BRUSSELS: Landmark Ruling Against Mastercard After 20-Years of Payment Fees ‘

#AceFinanceNews – BRUSSELS – September 12 – Mastercard has lost its legal battle with the European Commission over payment fees following a ruling by the European Court of Justice.

Master Card loses 20 Year Battle over Payment Fees - 2014-09-11T115146Z_1_LYNXMPEA8A0JJ_RTROPTP_3_MASTERCARD_original

The verdict on Thursday (11 September) threw out the firm’s appeal against a commission decision dating back to 2007, in which the EU executive ordered Mastercard to repeal its cross-border card fees.

The fees – known as “multilateral interchange fees (MIFs)” – are paid between the banks of a retailer and customer every time someone pays for items by card. The fee is charged to the retailer’s bank who, in turn, normally factors it into the price paid by consumers.

At present, average fees range from around 0.2 percent in Denmark and the Netherlands, to over 1 percent in Germany, Hungary, and Poland, raking in around €6 billion per year to credit card giants across the bloc.

In its judgement, the EU court found that the fee structure could not be described as being “objectively necessary” as the system was “still capable of functioning without those fees.”

There was also an “absence of … appreciable objective advantages” to either retailers or consumers from the system.

The court ruling comes more than 20 years after the commission originally launched proceedings against Mastercard in 1992.

Antoine Colombini, the Commission competition spokesman, described the ruling as “a big win for European consumers who for too long have been paying unjustifiably hidden fees”.

Javier Perez, the president of Mastercard Europe said it would have “little or no impact on how MasterCard operates,” although he conceded that it was “disappointing”.

But the ruling was welcomed by consumer and retail groups.

Source: 

#AFN2014

#acefiinancenews, #brussels, #credit-card, #cross-border, #denmark, #european-commission, #european-court-of-justice, #germany, #hungary, #multi-interchangeable-feesmifs, #netherlands, #payment-fees, #poland

` Banking Codes and Standards Change for Credit Cards in India ‘

#AceFinanceNews – MUMBAI – May 15 –  The Banking Codes and Standards Board of India (BCSI) have prescribed self-regulatory norms through which credit card issuers have to treat their customers. Next time you apply for a credit card do remember to have these norms in mind and extract the best service from the provider.

Information

The credit card provider is expected to give you complete details of the fees, interest charges, billing methodology, penalties, renewal and termination procedures by way of explaining and also providing you with a detailed service guide/booklet giving all the details. A copy of the `Most Important Terms and Conditions’ has to be given at the time of application itself to the customer.

Yes or No

 Once the customer has shown interest in applying or has already applied, it is the duty of the provider to clearly state what will be turnaround time for the application, meaning, in how many days will you know whether you application is accepted or rejected.

Online Alerts

The provider has to provide online alerts (which could also include mobile alerts) for any transaction above Rs 5000 where the transaction is a “Card not Present” transaction like net based purchases etc.

Credit Card/Pin dispatch

The customer can receive the card/PIN at the mailing address or alternate address or in case the customer wishes he has the option to physically collect the Card/PIN from the branch of the provider. Also for safety, the PIN will always be sent as a separate mail.

Activating card

In cases where the bank activates a card without consent from the customer and charges any bill/fees for it, the bank is liable to pay a penalty amount equivalent to twice the value of the charges.

Immediate information on Limit reduction

The bank is expected to immediately inform the customer by SMS/Mail in cases where the credit limit is decreased and simultaneously also send a written communication

Loans/Credit facility/Enhancement

Any increase in credit limit or extension of loan can only be done after getting a written consent from the customer.

Credit card Statements

The bank has to send a statement on a pre-determined date and free of cost to all the card holders. In case of non-receipt of statement and complaint by the customer regarding the same, the bank is expected to immediately send a copy of the statement, free of cost.

Notice Period for changes

Any changes in fees, charges and terms and conditions can only be effected after giving at least one month’s notice along with the monthly statement. Only in cases where there is a change in interest rates and regulatory changes the bank can implement them with effect from the date of announcement.

Evidence for transactions

The bank is bound to show original proof of any contentious transactions where they do not accept the customer’s contention. The customer has to be given all the details he or she asks for in cases where the customer feels that he does not recognize a particular transaction.

#AFN2014

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#bank, #card-not-present-transaction, #contractual-term, #credit-card, #credit-limit, #customer, #india, #personal-identification-number

One Man’s Escape From Debt-Collection Hell (Excerpt)

I do not claim credit for every post being my own nor should l, so firstly l would like to say thanks to Huffpost Money and Michael Casey.

My personal views are this is how debt can seize you in its grip and it holds onto you like a alligator in its teeth. To break its grip firstly do not need to be scared of debt,its only money. Also secondly do not let people scare you who you owe debt! Once you master these first two, you can look at the problem squarely in the eye and tackle it head on.

Need help or guidance with debt management leave a comment l check all of them and vet each one and will send you a personal email, in reply. Lastly you do not always and in more cases than you realise, do you have to borrow more to get out of debt. You just need help and guidance too make an arrangement with your creditors!

This is one mans story called Joe an ordinary man like any other who just wanted to do right by his family. But he wanted to use his skills to improve his life by borrowing and this is the result!

HIS STORY-  Or as l prefer to call it hisstory repeating its self!

For Joe Bonadio, the years surrounding the U.S. financial crisis might best be described as the era of telephone battles.

For most of the 53-year-old professional drummer’s adult life, his home phone was a useful appliance. It was the conduit through which he would be informed of his next gig or advertising jingle contract. “Most of the time, it always seemed like the work just came on its own, through recommendations and people wanting to use me,” Bonadio said. “It came from the telephone and it seemed like the phone always provided.”

But all that came to an abrupt halt in late September 2008, two weeks after the collapse of Lehman Brothers, after he returned to New York from a recording job in Los Angeles.

“I came home and there were no calls. The phone had just stopped,” Bonadio said.

The lull extended into weeks and then months. In the meantime, Bonadio, assuming that the work would come back, continued with the lifestyle he’d been accustomed to, funding it with credit card debt.

Then, just over a year later, the phone started ringing again, relentlessly.

The callers were not musicians or advertising executives. They were debt collectors, and with a mix of recorded and personal messages they were urging him in increasingly strident tones to make a minimum payment on one of his three overdue credit cards. He had racked up a total of $50,000 in debts and there was no way of repaying them.

Advised by a debt counseling firm, Consumer Recovery Network, Bonadio had decided that his only escape was to seek a settlement with his creditors. Not only was his credit card debt expanding exponentially due to late fees and compound interest, but the exotic, interest-only mortgage that a Merrill Lynch advisor had talked him into three years earlier was ballooning out of control. Meanwhile, the real estate collapse had halved the value of his home. In deciding to go through what proved to be an exhausting settlement process, he was given a window into the ruthless debt-collecting methods of the same financial institutions whose reckless and often predatory lending practices had fueled the financial crisis that stripped him of his livelihood. And it all played out via the telephone.

As Bonadio quickly learned, a customer who falls behind on a credit card payment soon gets a phone call. At first it is a friendly reminder that the account is overdue. If that doesn’t prompt a payment, there will soon be more calls, occurring more frequently. Bonadio says that at one point he was receiving between forty and fifty calls a day from his three banks. Typically the calls are recorded messages, but if the recipient responds, a human being jumps on the line to suggest that the minimum payment be made. If the customer says he or she won’t or can’t make the payment, the bank representative will warn about a deteriorated credit rating and the perils of bankruptcy. At that moment, many debtors relent. In so doing they hand the bank a victory at their expense.

Here’s why the banks win: Based on the universally applied 29.9% default rate that Bonadio was paying on his total. By then he would have paid an additional $130,000 in interest.

In contrast, because of the front-loading effect of the interest paid when the loan was at its largest, the banks would have earned back the entire amount in just three and half years. What the bank desperately wants to avoid is Here’s why the banks win: Based on the universally applied 29.9% default rate that Bonadio was paying on his a six-month cut-off date. If payments aren’t received by then, it must write off the entire loan on its balance sheet, recognize the loss, and then fight with other unsecured creditors over what could be a measly payout from a drawn-out bankruptcy. That’s why it resorts to the telephone equivalent of saturation bombing during the first ninety days.

“They know what’s going to drive you nuts and that you are going to give them $60 just to shut the phone up,” said Bonadio. If just one of those calls hits its target and prompts a minimum payment, the clock kicks back to six months and the bank is in the clear. But if the customer reaches the fourth month with no payment, the game changes. Out of the blue, a settlement letter will arrive from the bank, offering to accept perhaps 50 or 60 cents on the dollar. The savvy debtor will politely demand something more generous. And the bank, weighing the cost of a lower settlement against that of a charge-off, will routinely concede. In Bonadio’s case, he settled with Citibank, JPMorgan Chase, and Bank of America for an average 31 percent of the total, a saving of $37,379. And while his course of action initially trashed his credit rating, the subsequent improvement in his overall finances later prompted it to rise.

Most debtors aren’t like Bonadio, though. Most cave in to the banks’ phone calls and make their overdue payments. Indeed, according to the moral code by which most of us live by, that should be the right thing to do.

But the financial crisis makes the ethics less clear cut.

Just like Joe Bonadio, it left millions trapped by ballooning mortgages sold to them by the same creditors who were demanding these payments. Banks had used complex, confusing and poorly explained financial products to exploit vulnerable people. This, along with the fact that the crisis that left so many of them out of work was clearly generated by the same banks’ zealous risk-taking, raises questions about the fairness of the interest penalties on their credit cards.

But even beyond the morality issue, there was a simple point of pragmatism. With so many Americans at that time buried in debt, to force them to perpetuate loans they could never repay was to prolong the chance of a recovery in the U.S. economy. And that meant that the banks themselves were unable to get back on their feet and revive a healthy, constructive business of credit creation.

Bonadio is one of the few who outwitted the system. Why? Not because of his steely resolve, but thanks to a device that the Consumer Recovery Network advised him to purchase: a caller ID machine with ring controller. With that little box, he could program the phone not to ring whenever calls came from a number associated with one of the banks’ debt collectors. The machine, he says, kept him sane. It also gave him the detachment and time to watch how the banks approached problems such as his.

The machine’s call log captured the entire combative process through which the banks fight to get an insolvent debtor to make a payment until it can’t afford to play that cynical game any longer. That perspective embittered Bonadio.

“I’m not a religious person,” he said, “but it is as if Satan said, ‘I want to be on earth,’ and God asked him, ‘What are you going to be?’ And he said, ‘I’m going to be a bank. ”

From the global financial crisis to the Flash Crash, it’s not hard to find reasons why people are increasingly disgusted with Wall Street and the world of finance generally. It’s also not hard to sympathize. Michael J. Casey, an editor and columnist for Dow Jones Newswires, has a new book, The Unfair Trade: How Our Broken Global Financial System Destroys The Middle Class, that is a guided tour of the many ways the global financial system is letting us all down. You might call it a Dante’s Inferno of Wall Street. But there’s hope in the book, too, hope that we’re not all doomed to an existence of being perpetually abused by global financiers. This excerpt shows how one man won a small victory against the system. — Mark Gongloff

(Adapted from The Unfair Trade: How Our Broken Financial System Destroys the Middle Class. Copyright © 2012 by Michael Casey. Published by Crown Business, a division of Random House, Inc.)

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  • English: CBO Long-Term Public Debt Scenarios

    English: CBO Long-Term Public Debt Scenarios (Photo credit: Wikipedia)

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