Rising Credit Card Interchange Fees Equal Double Punch at Pumps
WASHINGTON -- According to Tom Robinson, president of the San Jose, Calif.-based Robinson Oil Corp., gas prices are not the only metrics rising at the pump.
"If you are concerned about prices at the pump you need to be concerned about [credit card] interchange fees," Robinson said while testifying today before the U.S. House Judiciary Committee's Antitrust Task Force on behalf of NACS.
With more than 60 percent of the country's 146,000 convenience stores being single-store operators, Robinson said that high credit card interchange fees are devastating these small business owners that sell an estimated 80 percent of the nation's gasoline.
This issue has resonated deeply with both Democrats and Republicans who together are supporting HR 5546, the Credit Card Fair Fee Act, bi-partisan legislation aimed at ending credit card industry price fixing.
In July, 2006, Convenience Store News magazine covered a Senate Judiciary Committee hearing entitled: "Credit Card Interchange Rates: Antitrust Concerns?" Among those in attendance was Mallory Duncan, the chairman of the Merchant Payments Coalition and senior vice president and general counsel of the National Retail Federation. Since 2001, he said interchange costs have increased by 150 percent.
A staunch supporter of interchange reform, Duncan commented on today's hearing saying, "There's no transparency and there's no negotiation. As long as rising rates are kept top secret, consumers have no way of knowing the extra costs they are paying through higher prices."
Visa, MasterCard and respective member banks receive payment from retailers every time a credit or debit card is used. The current interchange fee average is 1.75 percent, roughly three times the current rate in Europe and four times the rate in Australia. On average, consumers' stateside using credit cards pay an additional six to eight cents per gallon in interchange fees.
Last year, convenience stores paid $7.6 billion in credit card fees, a figure more than double industry profits of $3.4 billion. "Every time you buy gasoline. I ask you to remember this -- the station you are buying it from is paying more than twice as much money in fees than it is making -- and every time gas prices go up the card fees go right up with them," Robinson said to the panel. "These fees have simply taken over our industry."
CSNews Online could not reach MasterCard or Visa for comment yesterday. In 2006, Rhonda Bentz, vice president of public affairs for Visa, told Convenience Store News she acknowledged that credit card fees rates were rising, but said, "What is happening in regards to rising rates is more a reflection of consumers using cards more often," Bentz said, adding, "There is no price-fixing going on."
For Robinson, credit card interchange fees are his top operating expense at six of his 34 Rotten Robbie convenience stores, totaling $4 million last year. "It is clear that the price for the cashless society is way too high if you let the credit card industry set the rate," Robinson said in a released statement. He urged Congress to quickly pass the Credit Card Fair Fee Act, a bill that he and the Merchant Payment Coalition believe will provide a needed seat for merchants at a negotiation table with credit card companies and their member banks.
"Right now there is no market for interchange fees. The fees are fixed by the banks, hidden from the public and forced on merchants in a take-it-or-leave-it offer. The Credit Card Fair Fee Act will create a market for interchange fees for the first time by allowing merchants and the card associations to negotiate on equal footing," said Robinson.
"If you are concerned about prices at the pump you need to be concerned about [credit card] interchange fees," Robinson said while testifying today before the U.S. House Judiciary Committee's Antitrust Task Force on behalf of NACS.
With more than 60 percent of the country's 146,000 convenience stores being single-store operators, Robinson said that high credit card interchange fees are devastating these small business owners that sell an estimated 80 percent of the nation's gasoline.
This issue has resonated deeply with both Democrats and Republicans who together are supporting HR 5546, the Credit Card Fair Fee Act, bi-partisan legislation aimed at ending credit card industry price fixing.
In July, 2006, Convenience Store News magazine covered a Senate Judiciary Committee hearing entitled: "Credit Card Interchange Rates: Antitrust Concerns?" Among those in attendance was Mallory Duncan, the chairman of the Merchant Payments Coalition and senior vice president and general counsel of the National Retail Federation. Since 2001, he said interchange costs have increased by 150 percent.
A staunch supporter of interchange reform, Duncan commented on today's hearing saying, "There's no transparency and there's no negotiation. As long as rising rates are kept top secret, consumers have no way of knowing the extra costs they are paying through higher prices."
Visa, MasterCard and respective member banks receive payment from retailers every time a credit or debit card is used. The current interchange fee average is 1.75 percent, roughly three times the current rate in Europe and four times the rate in Australia. On average, consumers' stateside using credit cards pay an additional six to eight cents per gallon in interchange fees.
Last year, convenience stores paid $7.6 billion in credit card fees, a figure more than double industry profits of $3.4 billion. "Every time you buy gasoline. I ask you to remember this -- the station you are buying it from is paying more than twice as much money in fees than it is making -- and every time gas prices go up the card fees go right up with them," Robinson said to the panel. "These fees have simply taken over our industry."
CSNews Online could not reach MasterCard or Visa for comment yesterday. In 2006, Rhonda Bentz, vice president of public affairs for Visa, told Convenience Store News she acknowledged that credit card fees rates were rising, but said, "What is happening in regards to rising rates is more a reflection of consumers using cards more often," Bentz said, adding, "There is no price-fixing going on."
For Robinson, credit card interchange fees are his top operating expense at six of his 34 Rotten Robbie convenience stores, totaling $4 million last year. "It is clear that the price for the cashless society is way too high if you let the credit card industry set the rate," Robinson said in a released statement. He urged Congress to quickly pass the Credit Card Fair Fee Act, a bill that he and the Merchant Payment Coalition believe will provide a needed seat for merchants at a negotiation table with credit card companies and their member banks.
"Right now there is no market for interchange fees. The fees are fixed by the banks, hidden from the public and forced on merchants in a take-it-or-leave-it offer. The Credit Card Fair Fee Act will create a market for interchange fees for the first time by allowing merchants and the card associations to negotiate on equal footing," said Robinson.