- 5 - amounts from the balance, pending resolution of the dispute, when calculating the minimum monthly payment due to petitioner. A convenience user is a cardholder who uses the card to purchase goods and services, but pays off the entire balance each month, thereby avoiding any finance charges (interest). During 1980 and 1981, approximately 35 percent of petitioner's cardholders were convenience users. During the taxable years 1980 and 1981, the issuing banks charged those cardholders who did not pay off their entire balance each month interest at the annual rate of 18 percent on their outstanding (revolving) balances. This was the maximum rate allowed under Florida law. Each merchant would submit its Visa sales receipts (sales drafts) either to the issuing subsidiary bank or to another bank with which the merchant had a Visa merchant account relationship (merchant bank); the merchant received payment from the bank in the amount of the sales drafts less the applicable merchant discount.3 The merchant discount was equal to a set percentage of the total charges. Petitioner determined the merchant's discount percentage based on the merchant's projected annual sales and the estimated costs of the merchant's participation in the Visa program. If the merchant bank was not the cardholder's issuing bank, the merchant bank would sell the sales draft to the 3 The sales receipts or sales drafts were treated like deposits of cash into the merchant's bank account, less of course the merchant discount.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011