Thursday, January 14, 2010

Credit Card Companies Skimming Off Haiti Donations

Again, on HuffPo, Laura Bassett:

As a massive human tragedy unfolds in Haiti, relief organizations are soliciting credit-card donations through their hotlines and websites. About 97 percent of these donations will actually make it to the designated organizations -- but the other 3 percent will be skimmed off by banks and credit card companies to cover their "transaction costs."

Thanks to this hidden fee, American banks and credit card companies are making huge profits -- somewhere in the neighborhood of $250 million a year -- off of people's charitable donations, according to a Huffington Post analysis.

Those profits rise sharply after major disasters, when humanitarian relief organizations such as Oxfam and Operation USA take in more than 85 percent of their donations via credit card -- and the credit card providers, with only a few exceptions, refuse to waive their fees...

...Ben Woolsey, director of marketing and consumer research at, says the hidden processing fees tacked onto all credit card donations cover far more than the transaction costs, allowing the issuing banks, as well as companies like Visa, MasterCard and American Express, to generate significant profits off of online charitable donations.

"They certainly profit off of these fees," Woolsey said. "Charities are treated like any other merchant. The credit card company bleeds a few percentage points off each transaction; that's central to their business model.

Words fail. But it gets worse:

Spokespersons for Visa and American Express declined to say whether they would consider waiving their fees for the Haiti disaster, or for all charitable donations. But Bill Strathmann, CEO of the online charity portal Network for Good, says they won't: "The reason credit card companies don't waive fees for charities is that they have so many corporate partners who drive high volume through their system. A company like Walmart could say, 'Hey, you're giving them a bettter rate? Last I looked I was passing billions of dollars through your company.'"

It is difficult to know whether this is the true reason or not. it would almost be worse if it were. What would it say about America if a company as important as Walmart couldn't understand why charitable donations should get preferential treatment?

I agree with Laura that legislators should intervene. This is unconscionable. Visa et al should not be profiting from this disaster. They are literally taking food away from the mouths of starving Haitians, and they should be ASHAMED.

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