Industry Groups Applaud House Committee Interchange Reform Hearing

Following a hearing this week on H.R. 2382 -- the Credit Card Interchanges Fee Act of 2009 -- by the House Financial Services Committee, leaders from the National Grocers Association (N.G.A.) and the Food Marketing Institute (FMI) are hopeful that testimony concerning the burdensome fees that are deleterious to both retailers and consumers will continue to bolster the industry’s case for reform.

The bill was designed to address what the trade group terms “discriminatory rules that penalize merchants and consumers.”

N.G.A. president and CEO Thomas Zaucha called this week’s hearing a significant “first step that will ultimately provide real relief to merchants of all sizes and consumers from excessive interchange fees.” Thanking House Financial Services Committee chairman Barney Frank (D-Mass.), Zaucha also conveyed gratitude on behalf of the industry to Reps. Peter Welch (D-Vt.) and Bill Shuster (R-Pa.) for co-sponsoring the bipartisan legislation.

Kathy Miller, owner of the Elmore Store in Elmore, Vt., provided testimony to the committee on behalf of N.G.A., the FMI and the Vermont Grocers Association. During her comments, Miller stressed the burden interchange fees have had on her business, and the adverse affects they have on consumers. No stranger to the political process, Miller also testified three years ago before the Senate Judiciary Committee at the invitation of Sen. Patrick Leahy (D-Vt.) on the anti-competitive and anti-consumer practices of credit card companies.

“The Millers and other merchants who accept Visa and MasterCard are not allowed to set a minimum amount for credit card transactions in their stores,” noted FMI Jennifer Hatcher, FMI group VP, government relations. “Kathy Miller shared that when she sells a pack of gum, she loses money. When she sells a bag of chips, she makes two cents and the bank makes 23 cents. Something is wrong with this picture.

“Credit card swipe fees are the second-highest cost and the only completely uncontrollable cost businesses face,” added Hatcher. “Because of their exponential growth, they are the expense that is most likely to cause small stores to go out of business.”

N.G.A. and FMI support reform of the credit card payment system to include lower rates that are cost-based and nondiscriminatory. According to Zaucha, the long-needed passage of H.R. 2382, “would bring much needed transparency to the credit card payment system while providing relief to merchants from many of Visa and MasterCard’s onerous operating rules.”

Among the provisions of H.R. 2382 that the trade groups believe will benefit the grocery industry and the merchant community:

--The prohibition of credit card companies from charging merchants more when a consumer uses a rewards card or other ‘special’ card
--Allowing merchants to discount for cash without having to comply with pricing display restrictions
--The elimination of the honor-all-cards rule
--Allowing merchants to steer consumers towards alternative, cheaper payment devices

Arlington, Va.-based N.G.A. is the national trade association representing the retail and wholesale grocers that comprise the independent sector of the food distribution industry. For more information, visit:
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