Credit Card Industry Responds to 7-Eleven Petition

As prevalent as the reports of 7-Eleven’s petition against high processing fee has been, so now is the press reporting the Card Association’s response to the petition. Those of us that follow these things aren’t terribly surprised at the response but I thought I’d share it anyhow. My comments are interspersed [in bold italics.]

MasterCard statement

“Consumers signing 7-Eleven’s anti-interchange petition should first ask themselves ‘what’s in it for me?’ because experience shows that the answer would be higher fees and fewer benefits on their credit cards. The real beneficiaries would be the merchants who want to keep the many benefits of card acceptance, while shifting the cost to their customers. [Gee, don't merchants pass those costs on already? Aren't we in business to make money?]

7-Eleven is misleading its customer into thinking that a reduction in the store’s cost of acceptance would lead to lower pricing. The real-life experience in Australia, where several years ago the government mandated a reduction in those fees, shows that consumers there are now paying as much as 77% more in annual fees to use their credit cards, and are receiving 23% fewer benefits, like points or airline miles; however, there is no evidence that merchants lowered any prices on products or services to reflect their lower acceptance costs. [For those who don't know it, merchants pay higher fees for the reward programs that benefit consumers.]

“MasterCard publishes all of its interchange rates online, allows merchants to offer discounts to encourage customers to pay with cash or other forms of payment and to display their costs of acceptance at the point of sale. [Yes they do - the FTC forced the card issuers to allow that] We encourage 7-Eleven, as well as other merchants, to be as transparent about all of the costs that go into the pricing of products they sell in their stores, so that consumers have as much information as possible to make informed choices about the goods and services they purchase.” [Huh?]

And Visa chimed in too

“Given the tremendous value 7-Eleven gets from accepting payment cards, including speed, convenience, efficiency, reliability and guaranteed payment, this latest effort is both puzzling and misleading. The fact is, like all retailers, 7-Eleven can exercise numerous point-of-sale options related to accepting payments, including offering discounts for cash or PIN debit, acceptance of only cash or checks or steering customers to other forms of payment. They can also negotiate their acceptance costs or offer private-label payment cards. [All of those rates are based on the highest rates the issuers can get - not the lowest Issuers are in it for profit too]. Unfortunately, 7-Eleven has chosen to ignore these facts and instead is asking consumers to sign a petition that would ultimately shift 7-Eleven’s costs of doing business onto consumers while 7-Eleven enjoys all the benefits of accepting electronic payments. [Again, we already pass those costs to the consumer. They just don't know it]

“Retailers who are no longer content with paying their fair share for the efficiency and security benefits they receive from their payment network [more security than cash?] are asking Congress to regulate the credit and debit card payment industry in a way that would significantly and negatively impact consumers, especially those struggling in this time of economic uncertainty. [Like the current rate jacking isn't hurting consumers?] If this overreaching and unnecessary intervention succeeds, it will likely lead to higher costs and reduced benefits as we have witnessed in Australia where free market approaches were rejected and consumers now pay higher costs for less choices and fewer benefits.” [Jacking interest rates to 28% is the merchant's fault? Looks like Visa and MasterCard compared notes on this Australia thing]

So what does all that mean? I have no idea. It’s just more payment card industry double talk.