- The Washington Times - Thursday, October 1, 2009

Mark Chiochankitmun has operated a 7-Eleven store in Washington for 30 years so he is no stranger to public protests - but on Wednesday, it was personal.

Leaving employees to mind his store at Seventh Street and Rhode Island Avenue Northwest, Mr. Chiochankitmun joined 7-Eleven CEO Joe DePinto and other convenience-store owners from across the country on Capitol Hill to ask Congress to help end “unfair and excessive” credit card fees.

“We want to bring to the attention of Congress that we have an unfair credit card fee, and banks will not let us sit down and negotiate,” Mr. Chiochankitmun said.

“Each year, store owners spend about $25,000 to $45,000 a year in fees. President Obama and Congress work to protect consumers from credit card companies and overlook the merchant. We just want to bring the credit card company to the table,” he said.

Interchange or swipe fees, set privately by credit card companies, are charged store owners every time a customer uses a credit card, according to NACS, a trade association representing convenience stores.

Store owners want the ability to negotiate the price of the fees they are charged by banks. Officials at 7-Eleven say interchange fees totaled $48 billion in 2008.

In July, more than 6,000 7-Eleven stores held petition drives to gain customer support on the issue.

On Wednesday, officials showcased their results, bringing 130 cardboard boxes, filled with more than 1.6 million signatures, to a news conference at the Taft Memorial as part of the company’s “Stop Unfair Credit Card Fee” rally.

But MasterCard officials say consumers were poorly informed about the information they signed. “We conducted a survey and survey results indicated that the petition was misleading,” said Shawn Miles, leader of MasterCard’s Grobal Public Policy Group.

“Three in four consumers surveyed said they would oppose legislation once they understood that it would cost them more through higher fees to use their payment cards. The survey also found that three-quarters of respondents believe the fees merchants pay for accepting credit cards are just a cost of doing business, and that merchants should pay those fees,” he said.

“If a customer pays for a [$1] newspaper with a credit card, the merchant pays about 20 cents in fees,” Mr. Chiochankitmun said. “That does not seem like a lot, but over months and years it adds up. Ten years ago, not many people used a credit card at a convenience store. Today, 10 times as many people use a credit card.”

There is an alternative.

The credit card industry, with its archaic magnetic stripe technology, is an “artifact of 1960s mainframe culture,” said Ted Leonsis, longtime AOL executive and chairman of Revolution Money, a St. Petersburg, Fla., alternative payments company.

But that outdated business model still rakes in more than $70 billion a year in interchange fees, he noted.

MasterCard raised its interchange fee by 75 basis points last year, imposing a hardship on family restaurants and convenience stores that conduct a lot of small transactions, he said.

Mr. Leonsis’ company has already signed up nearly 1 million merchants and aims to “replicate the MasterCard-Visa-American Express footprint” within five years at a fraction of the cost to merchants.

But decreasing or eliminating the interchange fee will not necessarily lower costs for consumers, Mr. Miles said.

“To understand what would happen to consumers if 7-Eleven got its way, you only need to look at what happened when the government of Australia lowered interchange. Consumers there are now paying significantly higher fees to use their credit cards and receiving fewer benefits. No one has found any real evidence that merchants lowered prices. Merchants simply pocketed the savings, and consumers were disadvantaged.”

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