A Questionable Swipe

A celebrated legislative win may also be a blow to free markets
OAK BROOK, Ill. -- The excitement of our industry leaders was palpable.

"Big Win for Industry," trumpeted a NACS news release.

"Two Wins in One Bill: Tremendous Victories for Petroleum Marketers," exalted PMAA.

Indeed, the euphoria this month was understandable. The Senate, on the heels of passage in the House, had just voted 60 to 38 in support of the massive financial reform package known as the Wall Street Reform and Consumer Protection Act.

Among other things, the bill, authored by House Rep. Barney Frank (D-Mass) and Sen. Christopher Dodd (D-Conn), [image-nocss] promised to remove a neck brace that has choked our industryunreasonable interchange fees.

Industry credit-card fees, as NACS has long tracked, is a virus that seemingly lacked an antidote. In 2008, such fees pulled $8.4 billion from our industry's coffers, and another $7.4 billion last year. While it cannot be denied that the massive emergence of plastic has benefitted all retailers with higher rings and greater customer flexibility, the 2% interchange fees in the United Statesreportedly the highest among developed countriesno longer could be justified.

So when President Obama on Wednesday signed the 2,323-page Wall Street reform into law, the congratulatory echoes across the c-store landscape made perfect sense.

Or did they?

By focusing exclusively on a remedy to an onerous hardship, the convenience-store and petroleum-marketing sectors implicitlyif not explicitlyendorsed a massive government expansion that leading conservatives railed against and, perhaps with hyperbole, said threatens our very free-market system.

Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, called the Wall Street bailout a "legislative monster that I believe...expands the scope and the power of ineffective bureaucracies.... The bill does very little to make our financial system safer."

Senate Republican leader Mitch McConnell compared the government initiative to another one that NACS and PMAA opposed: health-care reform, which also passed largely along partisan lines.

"As it turns out," McConnell said this month, "the American people don't seem to like this government-driven solution to the financial crisis any more than they liked the Democrats' government-driven solution to the nation's health-care crisis. They don't think this bill will solve the problems in the financial sector any more than they think the health-care bill will lead to lower costs or better care."

Indeed, only three Republican senators joined Democrats in favor of the financial reform package: Maine's Olympia Snowe and Susan Collins and Massachusetts' Scott Brown.
Yet, on the reform's passage, NACS issued the following headline: "President Enacts Swipe Fee Reforms."

NACS president and CEO Hank Armour hailed the measure for finally tackling the bitter-tasting interchange fees. "This legislation represents a huge accomplishment that we could not have achieved without the significant response of NACS members to our grassroots calls to action," Armour said.

"Our Interchange Fee Reform Petition Drive gathered more than 5.4 million signatures demanding that Congress take action to reform the interchange system, making it the largest petition drive on a legislative issue in U.S. history!" Armour said. "Further, the thousands of person-to-person calls and meetings by our members with their elected representatives, as well as the letters that many of them wrote, were vital in communicating the facts supporting our initiative and the passion constituents had for the issue."

I agree with Armour, and I understand the position of NACS and PMAA, and the other retailer advocates. The interchange fees needed government action. And they've fought for years to get a remedy passed without success.

But for swiping at a fee, did we deliver a blow to free markets?

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