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Table of Contents

Lead Story

Hard times expose vulnerable residuals

News

Industry Update

7-Eleven takes interchange issue to D.C.

Canadian debit shake-up

Two companies, two new security departments

Cyber thieves stealing from students

Features

How to leverage available technologies to manage risk and prevent fraud in RDC

Ed McLaughlin
RemoteDepositCapture.com

Research rundown

Selling Prepaid

Prepaid in brief

Vigilance is watchword in fraud prevention

Empowering the cash-compensated

Is PayPal a threat to prepaid?

Views

Portfolio conversions done right

Biff Matthews
CardWare International

The MLS and the ISO:
Cause for concern?

Brandes Elitch
CrossCheck Inc.

Education

Street SmartsSM:
Microbranding

Jon Perry and Vanessa Lang
888QuikRate.com

Reserve accounts and processor meltdowns

Adam Atlas
Attorney at Law

Digging into PCI - Part 3:
Protecting stored cardholder data

Tim Cranny
Panoptic Security Inc.

A practiced approach

Jeff Fortney
Clearent LLC

Revving up business with profit-controlled marketing

Daniel Wadleigh
Marketing Consultant

Company Profile

Payvision

New Products

Gateway as a service

paymentAccess
paymentAccess

First Data's new dynamic duo

First Data Secure Transaction Management
First Data Corp.

Inspiration

Little actions add up

Departments

Forum

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

October 12, 2009  •  Issue 09:10:01

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7-Eleven takes interchange issue to D.C.

On Sept. 30, 2009, 7-Eleven Inc.'s President and Chief Executive Officer Joe DePinto and eight 7-Eleven store franchisees delivered a petition asking Congress to "stop credit card companies from charging unfair transaction fees to the businesses you shop."

Petition workers gathered signatures at 7-Eleven locations across the country from June to August 2009. The company claims that the more than 1.66 million signatures it amassed are the "largest number of signatures collected for a public policy issue on record."

"Customers share our frustration over the hidden fees that American retailers and, ultimately, consumers are forced to pay," DePinto said. "They, too, want Congress to take action to regulate these unfair fees, which are the highest in the industrialized world."

The petition only discussed the effect of interchange on 7-Eleven's business and did not claim that regulation would directly benefit the store's patrons, according to 7-Eleven's Government Affairs Director Keith Jones. "We wanted to be very honest with them. So, we never told them that their prices were necessarily going to come down or it was going to do anything for them. We told them it was hurting us, and we asked our customers to help us," Jones told The Green Sheet.

Fees and profits

Jones said 7-Eleven made $200 million last year and projected that, at its current revenue levels, the interchange fees it pays would be greater than its profit. The National Association of Convenience Stores' State of the Industry Report of 2008 Data, a study released in 2009 that analyzes convenience store trends, stated that the average U.S. convenience store's transaction fees exceeded its profits by 63 percent in 2008.

"And Visa and MasterCard continue to raise the rates," Jones said. "So, the only thing we've got left is to petition Congress and ask them to do something to give us a chance to control these expenses. We can't not accept [credit cards]. We have to continue to accept plastic because that's what our customers expect."

Fact check

Shawn Miles, Group Head of Global Public Policy for MasterCard disagrees. Merchants can "accept credit cards and not debit cards or accept debit cards and not credit cards, so they have options," Miles said. "They can offer discounts for cash; they can steer customers from one payment form to another."

Miles added that merchants aren't talking about the benefits of card acceptance, which include higher ticket amounts, payment guarantees and savings on cash handling expenses like armored car services.

A CRA International Inc. survey conducted by KRC Research and commissioned by MasterCard probed consumers about their understanding of interchange and their reaction to 7-Eleven's petition.

The survey reported that seventy-three percent of respondents supported merchants absorbing the cost of credit card acceptance as a cost of doing business. And of those participants who initially supported 7-Eleven's call for interchange regulation, 75 percent withdrew their support when told such regulation would result in increased payment card fees for consumers.

"It is the height of irony that a convenience store, which regularly marks up their products by as much as 500 percent for 'convenience sake,' doesn't want to pay for the convenience of accepting cards," said a press statement issued by the Electronic Payments Coalition on Sept. 30, 2009.

Fiscal forecast

According to Miles, card issuers are experiencing record credit losses and charge-offs. "If regulation were to go through the way merchants are seeking to advance it, it would hurt the availability of credit, cause more fees to consumers and limit the values of rewards programs and other benefits associated with cards, and potentially decrease the spending associated with those cards which doesn't help merchants," Miles said.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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