There is one issue above all that members have told NACS to fight, said the association’s president and CEO, Hank Armour: swipe fees for credit and debit cards.
A decade-long battle to reform the system has paid significant benefits, Armour said in a speech Oct. 9 at the general session of the NACS Show at the Las Vegas Convention Center. With the implementation of debit fee reform that took effect last Oct. 1, retailers and their customers have seen costs reduced by about $500 million as average debit fees dropped from 44 cents to 22 cents per transaction.
“Normally, we’d all be pretty happy about that,” said Armour. “The problem is that it should be much lower than that.” NACS, the National Association of Convenience Stores, is suing the Federal Reserve, challenging its final rules. “We presented oral arguments in the case last week,” Armour reported. “We have a strong case and expect a ruling by the end of the year.”
But there also is potentially some big, ugly news related to credit card fees — unless retailers make their voices heard, Armour said. This past July, a proposed $7.2 billion antitrust settlement was announced between Visa and MasterCard and 19 plaintiffs, including NACS. The NACS Board of Directors instantly rejected the proposed settlement, as did a number of other plaintiffs, arguing that it didn’t address longstanding problems with a broken system.
“The proposed settlement provides a one-time monetary payout — in the ridiculously low amount of about two months’ worth of swipe fees,” Armour said. “Essentially that’s all the settlement does. It would actually cement Visa’s and MasterCard’s role as price-fixers.
“And the legal release is ludicrous,” Armour said. “It would prevent you — and the associations that represent you — from suing for change in the swipe fee system for years to come. And in the meantime, they can do whatever they want to fees, to merchant agreements, and to your business. Who, in their right mind would agree to this? We didn’t...and you shouldn’t either!”
This week, the judge in the case will receive the proposed settlement for preliminary approval. Over the next 30 days, he will take into account the views of all industry stakeholders, including convenience store retailers.
“You have an opportunity to make your voice heard, and to stop this move to perpetuate the ever-escalating fees you are forced to pay,” Armour said. “We need every company that has ever accepted Visa and MasterCard credit cards to sign a short declaration that lays out why you feel the proposed settlement is bad for your business. This is the best way to show the court that this deal should not be approved.”
Declarations are available to any retailers requesting them, via e-mail, by sending a note to NoDeal@nacsonline.com.
“It’s that simple,” Armour said. “You told us that this is hugely important to your business. So do it...and let your voice be heard loud and clear.”
Armour also discussed the association’s engagement with another pressing issue, roll-your-own tobacco.
“You told us that this was a dangerous threat affecting your business,” Armour said. “Stores with large-scale manufacturing operations were masquerading as tobacco shops and were stealing 10 percent of your business…Through our grassroots efforts, we leveled that playing field when Congress voted 82 to 16 to pass our legislation.”
By virtue of its size, the industry wields plenty of clout, Armour observed.
The U.S. convenience-store industry’s annual sales of $681 billion would rank it 19th among the world’s largest economies, between Switzerland and Turkey, Armour said. “I have never been more convinced that when we speak as one, our industry is incredibly powerful and effective,” he said.
The key to the industry’s sales, said Armour, is one number: 160 million. That is the number of transactions that the industry conducts each day. “That’s half the population of the United States,” he said. “Another way of saying that is that if you haven’t been in a convenience store today, you’re going tomorrow.”