Following a meeting with convenience store owners from across the state of Idaho, Sen. Mike Crapo promised that he will "look into" problems related to how banks charge for the use of credit and debit cards, according to his spokesman, Lindsay Nothern. Store owners, in addition to meeting with Crapo, delivered to him a petition signed by more than 24,000 Idahoans who, store owners claim, are concerned about credit and debit card fees.
In a phone call to IdahoReporter.com, Nothern said that Crapo plans to speak with Sen. Chris Dodd, D-Conn, chairman of the Senate Banking Committee, which Crapo sits on, about including reforms to fees for businesses in an upcoming financial sector reform bill. He said that though "none of the Democratic leadership has made it an issue," Crapo will push for fee changes in Dodd's sweeping reform legislation.
The senator from Idaho will also consider pushing legislation that would force banks to treat debit card transactions the same was as check transactions. Paper checks are typically cheaper to process than debit cards.
The meeting with store owners came after a Friday press conference with the owners and John Eichberger, vice president or the National Association of Convenience Stores, explaining to reporters that they feel that the fees are hurting locally-owned stores, which don't have the ability to negotiate with large banks or credit card companies. Eichberger said that large credit card companies are becoming increasingly wealthy through fees that store owners are forced to pay when their customers use debit or credit cards as a form of payment. He explained that of the approximately 140,000 convenience stores in the U.S., 60 percent are locally-owned stores that take significant losses for accepting credit cards as a form of payment. The fee for accepting cards, said Eichberger, is usually a set fee plus a percentage of the total cost of items purchased. Stores are forced to agree to pay the fees, but aren’t able to predict the set amount of fees each month because they vary wildly depending on the number of customers during the month and the value of the items purchased by those customers.
Eichberger said that credit card companies, during the past few years, have tried to increase the fees store owners pay. One way, he said, is by encouraging consumers, through incentive programs, to swipe credit cards, which incur higher fees on stores, rather than debit cards, which typically cost less to process. Stores are also prohibited, as a provision of contracts they sign with credit card companies, from charging consumers less for paying with cash.
On the state level, Rep. Joe Palmer, R-Meridian, a small business owner himself, said there is not much that can be done, but that he is looking into a few state remedies for the problem. Palmer, who traveled to Washington, D.C., to attend a conference on the fees, said he is not in favor of regulating banks because it would violate the Constitution, but he feels there needs to be something done to better educate consumers about the fees they pay. Palmer believes that if consumers know about the additional costs, they would change their spending habits. Eichberger’s organization estimates that consumers pay an extra $400 a year for products and services because business owners are forced to raise prices to cover the fees they pay.
“People will do what is best for the business,” said Palmer, whose business pays between $500 and $900 monthly in credit card transaction fees. “If people think they are getting sky miles for free, they’re not; they’re paying for them,” added Palmer. He said that he would like to see banks be more open about the fees so consumers could make more informed choices about how to pay at stores.