Financial services companies earn about $250M from transaction charges for charitable donations. That's easy dough. The companies, however, had no choice but to kill the fee on Haiti donations. They would have been blistered for cashing in the tens of thousands of dead and ruined lives in Haiti.
The companies can take a bow for avoiding that nightmare reputation. Visa is waiving fees on gifts made to American Red Cross, AmeriCares, Care USA, Direct Relief International, Habitat for Humanity, International Rescue Committee, Mercy Corps, Oxfam America, Save the Children and U.S. Fund.
The company is donating $200,000 to the American Red Cross Haiti Relief and Development Fund.
American Express is waiving the merchant discount rate for contributions made to non-profits listed on the USAID website in support of Haiti relief. It will divvy up a $250K donation to Doctors Without Borders, International Rescue Committee, United Nations’ Friends of the World Food program and American Red Cross. MasterCard is not charging fees on money directed to American Red Cross, AmeriCares, UNICEF, Save the Children and Care USA. It will double the amount of contributions to Haiti relief made by any employee.
There are two drawbacks. First, some people resent that the credit card companies are deciding which organizations merit the fee waiver. That's Big Brother. For instance, the fee on my donation to Jesuit Refugee Service would be waived by Amex-since JRS is on the USAID's list, but not by Visa or MasterCard. That's not right.
Second, there is a time limit on the fee waiver scheme. American Express, for instance, is waiving fees until February 28. The crisis in Haiti will go well beyond the end of the next month. Deadlines should be dropped.
Goodwill toward credit card companies has been in very short supply. They have been criticized for nickel-and-diming customers with hidden fees, dropping others and cutting back credit limits. The Haiti fee waiver will help.
Good PR for Visa, MasterCard, AmexCo follows the dreadful PR performance of Wall Street's "finest" before the Financial Crisis Inquiry Commission, where JPMorgan chief Jamie Dimon declared the meltdown as something that happens every five to seven years. Really!
The Great Recession was likened by most as a milder version of the Great Depression of 80 years ago. Goldman Sachs’ Lloyd Blankfein added to the fun by going the other direction. He feels the financial collapse was a 100-year hurricane. To him, it was a kind of natural disaster, not something schemed up by bankers cooking up exotic financial instruments and passing them along like hot potatoes to suckers.
Many Americans would like Wall Street to come up with its own waiver idea. It could begin by waiving the employment contracts of the big shot CEOs who remain clueless about the misery they have caused millions of Americans.