---------- Forwarded message ---------- Date: Fri, 2 Nov 2001 19:45:26 -0700 From: lynn.wheeler@firstdata.com To: JohnE37179@aol.com Cc: cryptography@wasabisystems.com, Jason.Gruber@btinternet.com, JohnE37179@aol.com, rick_smith@securecomputing.com, vertigo@panix.com Subject: Re: Rubber hose attack the following from a thread on some of the fees related to fraud issues at http://lists.commerce.net/archives/internet-payments/200110/maillist.html specifically from a thread on Visa/MasterCard Antitrust Comments. Here's an interesting quote taken directly from Judge Barbara Nelson's decision (the full text of the decision is available at: <http://home3.americanexpress.com/corp/doj/crt_dec_011009.pdf>): "Defendants' ability to price discriminate also illustrates their market power. Both Visa and MasterCard charge differing interchange fees based, in part, on the degree to which a given merchant category needs to accept general purpose cards. Transactions with catalog and Internet merchants, for example, which rely almost completely on general purpose cards, have higher interchange fees than 'brick and mortar' merchants. Defendants rationalize this difference by pointing to increased fraud in these merchant categories, but this explanation is belied by the fact that the Internet merchant, not Visa/MasterCard or their member banks, bears virtually all the risk of loss from fraudulent transactions. Even today, Amazon's fraud rate is lower than mail-order companies, yet it is charged (indirectly, through the merchant discount) the same interchange fee as these mail order companies. The reality is that Visa and MasterCard are able to charge substantially different prices for those hundreds of thousands of merchants who must take credit cards at any price because their customers insist on using those cards." --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to majordomo@wasabisystems.com