Truck Stops, Retailers Push Congress for Relief from Credit Card Issuers’ Transaction Fees

This story appears in the Oct. 19 print edition of Transport Topics.

Retail groups, including the trade association representing truck stops, are urging Congress to enact legislation that would regulate the fees retailers are charged by credit card companies.

However, financial groups said the fee was simply “the cost of doing business” with electronic payments and should not be altered.

Stephen Beaulieu, director of government affairs for Natso Inc., told Transport Topics on Oct. 14 that the association supports legislation that would curb the ability of banks to collect interchange fees from retailers.

Beaulieu said a bill introduced by Reps. Peter Welch (D-Vt.) and Bill Shuster (R-Pa.) “provides flexibility” for retailers in dealing with the terms imposed by card companies such as Visa and MasterCard.

“It’s a pretty narrow approach,” he said, but even some of the “smaller things like setting a minimum [for purchases]” will be helpful.

Interchange fees are “one of the biggest costs that our members can’t negotiate,” he said. The fee generally averages 2% but can rise as high as 5%.

“As price of fuel rises, that 2% really starts to add up,” he said. “Credit card companies and banks made more money on the sale of gas last year than our guys did.”

During an Oct. 8 hearing of the House Financial Services Committee, Mallory Duncan, general counsel for the National Retail Federation, said the “collective setting of interchange fees by Visa and MasterCard represent an ongoing antitrust violation and it costs merchants and their customers . . . tens of billions of dollars annually.”

Duncan testified on behalf of the Merchant Payments Coalition, of which NRF and Natso are both members.

“Interchange fees are hidden charges paid by all Americans, regardless of whether they use credit, debit, checks or cash,” said Edmund Mierzwinski, consumer protection director for the U.S. Public Interest Research Group, arguing that the interchange fees charged to retailers are passed on to all consumers.

Financial institutions argued that fee was simply the way electronic payments were handled between businesses.

“The merchants like to describe interchange as a fee on consumers; however, interchange represents the merchants’ assumption of their fair share of the financial responsibility for the card payment system,” said Mark Caverly, executive vice president of Local Government Federal Credit Union, Raleigh, N.C.

Caverly, who spoke on behalf of the Electronic Payments Coalition and the Credit Union National Association, said that retailers “receive many benefits as a result of their participation” and that the fees cover some of the risk of nonpayment and administrative costs of tracking electronic payments.

“In short, interchange is a ‘cost of doing business’ for a merchant which chooses to accept this valuable form of payment,” he said.

Beaulieu said the problem was that major card issuers “hold all the power” related to how the fees are set.

“It’s a huge cost that there’s nothing you can do about,” he said.