Retailers ask Congress to lower credit-card fees

The Merchants Payments Coalition launched the campaign this morning during a telephone press conference with representatives of the National Retail Federation, the Food Marketing Institute, the National Grocers Association and the National Association of Convenience Stores.

Mallory Duncan, general counsel of NRF, said the coalition seeks federal legislation to require the nation’s banking industry, which issues credit cards through Visa, MasterCard and other entities, to negotiate with a collation of retailers over credit card fees and rules. For example, retailers might seek an agreement to offer price discounts to customers using credit cards that are less expensive to the retailer, he said.

“Retailing is the most competitive industry in the U.S., with an after-tax profit margin of about 2 percent; in the grocery segment it is even less — about 1 percent,” Duncan said. He said a 2 percent credit card fee wipes out the retailer’s profit and leads to higher prices that are charged to both cash and credit customers.

A spokesman for Visa was not available to comment, but the company’s Web site states that retailers are allowed to offer discounts to cash-paying customers, and states, “Visa believes that any inappropriate intervention into interchange, if successful, would result in fewer payment choices and a reduction in benefits for both consumers and merchants, and possibly even higher checkout costs.”

“We don’t think we can fix the economic crisis without addressing the incentives behind irresponsible credit-card lending by reforming the interchange fee system and addressing this unfair burden on American small businesses and consumers,” said Hank Armour, chief executive of the National Association of Convenience Stores, on this morning’s call.

Interchange fees have increased 300 percent in the past seven years, said Jennifer Hatcher, group vice president of government relations at the Food Marketing Institute.

The coalition said $48 billion interchange fees were paid last year.

Scott Hardman, chief executive of Rutter’s Farm Stores in central Pennsylvania, said, “Credit card interchange fees were $4.6 million for my stores alone. In this economy, this directly affects my business and also my customers.”

New Jersey retailers "absolutely" want the power to negotiate lower credit-card fees, said John Holub, president of the New Jersey Retail Merchants Association, which is working with the national coalition.

"Our hands are really tied in the ability to negotiate lower fees," Holub said. "The credit-card companies keep increasing the fees, and this is a very significant issue for us."