Visa and Mastercard have reached a nearly $30 billion settlement to limit credit and debit card fees for merchants by reducing their U.S. credit card interchange rates or swipe fees for at least a five-year period. But Doug Kantor, general counsel of the National Association of Convenience Stores (NACS), doesn’t see this as a win for c-stores.
“There is nothing to celebrate in this,” guest Kantor said to podcast co-hosts Joe Kefauver and Franklin Coley on Working Lunch from Restaurant Business, a sister publication of CSP.
Kantor has been on the forefront of the fee-reduction struggle for the full two decades. Contrary to what an initial assessment might have suggested, the offer posed by the card companies just isn’t good for merchants.
For one thing, Kantor said, the credit giants offered to roll back just one of the two charges that figure into processing costs. The other levy will be left as is, he noted, meaning the reduction in swipe fees would be very slight.
It’s also temporary, with rollbacks lasting just a set number of years before they can be reversed.
In addition, Kantor said, the agreement does not alter the setup that allows MasterCard and Visa to virtually dictate their rates. The restaurant and retail industries have been pushing for legislation that would permanently alter the system by fostering new competition for the credit giants. A law currently before Congress would require that institutions other than the big two be allowed to process customers’ charges, ending their lock on the market.
The changes not only stop short of what merchants want, but are also temporary, Kantor noted. Under MasterCard and Visa’s offer, fees would be rolled back just for several years.
He characterized it as a ruse: “’We’re going to pretend to give you a little relief. And then we’ll go back to business as usual,’” said Kantor. “It’s a little getting a kiss on the cheek while being stabbed in the back.”
In any case, the agreement proposed by MasterCard and Visa requires the approval of the federal court that's hearing a lawsuit filed against the card companies by a cross section of businesses that depend on credit card payments.
"We’re months and months away from the court deciding, 'Is this settlement okay or not?'" said Kantor.
To learn what credit-card reforms would be preferred by restaurants and other merchants would prefer, and what the chances are of winning those concessions, give the podcast a listen.
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