Originally Posted by Kimmykim

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.

***Courts including the supreme court have ruled that Visa/MC is 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.

***They do not segregate according to risk. And also, visa should not make broad decisions without allowing banks to determine risk.

***These violations are causing damages into the hundreds of millions. I don't care how long it takes, that is real $$!

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.

***In this case, restricting supply and inflating prices is determined to be best for the banks. I don't disagree with that. My point however, is that this a violation of their monopoly power.
A monopoly is not allowed to restrict supply or inflate prices to bully customers to pay it more money.

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

***Insurance companies determine risk and then compete for customers by adjusting payouts and payments.
***Visa does not allow banks to determine risk and banks are not allowed to compete freely.

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.


***Most chargebacks are from fraud/theft. the example of customer ordering and saying they didn't get it is VERY rare.
***The levels of theft and fraud are no different on physical products, online products, services, in adult or non-adult.
***The main difference is the quality of scrubbing the company performs before processing orders.

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.

***These companies have figured out how to keep chargebacks under 1%. You can continue to believe that theft and fraud are a huge problem and big risk, but you are being fooled by the banks making all the money.

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.

***If their rules break the law, then we should not have to obey and they should not be allowed to enforce them.

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.

***Their is nothing illegal about porn online.
***I know many companies selling memberships, videos sales, dating sites, etc. No one has a fraud problem.
***I am disappointed to see someone from our industry with such a negative view of our industry.

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.

***I think visa could be found to inflating processing by 5-8%. 5% of 1 billion a year in transactions is 50 million. This has been going on for at least five year. Thus we are looking at damages of 200 million or more. I don't care how long that takes!!!

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.

***Companies need Visa/MC to compete. This why the courts have ruled several times in support of the idea that Visa/MC is a monopoly.