CSD: Fighting Credit Card Costs
By Howard Riell
a special arrangement, presented here for discussion is a summary of an
article from Convenience Store Decisions magazine.
Is there relief
ahead for exorbitant credit card fees? The answer is yes. But first, there’s
a fight to be fought.
“I think that
there is hope on the horizon,” said Keith Jones, government affairs director
for 7-Eleven Inc. which led a consumer petition drive opposing credit card
fees that drew 1.7 million signatures.
gotten to the point now where they are, frankly, out-of-control,” Mr. Jones
said. “If you are selling gas right now and the price of gas spikes again,
when you factor in the interchange, we will be losing money selling gas.
The formula doesn’t work in the c-store industry; it is really unfavorable
for low dollar transactions.”
front is the most obvious and the most public option for reversing the
upward trend on card fees. There are multiple bills currently making their
way in Congress, all of which would help industry retailers.
What Mr. Jones
described as a second front is the ongoing civil litigation in the form
of class-action lawsuits and potential violations of antitrust laws. A
third area, just developing, is that a number of state attorneys have indicated
an interest in wanting their own antitrust consumer protection investigations
on interchange fees and practices from credit card companies. The final
crucial factor is that retailers across all industries appear to be organized
as one cohesive unit thanks in part to cross-channel groups like the Merchant
Payments Coalition (MPC).
wait for relief from credit card fees, progressive chains have been diligently
developing alternative solutions for reducing costs on their own. Last
year, Flash Foods Inc. in Waycross, Ga., introduced what it calls its Go
Blue program, which effectively turns its loyalty card into a payment card,
according to Chief Information Officer Jenny Bullard. Benefits include
savings of three cents per gallon at the pump at the company’s more than
170 stores in Georgia and Florida.
to hit our credit–and even our debit card customers,” Ms. Bullard
“When people ask why we’re going after our debit card customers, I tell
them it’s because last year our debit transactions cost us almost as much
as the credit-card transactions because of the new fees put in place by
Visa and MasterCard.”
can still do more to push reform by talking to their elected officials
and customers. “Collectively, they can make their voices heard,” said Jeff
Lenard, vice president of communications for NACS.
“At the end
of the day,” Mr. Jones said, “Visa and MasterCard are going to look back
and realize that they were their own worst enemies. They are going to push
the rates to a point where the courts will act, Congress will act or the
Federal Reserve regulators will intervene and put a stop to it. I mean,
it’s really very difficult to justify the fact that American retailers
pay two times the average interchange rates as the rest of the world.”
Questions: Do retailers have any alternatives when it comes to fighting
credit card fees? What’s the likelihood that credit card free reform
will happen in the next year? Will loyalty programs become a meaningful
way to lower credit card fees?