NACS Comments on Interchange Fees at Today's Hearing

Robinson said that high credit card interchange fees are devastating the country's small businesses that dominate the convenience and petroleum retailing industry. More than 60 percent of the country's 146,000 convenience stores, which sell an estimated 80 percent of the country's gasoline, are one-store operators, and less than 3 percent are owned and operated by major oil companies.

Credit card interchange fees are a percentage of each transaction that Visa and MasterCard and their member banks collect from retailers every time a credit or debit card is used. In the United States, these fees average 1.75 percent, approximately three times the rate in Europe and four times the rate in Australia. With the average fueling transaction today, consumers paying by credit card incur 6 to 8 cents per gallon in interchange fees.

"The impact on my industry is incredible," said Robinson, noting that convenience stores paid $7.6 billion in credit card fees in 2007, 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," he said. "These fees have simply taken over our industry."

Robinson said that credit card interchange fees are his top operating expense at 6 of his 34 Rotten Robbie convenience stores, cumulatively costing his business - and his customers - $4 million in 2007. Moreover, credit card interchange fees are his only major expense that is not the result of competitive negotiation.

"It is clear that the price for the cashless society is way too high if you let the credit card industry set the rate," stressed Robinson.

Robinson urged Congress to swiftly enact H.R. 5546, the Credit Card Fair Fee Act, which would provide an opportunity for merchants to negotiate reasonable terms with the 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.

Under the current system, banks that issue credit cards are supposed to compete with each other, but they charge the same "default" interchange fees, giving retailers an ultimatum: either agree to the terms in full or refuse to accept credit cards. However, the latter choice is not a viable option, given the huge combined market power Visa and MasterCard wield with their banks.

"The Credit Card Fair Fee Act is a critical first step to bringing market fundamentals to this non-existent market. This is just the type of approach that appeals to me as a businessman. This is the way that American businesses operate and I am comfortable with it," said Robinson. "What I need is the ability to present myself to the card associations and banks in the same way they present themselves to me - as a group. The card associations should not be afraid to negotiate on even footing with merchants."