn't the Wikipedia entry on interchange fee use that word as well? You have never answered this charge. Let me put the question on it's own so you can address it on its own:

When Visa's SEC filings, your own source, Fumiko Hayashi, a Merchant's services guide, and an official court record all refer to the interchange fee as "major component of the merchant fee" why do you balk at using the word "component"? This is an established fact.

Not one, not two, not three, but four sources that span the POV gamut all say that the interchange fee is a component of the merchant discount rate. If you have another source that says otherwise, please present it. Otherwise, please stop eliminating those parts of the article that you simply don't like.

Further, I would like you to apologize for saying "similarly indefensible is your claim that Interchange is "often the largest" part. When the Interchange fee runs 70% to 90% of the fees involved in this transaction, how often is it not the largest part? Edits like this make it all the more clear that you are pushing an obscurantist agenda." The phrase that so offends you, "The difference between what they charge and what they receive is called a “merchant discount rate,” of which the interchange fee is a single component, often the largest" comes directly from a source that you yourself introduced and claimed was valid: Visa's SEC filings. This is what they wrote: "Interchange fees are often the largest component of the costs that acquirers charge merchants in connection with the acceptance of payment cards. We believe that interchange fees are an important driver of system volume."

Unlike you, I am not making any arguments on this page. I am simply reporting what has already been said. Again: Visa's SEC filings call the fee a component, "often the largest," as do all other sources. That's not POV-pushing, that's simply accurate citation.

Also, you take issue with my assertion that "merchants "do not pay the interchange fee as a free-standing charge." Of course they do; it's the only part of the transaction which is fixed. It appears that you are trying to portray the Interchange Fee as a transfer of value between acquiring and issuing banks only. These transactions are admittedly complex, and the prior version even said this, too. But do you really dispute that the merchants bear the cost of Interchange fees?"

Of course I don't dispute that merchants bear the cost of Interchange fees. But every one of my sources, and yours too said that the interchange fee is part of a larger financial structure, the merchant discount rate. That's not my argument, that's what the sources all said. (and I have put them all back in, so please refer to them when you make your next argument.) I think that a decent analogy is this: no one who uses a cell phone pays the fees and taxes as stand-alone costs. Those fees and taxes are a part of the cost of owning and using a cell phone. Likewise, the interchange fee is a cost associated with accepting electronic payments. The fee itself is charged between banks. It's an administrative cost. Just like the government taxes the cell phone providers, not me, for their use (not mine) of the airwaves. My cell phone company then bundles that cost in with my total bill. Those taxes and fees are components of my cell phone bill.

Further, you mislead readers when you write "Wal-Mart has the potential to negotiate," when I wrote that it did. Again, this is a source you introduced (see citation on article page): "a few large merchants, including Wal-Mart, Sears and large grocery chains, have negotiated special interchange fee deals." That doesn't say Wal-Mart may have, or could have, or had the potential to. It's pretty clear: Wal-Mart negotiated special interchange fees. If you don't like that, you can't simply change the words to fit your whim. There's a citation on the table, either counter it with your own or let it stand. —Preceding unsigned comment added by GBYehuda (talk • contribs) 02:28, 14 March 2008 (UTC)

In short, let me again say, I am not making any arguments or stating anything of my own invention on Wikipedia. That's not what this site is for. Rather, I am reporting accurately and dispassionately what the current overwhelming record shows. Court records, SEC filings, scholarly articles, Merchants' services organizations, banks. All of these sources provide the content for my edits. Please, if you have a problem with the words I use, don't quote Wiktionary. Find a reliable source and quote that. And don't tell me not to edit, that's rude and presumptuous.

And if you're going to use my name, please take the time to learn it (it's on my user page, after all): Mr. Ben-Yehuda. Or Gadi. And your name is?

Thanks.

GBYehuda (talk) 02:14, 14 March 2008 (UTC)


 * Mr. Ben-Yehuda, I'm reverting your edits because your version continues to display the flaws I described above. It contains several inaccuracies, employs marketing-speak and removes factual information about how the fee works. You have not acknowledged my arguments, only insisted that the word "component" absolutely must appear.


 * As for my activity on other websites: No doubt, Wikipedia editors have opinions on things. However, I make sure to keep my opinions out of Wikipedia, and message boards have different standards than Wikipedia. I have worked carefully to keep my edits on Wikipedia neutral. I think the tenor our discussion speaks for itself.


 * Now, I am not telling you to stop editing Wikipedia. I am asking you to stop making unhelpful edits to this page. If you believe the Merchant Discount Rate is more important than the Interchange fee, then perhaps you would be happier creating that page. --Livefeeordie (talk) 02:57, 14 March 2008 (UTC)

Livefeeordie: Please bring your sources and answer these questions directly.
 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?  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. 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.

Thanks,  GBYehuda (talk) 11:01, 14 March 2008 (UTC)

After a breather, an attempt to refocus
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)

Waiting before making edits.
I do think that this version is better, but I do have some problems, some substantial, some stylistic.

Stylistically, you take more words than I do to get to the point: "Interchange fee is a term used in the payment card industry to describe a fee that a merchant’s bank" vs. "Interchange is the fee that a merchant’s bank"

I'm not sure why you want to turn 8 words into nineteen, why you want to say that something is a term (which is obvious) rather than starting by defining the term, or why the "interchange fee" is a term used by "the payment card industry." Neither you nor I are members of the "payment card industry" yet here we both are. I think it is more appropriate to say that "interchange is the fee. . ." rather than saying it's a term used by some industry.

Still, I think that my taking a respite is at least common courtesy, and perhaps a necessary palliative to overheated editing.

GBYehuda (talk) 15:44, 7 April 2008 (UTC)


 * That seems appropriate. I was primarily trying to preserve Interchange fee in full as the bolded part, but I can't really argue with fewer words. Not that more words sometimes aren't necessary.


 * I wonder what are your other disagreements? --Livefeeordie (talk) 02:25, 8 April 2008 (UTC)

Adam Levitin's Law Review article
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. 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)

New section: further interchange discussion
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.”

--Merchantswiki (talk) 14:55, 15 May 2008 (UTC)


 * 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)

United States vs Outside the US
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)

Please could someone add the charges that are excersized in South Africa
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)

Deleting "the banks lost" etc.
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)

Mosts costs past on to consumer
"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)

Old/ incorrect data in Overview section of article
The section quoted below of the article, entitled "Overview" includes an old citation (footnote 12, referenced as April 2007), which also appears to reflect an incorrect calculation. Visa's previous 0.11% assessment, being increased by 0.6% would stand at 0.111. If the writer means 0.6 basis points, it would result in an increased assessment of 0.71%. Neither result would equal a new assessment of 1.77%. In any case, updated values for interchange and card brand assessments, reflecting 2013 values would be better.

"For one example of how interchange functions, imagine a consumer making a $100 purchase with a credit card. For that $100 item, the retailer would get approximately $98. The remaining $2, known as the merchant discount[11] and fees, gets divided up. About $1.75 would go to the card issuing bank (defined as interchange), $0.18 would go to Visa or MasterCard association (defined as assessments), and the remaining $0.07 would go to the retailer's merchant account provider. If a credit card displays a Visa logo, Visa will get the $0.18, likewise with MasterCard. Visa's assessment is fixed at 0.1100% of the transaction value and MasterCard's assessment is fixed at 0.0950% of the transaction value. On average the interchange rates in the US are 179 basis points (1.79%) and vary widely across countries. In April 2007 Visa announced it would raise its rate .6% to 1.77%.[12]"

Dr. Shy's comment on this article
Dr. Shy has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"(1) I found a typo: passthru should be pass-through (second paragraph) (2) First paragraph: The author should mention that the interchange fee is for transactions where the merchant bank (acquirer) is not the same as the issuing bank. This is called a four-party system (as opposed to a tri-party system (used by American Express, for example). (3) Third paragraph: "These fees are set by the credit card networks" (but for debit cards, these fees are now regulated by the Fed in the U.S.). (4) Same comments for the first sentence under the Section entitled: Overview (5) Overview, 2nd paragraph: The author writes: "Interchange fees collected by Visa and MasterCard...." This is misleading because interchange fees are collected by the issuing banks (not Visa and MC!!!). (6) Overview 3rd paragraph: "Often they are assumed to have been developed to maintain and attract a proper mix of issuers and acquirers to bank networks." I think that the author wants to say: ...to attract a proper mix of merchants and card holders to accept and hold payment cards. (7) Price fixing: The author writes: "Interchange fees have more than doubled in the last 10 years" The author should provide a reference for this statement."

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.

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Problem with the "merchant fee" section.
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)