St. Louis 7-Eleven owner in DC fighting 'swipe fees'

Thursday, June 17, 2010 By: Bill Lambrecht 

WASHINGTON — Why is it, Mike Foster wants to know, that he can control just about every cost of his business except the fees set by Visa and MasterCard?

Foster, who owns a 7-Eleven on Suphur Avenue near the Hill, traveled this week to another Hill — the one on which the U.S. Capitol is situated — to join the ongoing battle between retailers and credit card companies over interchange fees on transactions with plastic.

“If a customer comes in and buys a Post-Dispatch on a debit card, I’m better off letting him or her just steal it,” Foster said, only partly in jest.

That’s because the charges of up to 20 cents he pays on a debit card purchase can exceed his profit on smaller items, Foster said. He added that last year, debit card fees cost him about $18,000, money that could have been profit or investment in his store.

The long-running battle in Congress began this year as a drive to force credit card companies to ease up on the so-called swipe fees on both credit card and debit card transactions.

But up against a robust lobbying effort, Sen. Dick Durbin, D-Ill., was able to attach an amendment to Senate- passed financial reform legislation that covers only debit cards.

Durbin’s amendment directs the Federal Reserve Board to ensure that fees are reasonable and proportional to costs incurred in processing the transaction. It also prohibits Visa and MasterCard from punishing merchants who give discounts to customers who pay with cash. It exempts community banks and all but the three largest credit unions.

A conference committee made up of Senate and House members will be working in coming days to resolve differences between versions of financial reform legislation each body passed. Only the Senate bill addresses the card fees.

Bipartisan support from 64 senators for Durbin’s proposal suggests that it stands a good chance to remain in the final legislation. But both sides are lobbying hard.

On the Senate floor yesterday, Durbin noted that the Antitrust Division of the Justice Department has confirmed that it is investigating Visa and MasterCard. Durbin went on to contend that the credit card companies are coercing small banks and credit unions into opposing the fee limintations even though they’re exempted.

“This duopoly, this power in the market, this ability to terrorize credit unions and small banks, is an indication of too much power and too little competition,” he said. “In this case, merchants, businessmen, small banks and small credit unions are being terrorized by these powerful interests.”

Mike Foster said he hopes Durbin’s amendment survives “the sausage process” of lawmaking. “I like the safety, security and convenience of plastic,” he said. “We’d just like to see some fairer, reasonable rates.”