Q: What was your argument with Citibank about?
In
1992, in both the Wall Street Journal and the Los Angeles Times, I
read about a new plan instituted by Citibank, a real looney-tunes
idea, to "guarantee the lowest price on goods to their
cardholders." If they made all their purchases with a Citibank
credit card, and later found the same product advertised for less
somewhere else, that Citibank would refund the difference.
However, the real kicker in this one was an added phrase in their
advertising material even if the merchant won't.
Now, to me this was blantant interference in our businesses!
That put every small business owner in direct competition with
Sears, Costco, etc. Citibank, without our approval, was saying
that their cards were more important than the small businessmen
honoring them, and they were putting us all in an untenable
position. This to me was a smelly operation. What right had they
to interfere in my pricing, in my day to day operations. It meant
that customers would be asking for refunds that we were not bound
to make, and it set up confrontations with
clients and customers we (small business owners) had cultivated
for years! It was a slimey trick, to say the least, by
powerful banking interests who failed to regard us as equal
partners in the triangle of the credit card business. That's
oppression, to say the least. That's also dirty business, to
advertise nationally to try to force us into something that we, as
a group, had no knowledge of, and would not cooperate in if we
had!
Q: What did you do about it?
Well, first I wrote to
their Executive offices, but did not receive a reply. I then
thought, how can I get their attention? I decided to put a sign in
my window, and did, "Citibank Cards Not Welcome Here." I then took
a picture of it, ran it down to a One Hour photo lab, and mailed
it off to the CEO of Citibank, FedEx. That got their attention.
Two days later I had a call from a Vice President of Citibank in
the morning, from a VP of Visa an hour later, a VP of MasterCard
in the afternoon, and one from my account exec at S.B.B.&T.
The one at Citibank tried to explain to me how this was so great
and how it would increase my business. What a brain-washed jerk!
That detracts from our independence, for one thing, and forces us
to to sell below what we need to cover my expenses, not Sears or
Costco's expenses. I told him that the
competing banks would think up a scheme more hurtful to small
businesses than Citibanks, but he disagreed with me on that. "Time
will tell," was my reply. It did. Disastrously.
Visa and MasterCard took a more threatening attitude, "Get that
sign out of your window, or else lose the right to accept our
cards! You cannot discriminate." My own bank had a more tolerant
attitude, but they were eventually forced to issue the same
threats because of their agreement with the all powerful
Visa/MasterCard moguls and their onerous contracts.
Q: What can the businessman do about this
bribery?
Once he understands the concept, he should meet
with his attorney and discuss ways to get back at the Visa and
MasterCard banks for literally stealing his profits! This country
is swarming with lawyers, the best legal brains in the world (we
hope), and they'll find a way to tap into those cash-rich coffers
of Citibank, and all the others. It'll be like pirrannas stripping
the flesh off a fresh carcas in the jungles of Brazil!
Q: What can a merchant do about credit cards wiping out his
profits on discount sales?
Post a sign and refuse to accept
them, or advise the customer that you are going to add a
percentage equal to your costs to the amount of the sale. It'll
bring some problems, intimidating letters from their lawyers,
letters and calls from your bank, but if they can offer discounts,
no matter what your contract with them says, you should be able
to offer discounts, rebates or refunds, or add charges too!.
They'll dispute it, but sooner or later the case will reach the
courts and I predict, they'll lose and lose big.
