- 13 - Credit Card Fees as Payment for Services Petitioner's credit card program provides benefits for both merchants and cardholders. Processing of the sales drafts involved merchant aspects and cardholder aspects. Transactions could be for either convenience users or cardholders with revolving balances. The merchants, the convenience users, and the revolving-balance users all were served by the operation of this integrated system. It is difficult to apportion the benefits of the plan to its specific users. Petitioner derived its income from its credit card program from four sources: The merchants paid through the merchant discounts. Merchant banks (banks other than the subsidiary issuing banks) paid through the interchange fees. Cardholders with outstanding (revolving) balances paid interest for the use of that credit. All cardholders were charged the annual fee, and the amount of the annual fee was the same regardless of credit line, amount charged, or the amount of the outstanding balance, if any. It is similarly difficult to match any particular type of income with particular services performed by petitioner. See supra note 5. Nevertheless, cardholders paid annual fees and received services. All cardholders were issued at least one plastic card each year and had the right to use that card, subject to cancellation by petitioner at any time. However, if petitioner cancelled the card, it refunded the annual fee on a pro rataPage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011