BIRMINGHAM, Ala. – Banks make more money from an eight-unit chain of convenience stores in Alabama than the owner does. “In fact, the entire convenience store industry makes less from selling gas and snacks than the banks,” wrote Rahim Budhwani, CEO of 6040 LLC and the new NACS chairman, in an op-ed piece in the Birmingham Business Journal.
“The swipe fees put an onerous burden on small businesses like mine, making it harder to survive in the hyper-competitive retail industry. Swipe fees, for instance, are now many businesses’ second-largest operating cost after rent, including mine,” he wrote. That’s why the Dodd-Frank legislation was so important—it helped foster more competition for transaction fees related to debit card usage.
The mandated reforms gave merchants access to other networks to process debit card transactions, and provided incentives to financial institutions to compete on swipe fees. Even though the first full year of the reform in action “saved consumers $6 billion in lower prices and supported almost 40,000 jobs, … the House Financial Services Committee has passed a bill to repeal Dodd-Frank, including debit reform and the competition it brought. …
“Repealing debit reform would be bad for businesses like mine and bad for our customers—who will ultimately pay a lot for it if the bankers get their way. Even with debit reform, American merchants and their customers pay the highest swipe fees by far in the industrialized world. This makes no sense. With good technology and a huge volume of transactions here, the U.S. market should be about the cheapest in the world,” he pointed out.
“Repealing debit reform would be a return to price-fixing by Visa and MasterCard and it would hurt consumers and Main Street businesses,” Budhwani concluded.
NACS has pledged its support to halt this bill so long as the debit reform repeal is in it “and ensure that members of Congress and the Senate recognize the success of this vital reform in re-establishing competition in the debit-card market,” said Lyle Beckwith, NACS senior vice president of government relations, in a statement released last month in response to the new legislation.