That's the amount of money the c-store industry could raise to lobby Congress to rein in credit card transaction fees if every company contributed $180 per store.
Credit
card transaction fees paid by c-store retailers last year increased by
$1 billion, or 15.2 percent, to $7.6 billion, according to recently
released data from NACS. At the same time, the industry's pretax
profits dropped by $1.4 billion to $3.4 billion; meaning the industry
pays more than double its pretax profits to the credit card industry.
NACS chairman Richard Oneslager was right to wonder
recently why the federal government reserves its scrutiny for such key
c-store product categories as motor fuels and tobacco, but continues to
ignore the impact of rising credit card fees. I'm convinced there'd be
a much greater uproar if consumers only knew how much of the price of
gas, food and other merchandise went to credit card companies instead
of their local retailer. But retailers are not even allowed to show
customers this amount on their receipts due to contracts with the card
companies, according to The Merchants Payments Coalition, a retailer
advocacy group representing supermarkets, drug stores, c-stores and
other retailers. More importantly to retailers, though, is the credit
card companies' refusal to negotiate the fees and their monopoly-like
market dominance.
Even last month, when Visa and Mastercard, which
account for roughly 80 percent of credit cards issued, agreed not to
increase their rates, retailers were hardly doing cartwheels. "Simply
holding them at current levels is not a sign of good faith," Mallory
Duncan, general counsel for the National Retail Federation told the
Associated Press. The NRF and NACS are both members of The Merchants
Payments Coalition. "True competition would drive the fees down," said
Duncan.
While there are still several retailer-backed lawsuits
against the banks and credit card companies pending, it appears that
the best chance for driving down fees lies in passage of legislation
introduced in March by Reps. John Conyers (D-Mich.) and Chris Cannon
(R-Utah). House Bill 5546, The Credit Card Fair Fee Act, requires that
card companies negotiate transaction fees with merchants. If an
agreement couldn't be reached, then a panel of judges would set the
interchange fees.
The credit card companies have already attacked the
bill. They defend the fees as appropriate considering what they provide
in convenience and security of credit card transactions. Banks also
take the hit when consumers don't pay their credit card bills. They
also say HR 5546 would be the same as instituting government price
controls. In other countries where rates have been capped, consumers
receive fewer rewards and additional surcharges, they claim. But The
Merchants Payments Coalition points out that American consumers pay
among the highest credit card interchange fees in the industrialized
world.
The NACS chairman, who is also president of Balmar
Petroleum/First Hand Management LLC, feels so strongly about the bill
that he called on every c-store retailer to write a check to the NACS
Interchange Action Fund, for any amount, although he suggested
retailers could calculate their donation amount by multiplying their
number of stores by $180.
Imagine if every company followed Oneslager's advice.
With the industry store count currently at 146,294, we could see $26.3
million pour into the lobbying efforts on behalf of this important
legislation. Just a 1 percent decline in the yearly expenditure for
credit card fees could save the industry $76 million on the bottom
line. So the investment is pretty small considering what is to be
gained.
And, considering the formidable resources of the banks and credit card companies, every penny will be needed.
-- Don Longo, Editor-in-Chief
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