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July 02, 2010

  • News:  Interchange Fees On The Hill

    Financial reform; do we need it or does the retail industry need it? There's been a lot of finger pointing on Capitol Hill in regard to credit card transaction fees referred to as interchange fees. Small business owners and convenience store/gas stations have embarked upon Congress in large numbers protesting against unfair excessive credit card transaction fees. A Wall Street Reform bill which addresses the subject which was so conveniently omitted from the Credit CARD Act 2009 legislation, continues to gain momentum on the hill. A major player in the game is the National Retail Federation (NRF) and the 7Eleven convenience store chain.

    Recently the 7Eleven store owners launched a campaign which gathered over 1.6 million signatures in support of the "Stop Unfair Credit Card Fees" petition drive. During the drive, 7Eleven stores asked customers to sign the petition supporting legislation that would give retailers a role in negotiating interchange fees as well as remove restrictions pertaining to the promotion of electronic payments. The petition has made an impression on the hill as lawmakers scurry to arrive at a resolution on differences between committee members. Proponents of the bill maintain that the bill will provide transparency and promote competition which will benefit all stakeholders including credit cardholders, retailers, and the financial industry.

    Retailers pay over $47 billion a year toward debit and credit card payment transaction fees. Interchange fees are the second highest cost line item. Many have begun to charge customers a fee for cash back and others have eliminated the service all together. Still others have built the cost of interchange fees into the product sales price thereby passing the cost onto every consumer whether paying cash or credit. Wall Street Reform will provide retailers more options that will reduce costs and in the long run benefit consumers with lower prices. Of course, the real question is; if the law is passed, will retailers really pass the savings onto the customer or fill deep pockets?  

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