(Click here for yesterday's CSP Daily News coverage focusing on Bouchard'sgoal to double the size of the company's U.S. and Canadian retail network.)Bouchard said Couche-Tard's new credit-card initiative is designed to counter what he reminded shareholders are "out-of-control, exorbitant fees for electronic payment," said the report.CFO Raymond Pare said that the card would compete with the "duopoly" of Visa and MasterCard, according to a Financial Post report. He said it would most likely include a "good group of businesses" which would partner and create a common card with "normal rates."
Pare added, that Visa and MasterCard "simply don't compete. How can we let this continue?"To include competitors as well as other businesses such as pharmacies and supermarkets, the card would use the model used by airlines/hotels/car rentals that offer deals and incentives at a lower fee than that charged by the "duopoly" of Visa and Master Card, which Bouchard accused of "pick-pocketing" retailers 2% the value of each transaction.
According to the Post, Bouchard said his company has met several times with representatives from Visa and MasterCard as well as joining other business in the United States to lobby for the passing of a bill regulating the credit-card industry. The legislation has reached Congress, but Bouchard said if the "negotiating doesn't work.... it's clear we have a plan B."Annual credit-card and debit-card fees paid by Couche-Tard have almost tripled in the past four years, from $63 million in 2005 to $180 million last year, the report said.
Bouchard said any new card would charge 0.5% per transaction in order to keep costs down.
In late July, Circle K, the U.S. c-store network of Couche-Tard, entered the fight against high credit-card fees by also placing "Fight Unfair Credit Card Fees" petitions in its stores for customers to sign to convey to Congress their displeasure over the costs resulting in higher prices on retail goods.
In the company's annual report, Alain Bouchard, president and CEO of Couche-Tard, said, "There's one other significant drag on our profitability, and we have decided to do something about it. I'm referring to the now exorbitant fees for processing e-payments set by the credit-card industry."
He added, "Electronic mode payment costs have exceeded pre-tax profits in the U.S. convenience store industry for the last three years and the gap is widening dramatically. Based on published industry results for calendar 2008, total fees have more than doubled to $8.4 billion while industry pre-tax profits have sunk to $5.3 billion. That's not a typo. According to this report, only 13% of these fees actually pay for the transaction interchange, the rest goes into reward programs, marketing campaigns and profits."
Bouchard concluded, "We are taking a lead position on this issue. I'm not a person who normally seeks out regulation, but fees here are four times those in Australia, where sensible controls have been set. We have met with the ministers of Finance and Industry here in Canada and there are motions now in front of the U.S. Congress and the Senate where we have bipartisan support. I hope to have news in the near future."
(Click here for previous CSP Daily News coverage.)
Laval, Quebec-based Couche-Tard currently operates a network of 5,395 convenience stores, 3,556 of which include motor fuel dispensing, located in 11 large geographic markets, including eight in the United States covering 33 states and three in Canada covering 10 provinces.
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