The Merchants Payments Coalition, based in Washington D.C., consists of dozens of retailers, supermarkets, drug stores, convenience stores, gas stations, and other businesses who oppose what they allege to be unfair credit card fees levied by credit card issuers Visa and MasterCard. More specifically, the coalition is focused primarily on fighting back against interchange fees that are set by card issuers.
Some of the members of the Merchants Payments Coalition Inc include the Food Marketing Institute, the National Association of Convenience Stores, the American Petroleum Institute, the Petroleum Marketers Association of America, the National Retail Federation, and the Vermont Grocer’s Association. In all, the Merchants Payments Coalition represents a total of 2.7 million stores and all of them are tired of the high fees they are being charged by credit card companies.
Convenience stores, which sell more than 80% of all the gasoline purchased in the United States, are really feeling the pinch because consumers are increasingly using their credit cards to pay for their fill ups. While gas prices have soared, the increased use of credit cards doesn’t come as much of a surprise because most consumers don’t carry enough cash to pay for anything on a regular basis, especially not gas.
“It’s just turned into a credit card society, almost,” says David Tomczak, who is the owner of a Citgo convenience store. “It’s been getting worse and worse. And now probably 80 percent of the people use credit cards.”
In an attempt to save a little money, Tomczak stopped accepting American Express several months ago because the interchange fees for purchases made with American Express cards was just way too high.
On average, merchants are paying about 2% per transaction in interchange fees. In fact, according the Merchant Payments Coalition, $2 of every single credit card purchase made in the United States goes directly into either Visa or MasterCard’s pocket. For consumers that use rewards credit cards or business credit cards, these fees are likely to be even higher. Most credit card issuers extract the rewards that they pay their consumers for using their cards with the interchange fees that they charge their merchants. So all of those cash back rebates and airline miles rewards come right out of the merchants pockets. Even though debit cards typically charge lower interchange fees, as you might imagine, the fees for all cards have steadily been creeping up.
The Merchants Payments Coalition is currently focusing its attention on amending legislation in Vermont. Right now, the coalition is trying to make a state law mandating that merchants be provided with a “complete paper copy” of the fee rules. Although this will not reduce the fees being charged, the coalition hopes this will help to raise awareness and help merchants better prepare for the pratfalls of accepting credit cards.
Critics of the proposed legislation maintain that in it’s present form it would be completely ineffective and wouldn’t change the underlying problem or any of the more than 1,000 pages of current guidelines. The bottom line is that the Merchants Payments Coalition wants more transparency and favors a free market approach. Right now, they claim that prices, set by Visa and MasterCard, are fixed and non-negotiable and are nothing less than a legalized monopoly.
The coalition has brought this matter to Congress hoping for legislative intervention and is also looking at the possibility of taking it to the Federal courts.
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