Credit Cards Profiting From Haiti Disaster
HuffPo’s Laura Bassett reports, under the blaring headline “As Wallets Open For Haiti, Credit Card Companies Take A Big Cut,” that credit cards come with transaction fees.
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.
Yes, you heard right: credit card companies continue their business model even when the transaction is for charitable purposes.
I suppose that, if people were mailing in their payments, the headline would be “Post Office Takes a Big Cut.” Because of, you know, their charging for stamps.
As it turns out, both American Express and Visa have announced (as Bassett reports in an update) that they’re waiving their fees in this instance. Which means they’re losing money on each contribution they process. That’s a nice gesture — even if it’s presumably to avoid a PR backlash — but it’s an operating cost someone is going to have to pay. And I’m guessing it’s not coming out of CEO bonuses.