SPRINGFIELD, Ill. -- Wendy Chronister, president and CEO of Chronister Oil Co., Springfield, Ill., which operates the Qik-n-EZ convenience store chain, testified in Washington last week on behalf of a proposal to give small businesses a break on fees they pay when customers use debit cards, said The State Journal-Register.
"Small businesses have to accept Visa and MasterCard to survive, and so they have no choice but to accept the outrageous fees that are imposed on them by both of these companies," U.S. Sen. Dick Durbin, D-Ill., the sponsor of the bill, said at [image-nocss] a recent news conference in Washington.
The Durbin legislation would "create competition where there currently is none," Chronister told the newspaper.
Not counting the cost of inventory, she said, card fees are the second highest operating cost for her business, following only labor. It is "significantly higher than our utility bill," she added.
"We're selling fuel and we're selling little things," she said, "and this is a big cost that's built into everything."
Qik-n-EZ will soon have six Springfield locations, bringing its central Illinois total to 12, the report said.
Chronister, who lives in Chicago but said she is in Springfield every week, testified before the Senate Appropriations subcommittee on financial services and general government, which is chaired by Durbin.
She said her business is charged about 2% of each credit card sale as an interchange fee. The fee is about 1.6% when debit cards are used, she said.
"The real cost of the interchange fees is borne by the consumer because they inflate the prices of the products we sell," she said in her prepared testimony.
Durbin's proposed amendment to financial regulation legislation would:
Direct the Federal Reserve Board to ensure that debit -card fees charged by large banks are proportional to their processing costs; Prevent card networks like Visa and MasterCard from penalizing sellers for offering discounts for using cash or lower-cost cards. Allow retailers to decline the use of credit or debit cards for small purchases. Chronister said debit cardswhich, unlike credit cards, directly transfer money from a customer's bank accountare "really just an electronic check" and cost less to process. But retailers must pay big interchange fees when debit cards are used, while no such fee is charged for checks.
She said about 200 consumer groups support the Durbin amendment.
Trish Wexler, a Washington-based spokesperson for the Electronic Payments Coalition (EPC), which represents community banks, credit unions, large banks, processors and payment networks of Visa and MasterCard and American Express, argued against the changes.
"Large retailers, including the convenience store industry as a whole, have been lobbying Congress for the better part of a decade to try to shift the cost of what they pay to accept credit and debit onto their customers," Wexler said.
Durbin's amendment was included in a Senate-passed version of financial reform legislation, but not in a House version, said the report. A conference committee is working out differences between the bills, spokesperson Christina Mulka told the paper.
Chronister said she strongly supports Durbin's plan. Despite Wexler's argument, Chronister said lower fees will mean lower prices in a hotly competitive market.
"There is no question that the consumer will benefit from this, as we are in the business of providing the best value to our customers," Chronister told the Journal-Register.
Click hereto view Chronister's testimony.
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.