More Petitions Let C-Stores Ratchet up the Heat on Interchange

Presenting yet another wave of petitions signed by hundreds of thousands of customers, the convenience-store industry turned up the heat on Congress Thursday to enact curbs on debit card interchange.

The 1.68 million signed petitions, collected by Speedway SuperAmerica LLC and unveiled by the c-store chain and NACS, an industry trade group, ask Congress to regulate interchange fees generically. But they come just as conferees are slated to begin next week hammering out financial-services reform legislation based on bills in the House of Representatives and the Senate. The Senate version contains an amendment calling for regulation of debit card interchange.

Executives with Speedway SuperAmerica, a 1,600-store chain based in Enon, Ohio, said during a press conference held with the NACS that most customers readily signed the petitions. “There was immediate buy-in,” said Charlie Runyon, regional director for the chain, whose stores operate across a nine-state region in the Midwest. The company and NACS positioned interchange pricing—or “swipe fees,” as many merchants and merchant advocates have started referring to it—as burdensome to both merchants and consumers. Tony Kenney, Speedway SuperAmerica’s president, said credit and debit card fees are the chain’s second-highest expense and keep prices high for customers, both in the store and at the pump.

The latest wave of petitions brings to 5.4 million the number of consumer signatures c-store chains have collected since 7-Eleven Inc. asked customers to sign up in favor of interchange regulation last summer (Digital Transactions News, July 7, 2009). NACS calls that total the largest number of petitions ever gathered among consumers on a public policy question. 7-Eleven ended up with almost 1.7 million petititons, delivering them to Congress last fall in a high-profile effort to influence lawmakers (Digital Transactions News, Sept. 30). Another wave of petitions, sponsored by the NACS, took place over the winter (Digital Transactions News, Dec. 7).

Whether the mounting petition count will have any effect on Congress now is unclear. Last month, the Senate approved on a bipartisan vote an amendment sponsored by Sen. Richard Durbin, D-Ill., that is now on the table as Senate and House conferees prepare to meet. Under the amendment, the Federal Reserve would be required to oversee the debit interchange fees set by card networks to ensure they are based on the cost of processing transactions. The Fed would not set interchange prices. Banks with under $10 billion in net assets would be exempt from the provision.

The amendment would also ban network penalties that prevent merchants from offering discounts to customers for using competing card networks and for paying by cash, check, or debit card. Sellers could also decline credit cards for small dollar purchases, in which interchange fees often exceed profits on the sale.

While the merchants’ signature count is an impressive total, some observers discount it. “I don’t think the people who signed it understood it,” says Aaron McPherson, practice manager for financial services at Boston-based Financial Insights. He argues that most consumers are unaware of possible consequences of interchange regulation, including the imposition of annual fees for cards or a cutback in rewards. Even if merchants passed on all the savings from lower interchange, “I doubt it would offset the loss of benefits” to consumers, he adds.

In a written statement issued after the Speedway SuperAmerica press conference, Visa Inc. said: “What makes this latest petition effort both puzzling and misleading is that all retailers have the ability to exercise numerous point-of-sale options related to accepting payments, including offering discounts for cash or PIN debit, acceptance of only cash or checks, or steering customers to other forms of payment.”

But Lyle Beckwith, senior vice president for government relations at the NACS, said at the press conference that many of these options are effectively foreclosed to merchants. “Visa and MasterCard rules make it all but impossible to discount for cash,” he said.

As for the immediate future, Beckwith said his trade group and its members have one simple goal. “We just want to be sure the Durbin amendment stays in the [final] bill,” he said. President Obama has said he expects to have a bill to sign into law by July 4.