April 28, 2010
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News: Convenience Stores Embark Upon Washington
At the forefront of the business for convenience store and small retailers in America is the issue of increasing credit card payment processing fees. Interchange fees are the fees that merchants pay every time a consumer uses his debit or credit card. A portion of the fee goes to the consumer's bank and the merchant's bank as well as the major credit card networks. In a news conference, Hank Armour, President of the National Association of Convenience Stores said that interchange fees are the second highest line item on a merchant's expense sheet. These fees amount to more than other consumer fees put together which includes late fees, over-the-limit fees, annual fees, cash advance fees, and automatic teller machine (ATM) fees.
Retailers say that consumers ultimately pay the interchange fee because merchants pass them along through increased product pricing. Therefore, all customers including those that pay by cash end up paying for the added expense of credit card payment processing fees. Since interchange fees are set by credit card network giants, Visa and MasterCard whereby only the banks are included in the round table, merchants say they have no rights within the negotiation process. Merchants also claim they have no avenue to seek out various rates for specific transactions. A meeting will be held today by the House Judiciary Committee on legislation that would grant retailers these rights.
The American Bankers Association has responded to merchants by saying that providing debit and credit card payment goes beyond being a convenience for the consumers; it is provides merchants added benefits and is the cost of doing business. According to the Merchants Payments Coalition, what banks fail to recognize is that in 2007, interchange fees cost Americans more than $42 billion; more than double all other card fees put together. The subject will not end with the meeting today, Reps. Peter Welch (D-VT) and Bill Shuster (R-PA) will be proposing their own legislation that will demand interchange fees be disclosed to everyone. They will be asking for the proposal to be included with the financial reform bill that is currently being considered in the Senate. Welch is also asking that interchange fees be reduced with use of debit cards.