WASHINGTON -- Even casual users of social media could not help but notice on Twitter and Facebook the outpouring of thanks to the senators who last week helped defeat an attempt to delay the debit-card interchange-fee reforms passed last year, and tweets of victory for retailers of all channels, including convenience stores, part of a long and ongoing fight against banks and credit-card companies. Those thanks echoed across the industry.Here are a few representative examples:MurphyUSA: Fuel America: Congratulations! You helped in bringing lower prices! http://eepurl.com/edPdv
Senate just defeated delay of swipe fee reform! Thanks to all of u who helped stand up for lower prices by contacting your reps!
Thorntonsinc: Thanks to all who joined us in the fight for Swipe Fee Reform. Swipe fees are crucial to Thorntons efforts to bring value to our consumers.
RaceTrac: Thank You to our guests who joined the fight for Swipe Fee Reform to stay on track Because of you RaceTrac can continue to bring great value
reformswipefees: Sometimes, lightning strikes twice. Main Street has twice triumphed over the big banks on swipe fees.
Thank you to the Senators who stood with Main Street & everyone who wrote letters, called, signed petitions.
"Wall Street can beat almost anyone in a legislative brawl, but it cannot defeat the entire American retail industry." http://huff.to/m9tkxC
RILAtweets: #DC Small Business Owner - I am proud to join sb owners today to thank Congress for ensuring that fairness is brought to #swipefees for all!
Small business owners gather to applaud Congress for protecting #swipefee reform!
mainemerchants: Yes! Tester Amendment needed 60 votes to pass. Vote was 54-45. #swipefee reform.(Please send comments to Greg Lindenberg at glindenberg@cspnet.com,www.twitter.com/glcspdn or www.facebook.com/glcspdn.)And offline, more than 50 small-business owners from across the country rallied on Capitol Hill last week to thank Congress for supporting retailers and consumers and opposing the Tester-Corker Amendment that, if passed, would have undone interchange-fee reforms that are part of the Dodd-Frank financial reform package.
"For millions of small-business owners across America, swipe fees are the difference between breaking even or going bust. It can mean hiring a new worker--or having to let an old one go. It can mean passing along savings to customers--or losing the sale. For years, unfair and excessive swipe fees have held Main Street back. But not anymore," said Dennis Lane, -Eleven franchisee and national spokesperson for Reform Swipe Fees NOW!.
"It has not been an easy road to get here. The banks and credit-card companies have pulled out all the stops to maintain their cash cow," Lane added. "When it was time to cast their ballots, our members of Congress stood up to the powerful Wall Street lobby--sending the message that we will not tolerate this unfair and harmful system any longer. And that is a good thing for all U.S. businesses and consumers."
Last year, Senator Dick Durbin (D-Ill.) championed an amendment to the Dodd-Frank bill that fixed the broken interchange system that allowed credit-card companies to operate without regulation and to charge excessive and increasing swipe fees, said the group, negatively impacting small-business owners and consumers across the United States. The amendment passed Congress and was signed into law by President Obama. As a result, new rules limiting debit-card swipe fees are scheduled to take effect next month.
New rules limiting debit-card swipe fees are scheduled to go into effect on July 21, 2011.
But over the past 12 months, Wall Street banks and credit-card companies engaged in an aggressive lobbying campaign to undo these critical reforms. For their efforts, Senators Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) proposed an amendment to delay swipe-fee reform, but last Wednesday it was rejected in a full floor vote that failed to garner the required 60 votes. (Click here to view previous CSP Daily News coverage.)
This is good news for U.S. small businesses who, with fair fees, will be able to grow their businesses, offer better pay to employees and pass savings on to their customers, said Reform Swipe Fees NOW.
Before the vote, Sen. Jack Reed (D-R.I.), a senior member of the Banking Committee and a key supporter of swipe-fee reform, said on the Senate floor:
"Senator Durbin proposed this provision because businesses like in my home state of Rhode Island, Cumberland Farms, the old convenience store chain that I grew up with and the quintessential family-owned business, pays almost as much in these hidden fees as it earns each year in profits. These fees roughly equal their profit.
"Now, interchange fees for Cumberland Farms are their second-largest expense. It's not the milk, not the gasoline, it's not a lot of things. It is their second-largest expense. Despite the fact that the total number of gallons of gasoline that they sold has remained flat, the interchange fees have increased 237% from $13 million in 2003 to a projected $48 million this year.
"Cumberland's CEO calls this increase a 'runaway train.' When gasoline was $2 per gallon, interchange fees were about three cents per gallon. Now that gas prices are about $4 per gallon, interchange fees have increased to five cents per gallon. So, for the same 15 gallon fillup, the hidden fees increased 63%.
"So the motorists, the local Rhode Islander filling up at the local corner gas station, is paying 63% in their fees on top of increase in the price of gasoline. The actual debit-card services haven't changed. But because the price of gas increased, the fees almost doubled. That's a pretty good deal for Visa and MasterCard and banks. Unfortunately as these fees continue to increase, the increase--they increase gas prices, prevent investment, preclude new hiring. The convenience store industry reports overall it pays more in these fees than it's earning in profits. That's overall across the board, across the country."
Some small retailers, such as gas station owners, can pay as much as $2,400 per month in swipe fees, said Kirk McCauley, director of member relations for the Washington Maryland Delaware Service Station & Automotive Repair Association. "This is a victory for the little guy," he told Gazette.net.
7-Eleven franchise owners launched a petition campaign in 2009, gathering more than 1.6 million signatures, as owners pushed consumers to help them mitigate the fees. "We are thrilled that all of our efforts paid off," Linda Haddaway, president of the Baltimore Franchise Owners Association, which represents more than 65 7-Eleven stores, told the news outlet.
"Maybe this way, we'll be able to save money and get on the negotiating table to get the right charges," Mark Chiochankitmun, president of the Washington Metropolitan 7-Eleven Franchise Owners' Association, told Gazette.net. He said the savings from the reduced swipe fees could also help him hire two full-time workers to help run his store.
The Maryland Retailers Association also called the Senate vote a plus for consumers and likely to relieve the "tremendous" amount of cost pressure on retailers, president Patrick Donoho told the publication. "It's too bad that Main Street was fighting. This was a tough vote for politicians," he said.
Melvin R. Thompson, spokesman for the Restaurant Association of Maryland, described the amendment's defeat as a "huge victory" for restaurants and consumers. "Because over 90% of our customers now use payment cards when settling their bill, swipe-card fees have become the second-highest operating expense behind labor costs for many restaurants," he told the news outlet. "Lower operating costs as a result of the new swipe-fee cap will translate into more business investment, more jobs and more value for our customers."
But the Maryland Bankers Association, which represents 100 banks, argued that the lowered cap will result in higher fees on other consumer bank services; "75% of the costs banks bear for the interchange system, they'll not be able to recoup," Kathleen Murphy, president of the association, told the publication. "This will require banks to look at how their accounts are structured to offset those costs."
She said bankers are "incredibly" disappointed by the vote. "Ultimately, the consumer will be the big loser in this decision," Murphy said.
"It is proof that Main Street USA can still beat Wall Street," Channing Smith, the owner of The Corner Store in Inver Grove Heights, Minn., told MinnPost.com in a separate report. "It gives any business out there encouragement to know that there is a better tomorrow ahead for them."
Ted Brausen, owner of Brausen Auto in Roseville and Blaine, told the news outlet, "Everybody wins because it's money back into the economy. It's been a long time since somebody has taken care of small business."
Lane of Reform Swipe Fees NOW told MonnPost.com, "We cannot put the money in our pockets and run. We can't take a pay raise. We need to reinvest that money in our communities by hiring more people, by lowering our prices. We need to do the right thing."
Smith said he might use the savings to sponsor youth sports teams or clubs, or to increase the salaries of his part-time employees.
"For some people it's survival, for some people it's hiring more help, but it's certainly a lot of money back into the economy to help small business and their customers," Brausen said.
AnotherCSP Daily News Poll asked, "Who is the winner in the Senate vote on debit-card swipe fees, which rejected a delay in implementation of the reforms? Of the approximately 150 respondents, more than 50% said both retailers and consumers; nearly 27% said retailers; about 8% said nobody; nearly 7% said banks; more than 5% said retailers, consumers and banks; and almost 3% said consumers.
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