A Special Delivery on the Hill Makes Interchange a Grassroots Issue

A delegation from 7-Eleven Inc., including the convenience-store giant's chief executive and a handful of franchisees, cast the card-interchange issue as a matter of grassroots politics on Wednesday by personally delivering to lawmakers in the nation's capital petitions with nearly 1.7 million signatures calling for interchange regulation. The petitions, which filled 130 boxes, were signed by customers at the checkout counters in some 6,300 stores this summer. “Customers share our frustration over the hidden fees that American retailers and, ultimately, consumers are forced to pay. They, too, want Congress to take action to regulate these unfair fees, which are the highest in the industrialized world,” Joe DePinto, 7-Eleven's president and chief executive, said in a statement. John Conyers, Jr., D-Mich., and Peter Welch, D-Vt., both of whom have sponsored legislation in the House of Representative aimed at curbing interchange, issued statements welcoming 7-Eleven's petitions. A third bill is pending in the Senate that largely mirrors the one sponsored by Conyers. Members of the 7-Eleven delegation, which included franchisees whose stores had gathered the most signatures, scurried about Capital Hill delivering the petitions to Congressmen whose districts included stores where customers signed. While about 40 people participated in the effort on Wednesday, it will take about a week to complete delivery, estimates Lyle Beckwith, senior vice president of the National Association of Convenience Stores, an Alexandria, Va.-based trade group assisting 7-Eleven. He tells Digital Transactions News this is not the end of the campaign. With legislation pending, “7-Eleven intends to follow up with customers to let them know how their members of Congress responded [with votes],” he says. Nor is 7-Eleven the only chain gathering customer signatures to support interchange reform. Beckwith says Circle K Stores Inc. is finishing up collecting signatures on its own petition. “We anticipate many more doing one in the coming months,” he says. 7-Eleven's petition drive, which ran from June 22 to Aug. 10 and gathered 1.66 million signatures?more signatures, says 7-Eleven, than were on a health-care reform petition submitted earlier this year to Congress–has ratcheted up what was already a contentious issue between banks and the card networks, on the one hand, and merchants, on the other, over a pricing system in which merchants pay a fee on each bank card transaction that is passed on by merchant acquirers to issuers. This fee, called interchange, is set by Visa Inc. and MasterCard Inc. and is typically the largest component of a merchant's card-acceptance cost. It has risen significantly in recent years, sparking merchant outrage. The 7-Eleven corporate entity and its franchisees paid $160 million in acceptance fees last year, a fourfold increase from five years ago. Data from a NACS study indicates transaction fees on average exceeded profits by 63% for c-store operators last year. Anticipating 7-Eleven's visit to Washington, MasterCard and Visa blasted the chain for promoting legislation that the card networks say would drive up costs for consumers. Both networks cited results of surveys indicating that consumers don't support interchange controls. MasterCard on Tuesday released a survey it says shows that 7-Eleven's petition misled consumers into supporting regulation that will in reality transfer costs from merchants to consumers (Digital Transactions News, Sept. 29). But Beckwith says consumers are already paying for interchange in the form of higher prices. “Consumers are paying it now, they just don't know they're paying it,” he says. Far from misleading its customers, 7-Eleven was very clear in how it communicated with customers, Beckwith says. “The people who own these stores know their customers, they're talking to them and explaining the issue,” he says. “I have very much confidence that people knew what they were signing.”