U.S. credit card companies announced Thursday and Friday that they will waive or rebate the transaction fees on credit card donations to major U.S. humanitarian aid organizations involved in the relief efforts following last week’s devastating earthquake in Haiti.
Consumers, however, will still need to be on their toes to benefit from the waivers: the transaction fees will be waived only for select major relief organizations, and those differ for each credit card company.
The announcements came after an article in the Huffington Post cast light on the fact that credit card companies rake in as much as $250 million a year from the 1-3 percent interchange fee they charge for processing credit card transactions, including those to non-profits and charitable institutions. Donations to humanitarian relief organizations increase dramatically after major disasters, and donations made via credit cards typically account for more than 85 percent of donations, according to reports.
Several politicians, including Senate Banking Committee Chairman Chris Dodd (D-CT), and Rep. Betsy Markey, (D-CO) last week appealed to card issuers to waive the transaction fees, as their U.K. counterparts already do.
“Across the country, Americans are offering their hard-earned dollars to aid the Haitian people, but their donations could do more if credit card companies weren’t skimming off the top,” said Senator Dodd in a statement. “I urge credit card companies to join the cause and waive the transaction fees that are taking these generous donations away from the Haitian relief effort.”
American Express said early on that it would rebate transactions fees charged on donations to the relief organizations listed on the USAID-approved InterAction website. The rebate will be made effective retroactively on donations made from the date of the earthquake on January 12 through February 28. Amex also pledged $250,000 to relief efforts.
Visa International announced that through February, it will not apply transaction fees to donations made to 11 major charities involved in Haitian relief efforts. The charities include American Red Cross, AmeriCares, CARE USA, Oxfam America, Save the Children, US Fund for UNICEF, World Vision, Direct Relief International, International Rescue Committee, Mercy Corps, and Habitat for Humanity. Visa also made a $200,000 contribution to the Red Cross.
MasterCard Worldwide will be waiving interchange fees for donations made to the following five charities: the American Red Cross, AmeriCares, CARE USA, Save the Children, and UNICEF. For donations with Canadian MasterCards, the company will waive fees to select Candian relief organizations, including Canadian Red Cross; Doctors Without Borders,UNICEF Canada, and World Vision. The company also announced that it made a corporate donation of an undisclosed sum to relief efforts, and it will be double-matching employee contributions.
According to Discover Card’s website, it will waive merchant transaction fees for 11 charities, the same those listed above for Visa International. In addition, on its website, Discover is encouraging cardholders to donate using their Cashback Bonus earnings, which the company will match up to a total of $1 million.
Credit card companies have waived their processing fees for charity only once before, after the South Asian tsunami in December 2004; at the time, fees were waived for only 5 major relief organizations.
Visa and MasterCard are the two major electronic payment networks; the companies collect the transaction fees in exchange for processing credit card transaction for cards issued by banks, such as Chase, Bank of America, Capital One, and others. According to The Nielson Report, Visa holds close to half of the credit card market share, making its commitment to waive transaction fees for select major relief organizations particularly significant. Amex and Discover differ from Visa and MasterCard in that they are both payment processing networks and issuers of their own credit card brand.
Visa and MasterCard are the two major electronic payment networks; the companies collect the transaction fees in exchange for processing credit card transaction for cards issued by banks, such as Chase, Bank of America, Capital One, and others. According to The Nielson Report, Visa holds close to half of the credit card market share, making its commitment to waive transaction fees for select major relief organizations particularly significant. Amex and Discover differ from Visa and MasterCard in that they are both payment processing networks and issuers of their own credit card brand.
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