Through 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.
"Fees having 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."
The legislative 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).
As retailers 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.
"We're trying to hit our credit--and even our debit card customers," Ms. Bullard said. "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."
But retailers 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."
Discussion 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?