LAS VEGAS – Every convenience store operator has been hit by the unfair credit card fees, hidden costs of processing credit and debit card transactions that can bite into the store’s profits and yet contribute to bank coffers. NACS has been hard at work lobbying to reform the system, and Doug Kantor, legislative counsel for the association, addressed some of the latest developments during his “Inside Washington: Fighting Credit Card Interchange Fees” presentation Wednesday.
“Sometimes it feels like we are Davids fighting Goliaths on this issue,” he said. “They may have all the money, but we are right and that’s what matters. We are already gaining tremendous support.”
The association helped form the Merchants Payments Coalition, a group of more than 20 national and 80 state associations, to work together on this issue. The coalition has been gaining members, including most recently, the National Small Business Association and Digital Media Association.
Consumer groups such as Americans for Financial Reform are also taking a policy position in favor of interchange fee reform, Kantor said.
Credit card companies and banks made more than $48 billion in interchange last year alone, he said. More than $8 billion came from the convenience retailing industry. A recent report by the Merchants Payments Coalition revealed that the U.S. pays the highest rate for interchange fees in the world.
“We have more credit card use than anywhere else, we have very little fraud and we have great infrastructure, yet our fees are the highest in the world,” Kantor said. “The system that we have here makes no sense. It has to change.”
There are several legislative acts currently in the works. One of the most notable is the Credit Card Fair Fee Act, championed by Sen. Richard Durbin (R-IL), that would allow collective negotiations. Retailers would be able to ban together to bargain with Visa and MasterCard, and should they not reach a compromise, the issue would be arbitrated by a panel of judges. Sen. John Conyers (D-MI) and Rep. Bill Shuster (R-PA) presented a variation of this act, but without the panel of judges, which moved through the Judiciary Committee last year. Sen. Christopher Dodd (D-Conn.) raised the issue at his first hearing as the chairman of the U.S. Senate Banking Committee and is currently writing legislation about it.
Reps. Peter Welch (D-VT) and Shuster also have a bill that would remove the unfair barriers Visa and MasterCard have erected to prevent competition in the industry. That bill was the subject of a recent hearing by the House Financial Services Committee.
The petition campaign effort is also gaining ground. 7-Eleven collected and delivered more than 1.66 million signatures to members of Congress to bring attention to the issue. Many banks and credit card companies realized the power of this move and retaliated, generating even more publicity.
Sending letters and meeting with members of Congress are just some of the measures that retailers can take to move the issue forward. As NACS 2008-2009 Chairman