Last week, the National Association of Convenience Stores (NACS) issued a report that said credit card fees paid by convenience stores exceeded the industry's total profits. Total credit card fees by chains and independents in the convenience channel reached $6.6 billion in 2006.
At roughly the same time as the report from NACS was being made public, the Food Marketing Institute (FMI) put out a press release providing an overview of proposed legislation in 10 states to address what the association described as excessive, hidden credit card interchange fees.
"Retailers welcome state scrutiny of credit card company abuses, especially measures to require full disclosure and reduce interchange fees," said FMI president and CEO Tim Hammonds. "For too long, Visa, MasterCard and their card-issuing banks have fixed interchange fees under the cloak of secrecy. The predictable result: the cost of interchange now dwarfs that of all other credit card fees."
While FMI supports the action of legislators in the 10 states, the trade group is looking for Congress to take action on the federal level.
According to FMI, consumers are largely unaware of interchange fees associated with credit and debit card transactions. As a result, they are also unaware that retailers need to factor in these fees when determining pricing.
Discussion Questions: Are most consumers unaware of credit card interchange fees and its impact on the prices they pay at retail? Are the fees excessive, as charged by FMI? Is state and/or federal legislation needed to address the issue or is there a preferable market-based solution available?