LAS VEGAS -- That credit-card fees are consuming more than $5.4 billion in convenience-store sales is hardly news. NACS leaders have successfully reinforced that galling figure like a commercial refrain. More challenging is how to tame these unwieldy costs that are riding piggyback on the popular transaction bronco better known as debit and credit cards.
As described by Lyle Beckwith, We have to [accept plastic] to stay in business. We cannot not accept credit cards and stay in business. Beckwith, NACS' senior vice president of government relations, [image-nocss] was joined Monday by Gray Taylor, NACS vice president of research, in a NACS Show session called What's in the Cards?
For sure, and as noted by NACS Chairman/President Hank Armour in Monday's opening session, credit-card fees remain the association's top legislative priority. How NACS and others are attacking the fees was partially laid out in the Beckwith-Taylor session moderated by Balmar Petroleum president and NACS member Richard Oneslager.
Yes, partially laid out. Ever careful not to tip NACS' strategy for the next legislative session, Beckwith opened his presentation with a question replete with caution. He asked, Is there anyone in the audience representing banks or credit-card companies? When a handful of hands shot up, Beckwith replied, They are a very skilled and talented lobby. You have to be careful what your plans are because they quickly become common knowledge.
So, careful not to share strategic secrets, Beckwith shared the realities of the Beltway and how NACS, aligned with a broad-based retail collection known as Merchants Payments Coalition, has scored several victories over the past year. Through a multi-pronged attack combining comprehensive education of lawmakers along with advertising and media-placed stories, the coalition has successfully forced MasterCard and Visa to backpeddle.
The retailing community is on the offensive, he said. The banks and credit-card companies are on the defensive.
Among some of the small victories, Beckwith listed:
Both Houses of Congress have committees probing interchange fees and the power of the credit-card giants. MasterCard this summer announced it would cap fees on $50 pumped at the fuel island, so that retailers would not be charged fees on anything above that price. Increasing number of lawmakers from both parties now see credit-card fees as a pain point harming retailers of all segments. Indeed, as Beckwith noted, it's not a convenience store issue. It's a retailer and merchant issue.That said, he was not so brazen as to predict instant victory in what has been a multi-year campaign. Our opponents have a lot at stake, have a lot of resources and have a lot of horsepower on Capitol Hill, he said. We've got a plan and a strategy. I'll let you know [what it is] as it happens.
Attacking Charge Backs
While Beckwith's presentation encompassed anti-trust litigation and interchange fees, NACS' Taylor targeted a particular bane called chargebacks.
In short, both MasterCard and Visa impose caps on fuel payments. At least with Visa, if a customer pumps $50.50 and the allowable cap on the retailer is $50, then Visa will charge a fee to the retailer on the entire $50.50 amount, Taylor said. MasterCard is a bit more forgiving, granting a $75 limit and then some allowance for small excesses.
To seize better control of chargebacks, as well as to reduce customer fraud and interchange fees, Taylor offered numerous suggestions, including:
Locking out cards of customers under dispute. Tracking your own disputed card numbers. Don't trust the issue to disable their cards, he said. Promoting PIN debit/install PIN pads at the pump. This, he explained, is the cheapest, most secure transaction, albeit a bit of an irritant to the on-the-go customer. Today's generationGen X and Gen Ywant to pay now. They are the debit generation. He noted that while proprietary credit-cards like the major oil cards are on the decline, debit transactions are on the rise. Managing processing services by bidding out such a contract every three years and require all bidders to submit unbundled prices. Considering the NACS Card Processing Network to at least establish a benchmark on what are appropriate costs.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.