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Kimmykim · 05-09-2006, 02:35 PM

You people have obviously never heard the phrase... "the road to hell is paved with good intentions"...

You may claim that the card associations are a monopoly. They may in some instances be breaking laws like Sherman Anti-trust or other collusion type laws. In the case of coding and segregating their merchants based on historic data -- of which they have tons that would stand up in court if they decided to pull the plug, not to mention the fact that by the time anyone ever actually managed to get them into court over doing such it would be so long after the fact that it wouldnt matter -- they have every right to segregate merchants based on risk factors.

Visa and Mastercard are associations. Their member banks are the ones that sit on the association boards and make up the rules. Visa and Mastercard are brands. Very well funded, highly marketed brands. The associations create rules based on what is best for the member banks. There is no man behind the curtain in this case.

Rates are determined and merchants coded in the same way that insurance rates are arrived at -- based on historical risk and loss analysis.

Shipping a physical product is not more of a risk than a downloaded product is to the association. With a physical shipment there is proof of delivery which negates the majority of chargeback claims arising from consumers saying they didn't receive a product. Most of the chargebacks on physical goods come from consumers saying the product wasn't what they expected, was damaged, was not what they ordered, etc -- and those chargebacks are supported when the consumer returns the goods to the distributor. Consumers failing to return goods don't generally get a chargeback to stick.

Portable media, especially involving recurring billing models, is an entirely different animal. There is no way to prove that the consumer was able to utilize the materials in the manner that they expected. Compatibility issues with software or older computers, installer software failing to work, etc, these are not things that can be disproven that easily by the merchant.

When MC or Visa terminate accounts for failing to stay in compliance (and their compliance terms are pretty well published) they have every right to do so. We don't have to like their rules but they are the ones that make the rules. When you have industries where fraud is rampant and out of control -- which it still is today, ask any PPS program owner -- combined with materials being sold that are borderline legal -- finding a judge that will side against the associations is nearly impossible. The amount of money that such a campaign would take, coupled with the fact that by the time it was over it would probably be a moot point anyway, simply isn't worth it.

No one forces merchants to take Visa or Mastercard. That's their biggest trump card and one that isn't going to be overcome any time soon. This isn't a case of the associations telling their member banks they can't issue Amex cards, this is a process and a set of guidelines based on historical data that those in this industry directly are responsible for.

05-09-2006, 02:35 PM
Kimmykim bitchslapping zebras!!!!! Industry Role: Join Date: Jun 2001 Location: In a shack by the beach Posts: 16,015	You people have obviously never heard the phrase... "the road to hell is paved with good intentions"... You may claim that the card associations are a monopoly. They may in some instances be breaking laws like Sherman Anti-trust or other collusion type laws. In the case of coding and segregating their merchants based on historic data -- of which they have tons that would stand up in court if they decided to pull the plug, not to mention the fact that by the time anyone ever actually managed to get them into court over doing such it would be so long after the fact that it wouldnt matter -- they have every right to segregate merchants based on risk factors. Visa and Mastercard are associations. Their member banks are the ones that sit on the association boards and make up the rules. Visa and Mastercard are brands. Very well funded, highly marketed brands. The associations create rules based on what is best for the member banks. There is no man behind the curtain in this case. Rates are determined and merchants coded in the same way that insurance rates are arrived at -- based on historical risk and loss analysis. Shipping a physical product is not more of a risk than a downloaded product is to the association. With a physical shipment there is proof of delivery which negates the majority of chargeback claims arising from consumers saying they didn't receive a product. Most of the chargebacks on physical goods come from consumers saying the product wasn't what they expected, was damaged, was not what they ordered, etc -- and those chargebacks are supported when the consumer returns the goods to the distributor. Consumers failing to return goods don't generally get a chargeback to stick. Portable media, especially involving recurring billing models, is an entirely different animal. There is no way to prove that the consumer was able to utilize the materials in the manner that they expected. Compatibility issues with software or older computers, installer software failing to work, etc, these are not things that can be disproven that easily by the merchant. When MC or Visa terminate accounts for failing to stay in compliance (and their compliance terms are pretty well published) they have every right to do so. We don't have to like their rules but they are the ones that make the rules. When you have industries where fraud is rampant and out of control -- which it still is today, ask any PPS program owner -- combined with materials being sold that are borderline legal -- finding a judge that will side against the associations is nearly impossible. The amount of money that such a campaign would take, coupled with the fact that by the time it was over it would probably be a moot point anyway, simply isn't worth it. No one forces merchants to take Visa or Mastercard. That's their biggest trump card and one that isn't going to be overcome any time soon. This isn't a case of the associations telling their member banks they can't issue Amex cards, this is a process and a set of guidelines based on historical data that those in this industry directly are responsible for.