For years, big credit card companies have been charging an ever-increasing set of fees on credit and debit card purchases. Now a group of Idaho convenience store owners say their patience with the practice has been overdrawn.
Charley Jones, co-owner of the state’s chain of Stinker Stores, and Pat Lewis, owner of Oasis Stop 'N Go in Twin Falls, gathered this morning with John Eichberger of the National Association of Convenience Stores to present U.S. Sen. Mike Crapo’s office with a petition signed by more than 24,000 Idahoans urging reform of the nation’s interchange fee system—commonly referred to as “swipe fees.”
Jones and Lewis contend that the fees, which are a fixed fee plus a percentage of the purchase price appended to every credit or debit card sale, are in a seemingly endless upswing and severely cutting into their revenues.
“Much to our chagrin, we’re paying more in swipe fees than we are making in profit,” Lewis said.
“It’s a wild animal that’s broken loose,” Jones added.
According to Eichberger, who serves as the VP of government relations for the NACS, swipe fees at the nation’s 145,000 or so convenience stores range from 2 percent to 2.5 percent. That means the average family spends about $400 a year in fees, raking in a total of $48 billion for big companies like Visa, MasterCard and American Express.
The fees are set by a cabal of big banks working in concert with the card companies, and the store owners want to have a say.
“For years we’ve asked Congress to reform this system … yet nothing has happened yet,” Eichberger said.
Jones said the swipe fees his Stinker stations pay have tripled since 2004. Today card fees are the second largest expense for many convenience stores, topped only by paying their employees.
“It’s not often as an Idaho businessman that I look to the federal government,” Jones said. But when faced with a “gorilla” like the card companies, he added, there’s no choice but to go to “the bigger guy”—Congress—for help.
In an interview following the press conference, Lewis told citydesk that customers—even those paying cash—should be angry, too. Because it’s against the rules to charge different prices for items based on the method of payment, the card fees are passed onto all customers regardless of how they pay.
“We’re not allowed to steer customers’ purchases toward a method of payment that’s cheaper for us to process,” Lewis said, though card companies can market all they want to push consumers toward higher-fee methods—especially credit cards.
When retailers tried to push back by installing easy-to-use debit card kiosks, the card companies just raised debit swipe fees, he said.
“To me, now, it costs basically the same thing to process credit as it does debit,” Lewis said.
At the end of the day, he added, convenience store owners don’t want to abolish the fees, they just want a say in how they’re set.
“Just the ability sit down at the table and negotiate would help,” Lewis said. “Then maybe we could get the card companies—Visa, MasterCard, American Express—to compete against each other. We’re all for free markets and all for capitalism, but as it is now, the current system isn’t reflective of either of those systems.”