|by Jason Steele|
As we saw with the Haiti earthquake, Visa, Mastercard, and American Express are now waiving their interchange fees for non-profit donations to relief organizations providing assistance to Japanese people. Visa and Mastercard are only doing this until March 31st, while Amex is continuing this program until May 15th.
Yes, it is good that these companies are not profiting from this disaster, but their good will is only temporary. American Express should be commended for continuing its interchange fee waiver a month and a half beyond Visa and Mastercard. If you are not able to make a donation until next month, you should make it with your American Express card as the charity you donate to will receive the entire amount of your donation.
At the same time, why do they charge these fees at all? Earthquakes and other disasters occur too often all over the world. Every death is tragic, yet there seems to be some threshold that the number of deaths involved has to reach before these companies will stop skimming from charity donations in the form of interchange fees. In reality, the threshold is in how much publicity a disaster generates, and how much good PR they can expect from a temporary waiver.
I Support Interchange Fees
Ironically, I have always championed the right of credit card processors to charge merchants whatever interchange fees the market will bear. Merchants love to whine about these fees, and their propaganda would have you believe that these fees “are passed directly to the consumer”. To that line makes you wonder why they bother complaining so loudly. The ferocity of their complaints as well as all serious studies of the matter indicate it is in fact the merchant that is absorbing the fee. The fees are worth it to them, as we know by the fact that few of them have given up credit card acceptance in favor of cash or other payment methods.
I have no problem with the merchant paying a fee, but when it involves charitable donations, these processors should keep their hands off, before or after a major disaster. I think the industry needs to agree on a set of standards for which charities are entitled to the waiver. Clearly, every fringe organization that can barely qualify for non-profit tax status should not get this special treatment. For example, American Express is only granting this exemption to charities listed by USAID. Perhaps there is a role for Congress here in granting an anti-trust exemption so that these companies can directly discuss this or encouraging this practice in other ways.