Retailers large and small are closer to a years-long goal of lower “interchange fees” – the per-transaction cost charged by banks on the MasterCard and Visa debit cards used by customers. But under a new compromise, the network card giants got a break by dodging regulation now directed at major banks that issue the debit cards, including Bank of America, JPMorgan Chase, Citigroup and Capital One.
Beginning June 1, credit and debit card processors must have “reasonably designed policies and procedures” in place to detect if U.S. transactions are tied to bets placed with Internet gambling sites, according to a finalized rule by the Federal Reserve. But the intended crackdown on U.S. online wagering that was behind the 2006 law taking effect tomorrow is far from certain as its power to enforce such activity remains vague.
As a contingent of House Democrats push a framework for legalizing and taxing online gambling, Internet poker parlors and other betting sites are bracing for June 1 – the effective date of a 2006 U.S. law that restricts the use of credit cards and other payment methods for placing illegal online bets. The law was enacted by the Bush Administration with the intent of cracking down on financial transactions that enable the growing popularity of online gambling by Americans.
After years of attempting to even get a bill on the floor of Congress, business groups finally saw enough support to draw a bipartisan vote in the Senate for the first-ever regulation over the fees charged merchants by payment networks Visa and MasterCard. In a 64-33 vote, the U.S. Senate Thursday approved an amendment loosening the grip Visa and MasterCard have enjoyed on debit card transaction fees passed on to the banks that carry their cards.
A leading Democratic senator wants the Federal Reserve to determine if interchange fees – charged businesses every time a customer uses a credit or debit card – are “reasonable and proportional” to the costs of a transaction. Sen. Dick Durbin, D-Illinois, said he will be introducing an amendment this week calling for the first restrictions on the controversial “swipe” fees that merchants have to pay MasterCard and Visa.
As consumers started spending more in the first quarter, they were not hesitant to use their credit cards as Visa and MasterCard earnings show, with better than anticipated profits and higher transactions volume. Both exceeded Wall Street analysts’ estimates. The strong showing by the two top card processors reflect a resurgence in consumer spending of 3.6 percent in the first quarter, the biggest surge since early 2007, based on figures released by the U.S. Commerce Department last week.
Facebook will offer PayPal for buying ads and virtual goods, part of a strategy to make it easier for some international companies to pay on the top social media site. PayPal will also be an option for Facebook Credits, which is being tested in some games and applications. Facebook Credits gives users a convenient way to buy virtual goods from the Facebook Gift Shop.
Three former senior executives from MasterCard are betting that lawmakers will soon regulate legalized Internet gambling here and have set up shop to facilitate wagers as a U.S.-subsidiary for a United Kingdom payments processor. UC Group Ltd, the parent of SecureTrading, released a statement saying it is poised to provide “safe financial transactions and required consumer protections” in the United States in anticipation of federal legislation.
Online poker rooms and other gambling websites were buzzing today with reports that MasterCard was blocking transactions for placing bets – a move which took some by surprise since U.S. officials last year delayed the implementation of a new Internet gambling payment ban until June 1, 2010. The gambling websites also pointed to a federal appeals court ruling on Monday as a possible impetus for the blocking. “The blocking of all deposits made by U.S. citizens linked to poker sites and online casinos will be imposed immediately as MasterCard starts to comply” with the gambling payment ban, wrote online-casinos.com today.
A day after its dominant rival posted higher-than-expected earnings, MasterCard came in below analysts’ estimates with a 23 percent profit increase for the fourth quarter. The No. 2 card payments network saw single-digit growth in both dollar volume and processed transactions, compared to double-digit increases in transactions reported this week from rival Visa.