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Feedback On Credit Card Piece

April 13, 2006

I've gotten some comment on my article of yesterday, Someone Needs To Put A Leash On Credit Card Issuers. Here is one:


Kudos! I just read your article, "Someone Needs To Put A Leash On Credit Card Issuers." You're right on target, of course, but there's even more!

I've been toying with a piece for my blog at I'm wanting to go way out on a limb and predict the end of credit cards as we know them. I want to, but I can't seem to find that last bit of common sense in the credit card industry that might actually make it happen - they'll just keep keeping on in spite of themselves. But I can tell you that in any other industry that was as business unconscious as the card companies, prediction of imminent doom would be easy.

Consider this...

Visa and MasterCard will proudly boast that the online credit card fraud rate has remained steady or declined ever-so-slightly over the past 3 years. Independent polls seem to be in that ball park too. There's a problem - Online sales have increased at the rate of 30% a year, making the total dollars lost to fraud increase at 30%. All this is going on while Visa and MasterCard are touting their Verified by Visa(R) and SecureCode(R) as the best thing that ever happened to online merchants. You won't see all three of those facts in the same paragraph anywhere else.

If you take a look at the credit card situation from the E-Commerce merchant's point of view, it isn't any better. At we're seeing horror stories from merchants that you wouldn't believe.

New merchants are being signed on every day and never given even the slightest education on the perils of on-line fraud. Why would the card companies educate the merchants when all losses to on-line fraud are the merchant's liability? E-Com merchants take a triple hit on every fraudulent transaction.

The more fraud, the more money the card companies make in the form of chargeback fees - a politically correct term for the fines assessed to merchants for being a victim of a crime. And remember that in 2005 there were over 55 million card numbers, complete with names, addresses, expire dates, and security codes that were either stolen or known to be at risk with unknown consequences: These are just the ones that we know about. This year so far we're at 1.1 million cards and 700,000 full ID thefts - with a reported potential in the millions.

At (free) and (fee) I fight to educate the merchants. I'm losing!

Take these facts and add them to the issues that you brought up in your article. Can the credit card industry, as we know it, not implode?

Tom Mahoney, Director

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Comments to Feedback On Credit Card Piece

  1. RE: Feedback On Credit Card Piece
    usacreditcards :

    A credit card is a system of payment named after the small plastic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the user's account after every transaction. In the case of credit cards, the issuer lends money to the consumer (or the user). It is also different from a charge card (though this name is sometimes used by the public to describe credit cards), which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged. Most credit cards are the same shape and size, as specified by the ISO 7810 standard.

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