As you have read if you are frequent visitor to my blog, then you know my stance on the Banking industry, and how much I think they are bunch of parasites, and that they have lost their one primary function which is help you store your money – and even that is something to question. Well, from an unlikely source, I was given an email last night that came from my University. What was interesting was the direct comment they used on spelling out the high cost of a service called a merchant’s account. The email said that after August of 2010 they will no longer take payments for tuition by domestic credit cards, and that you now must pay in other ways. I personally like cash, but that is me.
A merchant’s account is the credit card user account that a business must have to use and process credit cards from customers who enjoy spending on credit. The customer then pays later on to the credit card company to settle their debt. This is based on the rule of convenience whereby the customer does not have to carry around large sums of money, and has some form of security when being robbed. However, the card holder is “dinged” twice by the credit company for the use of this plastic instrument of debt. First, by an interest rate applied to the balance if you carry the debt over a certain period of time, and second, and service charge for the point-to-point transaction. Some accounts work differently, but this is the basic charge that the customer gets. The Merchant gets a charge also for using the card. It is like a back-end fee for taking the card as payment—and the Merchant is not allowed to pass that fee back to the customer! Funny, eh, how both the user and end user are charged a fee?
Sadly, the credit card, or merchant’s account user has depended on the “card” as a lifeline when faced with limited income, and who wishes to make a purchase that is well beyond the means of their income. This is where the term credit debt, or personal debts comes in. So credit cards are believed to have caused of the super fast and high economy leading up to 2008, and the consumer side of the of the 2009 downfall with massive credit debt.
Here is a copy of the email I received last night:
Kwantlen Polytechnic University will no longer accept credit cards for domestic registration fees and tuition payments starting for the Fall 2010 semester.
If you planned to pay your domestic student registration fees and tuition by credit card, you’ll need to do so before August 3rd or choose one of the many other available payment options we offer. We will continue to accept credit card payments for many other fees and purchases.
Each year Kwantlen pays a significant amount in transaction fees to credit card companies. The change is aimed at reducing operational costs at Kwantlen without cutting services or programs for students. In fact, $250,000 expected from the savings will be put towards additional scholarships and bursaries for students this year.
For more details, other payment options, and Q&As, visit: Kwantlen.ca/creditcard
Some final words.
I have no idea how much this will effect some students. I know for myself this will have little effect as I have never paid using credit. But this story speaks volumes as I see it as the writing on the wall and the state of our economy. Not only has this card made monsters of debt out of all of Canadians, but it is also part of the cost of business that is sucking all of us in like a black hole.
I applaud the University for taking this initiative and mandating this tough decision. I know many businesses who are very reluctant to give up their merchant’s account because that is all the disposable income that their patrons have to buy with. They would go under if it were not for the credit card industry. But some day everyone will have to pay that