Carpenterpresident of J.D. Carpenter Cos., Urbandale, Iowa, which owns the ShortStop chain of six c-stores in Iowa, and an owner of Liberty Bank Iowashared his observations on interchange fees, or credit- and debit-card "swipe" fees, during a scheduled hearing. "From either of my vantage points, these fees have long been out of control, and they are nearly suffocating [image-nocss] my retail stores, while yielding no profit at all for my community bank," he testified on behalf of NACS, where he holds the title of vice chairman of the Convention & Events Committee.
(Click here for previous CSP Daily News coverage leading up to Carpenter's appearance before the committee.)
On Tuesday, NACS also delivered a petition with more than 2 million signatures from c-store customers, asking Congress to create transparency and competition for swipe fees. (Click here for previous coverage.)
The signatures, combined with 1.7 million signatures 7-Eleven delivered last year, bring the total to 3.7 million. (Click here for previous coverage.)
(AndClick here for previous CSP Daily News coverage of industry "swipe fee" petition drives and other efforts by retailers such as Speedway SuperAmerica, Kum & Go, Quick Chek and Circle K.)
Carpenter said that credit-card fees account for his stores' second largest expense, surpassed only by laborand that at one of his stores, card fees are double what he pays for rent. The Credit Card Fair Fee Act, among other things, would allow retailers to negotiate with banks to determine the fees assessed for credit-card sales.
He also said interchange fees have grown more rapidly than all of the chain's other expenses, without the controllability of the other expenses. "As a result, we have had to cut costs even more in other areas to offset the increases in card fees. Our customers and employees are financially stressed. Yet, the customer must pay more for everything he or she purchases, and our employees may have their hours cut, their benefits cut or get no raises. And stores may lose money, or fail to grow enough to adequately distribute overhead costs."
Since 2005, the amount credit-card companies earned in interchange fees from c-stores has surpassed the c-store industry's entire profitby more than 2-to-1 in 2007. Carpenter said the unpredictable fees are "choking the air out of our business." But with approximately 80% of ShortStop's sales being paid by credit and debit cards, he said, "there simply is no business without accepting cards." He said the increases he is seeing in credit-card and debit-card fees are simply unsustainable.
On the flip side, as a bank owner with its own Visa-branded credit and debit cards, he said the revenue his bank earned on interchange accounted for less than 1%, with the amount of profit accounted for being zero. "Therefore, I disagree with the contention that efforts to bring interchange fees under control will harm community banks. This is simply not an item that is significant to the business of community banks." He offers the cards as a convenience to business customers, and says that changes might even help the bank by allowing price competition on interchange fees to attract customers.
"But the way it is, the huge banks make big money on interchange and market heavily to our customers through direct mail and otherwise," he said.
He concluded by saying that the fees "tighten the noose" on businesses like ShortStop: "I believe these fees are out of control, that they must be addressed so that small businesses like convenience stores can thrive, and that this can be done without doing any harm to community banks' business model."
Click hereto read the prepared testimony of Carpenter and other witnesses.
(And see related story in this issue of CSP Daily News covering House Judiciary Committee Chairman John Conyers Jr.'s [D-Mich.] statement on the Credit Card Fair Fee Act of 2009.)
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