(Click here to view previous CSP Daily News coverage.)
"This has been the first time I've worked on a piece of legislation, an amendment, where I've felt like both parties understood it and understood how dramatically it affects small business," said Dave Carpenter, president of J.D. Carpenter Cos., Urbandale, Iowa (which owns the ShortStop chain of six c-stores in Iowa), owner of Liberty Bank Iowa and vice chairman of the NACS Convention & Events Committee.
"I think it will be very interesting to see the new types of competition that come from this, with us being able to give discounts for credit-card providers that give us a better rate, for us to price our products based on who is willing to negotiate with us betterand it's a win-win," he added.
Carpenter said his store associates made more than 80 phone calls in support, knowing that the fees directly affect them and his company's ability to increase labor, pay and hours, as well as build new stores and reduce expense to customers. "We're really excited about it," he said.
Doug Kantor, counselor to NACS, said the recent vote was "incredibly significant" to retailers as the fastest-growing cost over the last several years, second-highest operating cost and a cost that has tripled in size since 2001.
Kantor outlined that the amendment would:
Give the Federal Reserve the same authority over electronic checks as it currently has over paper checks, and ensure that charges are not unreasonable. Kantor pointed out that the Fed had decided on no fees for paper checks in the past. "Not the case when those checks are electronic and supposedly more efficient for the banks to process, but now the Fed will be able to set a structure whereby those fees on debit cards are reasonable and proportional to the actual cost of processing that transaction."
John Emling, senior vice president for government affairs for RILA, pointed out that it's an "absurd" 43 times higher to process a debit over a paper check. "That's akin to suggesting that an email should cost more than snail mail, in today's electronic age," Emling said.
Carve out small banks, with $10 billion in assets or less, from that regulation. In fact, Kantor said more than 99% of all banks were carved out. He added that the amendment covers 65% of all debit cards in the country, because a small number of very large banks issue the vast majority of these cards. Carpenter said, "I am a bank owner as well, and it had very little effect on me without the exemption. But with the exemption, it takes away any negativity that it would have on small banks."
Allow merchants to give customers discounts, a practice that MasterCard and Visa currently prohibit. Discounts could be based on credit card brand or by type of payment.
Allow merchants to set a minimum or maximum credit-card transaction amount. Although some merchants do that already, major credit cards sometimes threaten merchants with "huge fines" ($5,000 a day) for that practice, according to Kantor. "But this amendment would allow merchants to do that, because otherwise they often are required to lose money on those small dollar transactions in order to take the card." Kantor said the ongoing fight to make sure the amendment stays a part of the legislationand that the act becomes lawincludes lobbying, paid advertising and individual business owners contacting representatives and senators.
And Emling expressed gratitude for the Senate's vote. "We'd like to thank them for providing all of our merchants the opportunity to have the fairness to control what happens at the point of sale within their stores. The opportunity to have fairness in addressing the most egregious example of what's wrong with the current interchange system, that being debit cards, is a good first step."
(Click here to for more on this issue from Carpenter.)
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