This is a great article on how much money credit card companies earn. Please note: Visa and Mastercard stocks have plunged in recent weeks, and retailers are fighting the credit card companies.
By Andrew Martin
The most profitable item at Patricia Orzano’s 7-Eleven store on Long Island is coffee. Slurpees are a distant second.
But as more customers use plastic to pay for even small purchases like these, she has watched a growing share of her revenue vanish in a stream of credit and debit card fees that retailers say raise the price of goods and sharply lift the cost of doing business.
Merchants across the nation, from powerhouses like Wal-Mart and Home Depot, to gas stations, mom-and-pop restaurants and 7-Eleven, have spent years unsuccessfully fighting the biggest of these costs, known as an interchange fee, which generates an estimated $40 billion to $50 billion in income annually for banks that issue credit cards.
But after Congress passed a law last month to protect consumers from excessive fees and interest on credit cards, merchants are mounting a fresh offensive.
This time, they believe the momentum in Washington has turned in their favor. Legislation is winding its way through Congress, a government audit has been ordered and petitions are surfacing in hundreds of convenience stores, including Ms. Orzano’s 7-Eleven, encouraging customers to voice their opposition to the fees. “Congress sort of already illustrated the willingness to take on the credit card companies and the big banks,” said Keith Jones, a lobbyist for 7-Eleven. “We just feel like the job is half done.”
And while large and small banks often clash on political agendas, they have formed a united front, joined by payment networks like Visa and MasterCard, to prepare for a furious battle on Capitol Hill. With profit from credit cards likely to diminish because of the new laws, they are determined not to absorb another major hit.
Read the entire article here.