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Evil Credit Card CompaniesI wrote a post a couple of days ago highlighting how all of the major credit card companies are waiving the credit card processing fees for Haiti donations through select charities like the Red Cross and other reputable organizations BUT would the credit card companies be “evil” if they were to just continue charging transaction fees?

The reason I ask is that in customary fashion of the “credit card debt is not my fault” thinking that masquerades as financial journalism (see “The Card Game”) along with the quick to yell credit card usury thinking and those who would accuse credit card companies like Bank of America of foul play for adding annual fees to some of their credit cards even as the BOA credit card division has had massive losses for 5 quarters in a row (how dare those greedy “fat cat” bankers try to actually turn a profit!) there is now a petition over on MoveOn.org that seeks to end all credit card processing fees charged on charitable contributions.

Nothing wrong with that right? I actually agree with the petition in that I think it might be a good thing for credit card companies to waive all fees for charitable contributions BUT where I have a huge problem is when people make it seems like the credit card companies are evil for charging fees as if they are some kind of price gouging Billy Bob or Slick Rick standing on the corner with a case of water bottles after a hurricane.

MoveOn.org = FAIL

MoveOn FailMoveOn even goes so far as to say that, “As the tragedy in Haiti unfolds, Americans are generously donating millions of dollars to aid organizations. But when they donate with their credit cards, the credit card companies take a big cut. It’s outrageous and wrong–and it needs to stop.”

As much as I like the idea of having all of the fees waived on any charitable donations given with a credit card let’s be honest here.

Credit card companies provide a valuable service by allowing us to not only be extended a line of credit but more importantly they provide us a means to facilitate instant commerce all around the world in a way that is both convenient and secure.

We can swipe our card and just like that make a purchase or make a donation to anywhere in the world that Visa, MasterCard, Discover, American Express, etc. is accepted. Think about that for a second. You can be sitting at home in Lincoln, Nebraska or on a business trip in Seattle, Washington or on vacation in Shanghai, China and simply by entering your credit card information in online at RedCross.org or Amazon.com or by physically swiping your credit card and within seconds that merchant or that charitable organization can allow you to complete your transaction.

A Worldwide Secure, Reliable, and Instant Payment System Costs $$$

Just think about the billions and billions of dollars that go into not only creating but maintaining a worldwide infrastructure that can process millions upon millions of credit card transaction in a constant second by second flood all across the world. Not to mention that those credit card transactions have to be processed accurately, securely, and instantly.

Why is it that we think that the credit card companies that spend so much money to give us so many benefits in using a credit card or debit card shouldn’t be allowed to make money off of their much needed service just like any other business?

Yes, it would be a nice thing to know that all charitable contributions would have their credit card processing fees waived but let’s get real here. The credit card companies are not “evil” if they continue to charge credit card processing fees on donations in the future because they are providing a valuable and much needed service to both donor and donee.

What About Free Rent, Free Computers, and Free Cars?

FreeUsing the same logic as MoveOn.org should we force all property managers to let charitable organizations set up an office in any building they want and stay there rent free? Should Dell have to provide free computers to all charitable organizations? Should Ford be forced to provide free vehicles to all charitable organizations?

If any of the above companies CHOOSES to give away to charities rent free office space or free computers or free vehicles then that is great and I applaud them just like I would applaud any of the credit card companies that would choose to permanently waive all of their rightful credit card processing fees for charitable organizations. However, to accuse a credit card company or any other company of being “evil” simply because they charge money to a charitable organization for using their very useful goods or services is patently ridiculous.

What do YOU think?

(UPDATE: Check out the infographic titled: “Are Credit Card Companies Profiting from Tragedy?“)

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7 Responses to “Are Credit Card Companies Evil if They Don’t Waive Fees on Haiti Donations?”

  1. Tough call Joel. If there’s a massive movement going around that CC companies are waving fees, to be the outlier and not wave a fee will probably result in big marketshare loss if the public finds out.

    I see your point that it is a CC company’s business regarding fees, but I’m of the camp that yes, if AMEX or my Citibank Home Rebate card gives me the option to donate, and doesn’t wave a fee, I’m inclined to switch to a more sociably responsible CC company. They can do whatever they want, and so can I.

    • Joel says:

      Exactly right – I think that it is a good thing for credit card companies to waive fees especially because even aside from being socially responsible it makes great business sense as people that care about this issue would be prone to take our business to a different card issuer that did waive fees.

      All in all the takeaway though is that consumers have a right to choose and credit card companies have a right to choose and there is nothing morally wrong about charging credit card processing fees even on charitable contributions just like there is nothing morally wrong for any other company to charge a charitable organization for their goods and services.

      Wouldn’t you agree?

      • Yes, I agree thre is nothing wrong essentially with a company or person charging for a service to make a living. That is the American way! Instead of demonizing a specific company for not waiving the fee, just use another card!

  2. Jamis5410 says:

    The problem is credit card companies profit obscenely when there are major disasters and people donate in huge numbers. There IS something morally wrong with funneling millions into bank profits instead of letting them go to suffering people in a crisis.

    The credit card companies make a killing with Hurricane Katrina, and it’s hard to argue that these companies have any kind of heart since the only reason fees for Haiti were waived was they were completely shamed by the public.

    The waived fees only apply for a month and only apply to specific charities.

    If a local church is organizing an immediate aid team to Haiti, for example, and people contribute at their web site using credit or debit cards why should Visa and MC get as much as a 3%-5% cut?

    If Visa and MC get to decide what’s a worthy charity why doesn’t the credit card industry also refuse to permit credit or debit transactions with “charities” that are known to be scams? Because they want their cut….

    • Joel says:

      Thanks for the comment. Credit card companies do not profit obscenely when there are major disasters and people donate in large numbers. As I mentioned above it costs billions and billions of dollars to develop and maintain the complex payment systems that allow people to be able to so quickly and securely be able to give to charities all around the world in just a few seconds rather than having to wait to mail a check or wire money.

      When people give to a charity there is no requirement that people give using a credit card just like there is no requirement that the charities themselves even have to accept credit cards in the first place. If people do not want to use their credit card then they do not have to just like if a charity does not want to accept credit cards then they do not have to. However, if a credit card is used then why shouldn’t they be compensated via credit card processing fees for the very valuable service they provide?

      I am all for credit card companies waiving fees for charitable contributions but lets take a step back and be honest with ourselves here. If they choose to waive fees it is certainly not because they should feel obligated to or because there is something wrong with them continuing to charge fees just like any other company that sells a product or a service to a charitable organization. If they want to make a donation of the fees that they earned then that is great but if not then there is nothing wrong with that at all.

  3. Len Penzo says:

    Well done, Joel.

    The credit card companies deserve to earn a profit for providing a service.

    Those that are squawking forget that without the convenience provided by the credit card companies, many many many donation would never have been made in the first place.

    People that feel differently can try putting some real dollar bills in an envelope and sending their donation via the postal service, or find CC companies that have decided to waive the fees.

    Best,

    Len
    Len Penzo dot Com

    • Joel says:

      Thanks, Len – It is really funny to hear people act as if the credit card companies don’t actually DO anything to earn those credit card processing fees. I guess maybe because its not a physical good but rather a service that they provide that it is harder for people to see than if say Dell sold a bunch of computers to a charity.

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