Interchange Fees: 'It's Robbery'

Couche-Tard's Bouchard backs grassroots campaign to battle credit-card costs

LAVAL, Quebec -- As Alain Bouchard reported Alimentation Couche-Tard's lackluster fourth quarter this past week, he was his typically positive self, suggesting the company will have little trouble getting beyond the issues raised by record-high gasoline prices, the struggling U.S. economy and even immigration issues. "I'm pretty optimistic about the future," he said during a conference call. He did, however, attack one target that he has seldom commented on in the past: credit-card interchange fees. "It's robbery!" he exclaimed.

Thus, the chairman, president and CEO of the Canada-based [image-nocss] retailer—the second-largest convenience retailer in North America—is throwing the company's support behind a NACS-led grassroots campaign to educate consumers and put pressure on Congress to change the system.

"We will have a big, big initiative in the market during August with pumptoppers that we will share with the consumer," he said during the fourth-quarter earnings call. "And it's not just us; there will be 100,000 outlets out there talking about credit-card fees to consumers, [urging them to contact their] congressmen and senators and governors. We want to pressure politicians, and we want to have the consumer aware of this. It's robbery!"

The NACS campaign aims to gain support for the Credit Card Fair Fee Act, a proposal pending in Congress that Bouchard said he'd like to see enacted. NACS is making pumptoppers available free of charge to retailers [Editor's Note: downloadable for free from the NACS site or at cost from signage supplier GSP] to communicate the industry's fight against high interchange rates and call upon consumers to ask their local members of Congress to support the act.

NACS is asking retailers to put the pumptoppers in their promotional signage plans from August 1 to September 6, when Congress is in recess and members will be in their home districts. Bouchard said that's just what he plans to do.

The reasons for Bouchard's support of the act were clear as Couche-Tard executive vice president and CFO Richard Fortin explained gasoline margin compression during the conference call. "Motor-fuel gross margin for the company-operated stores in the United States decreased substantially to 10.02 cents per gallon for the fourth quarter of fiscal 2008 and 6 cents per gallon on a net basis, that means after credit-card fees," he said, "compared with 13.12 cents per gallon or 9.53 cents per gallon on a net basis in the corresponding quarter in the previous year." (Click here to read CSP Daily News' previous coverage of Couche-Tard's quarterly results.)

When one analyst noted that the Credit Card Fair Fee Act essentially would only open negotiation of such fees, both Fortin and Bouchard said that's a big step forward. "At the end of the day, we know that we're paying way too much compared to what is being charged in Europe and in Australia and every part of the world," said Fortin.

Added Bouchard, "In Europe [interchange fees are] less than half of 1% and here it's over 2%. So there is a lot of room there to get an acceptable deal, a normal deal."

Laval, Quebec-based Alimentation Couche-Tard operates a network of 5,119 c-stores, 3,273 of which include motor fuel dispensing, located in 11 large geographic markets, including eight in the United States covering 29 states and three in Canada covering six provinces.

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