Retail column: Credit card bill will impact consumers
| Tuesday, Jun 30 2009 07:46 PM
Last Updated Tuesday, Jun 30 2009 07:46 PM
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It never fails that when I’m in a hurry at a store, I get stuck in line behind a little old lady who takes forever to write a paper check.
Shifting my weight from foot to foot and glancing at my watch, I can’t help but wonder, “Who writes checks anymore?”
Most people make large purchases with plastic, which is why you need to pay close attention to some legislation introduced in the U.S. House of Representatives last month.
House Judiciary Committee Chairman John Conyers, D-Michigan, and co-sponsor Rep. Bill Shuster, R-Pennsylvania, would like to waive antitrust laws that prohibit merchants from collectively negotiating interchange fees.
Those are the fees card-issuing banks collect from retailers every time a customer swipes a credit or debit card at checkout.
“It is time to level the playing field for merchants and consumers,” Conyers said in a statement about The Credit Card Fair Fee Act (H.R. 5546). “It is not an attempt at regulating the industry and does not mandate any particular outcome. This bill simply enhances competition by allowing merchants to negotiate with the dominant banks for the terms and rates of the fees.”
It’s not the first time someone’s taken aim at these fees. Previous attempts to tinker with them haven’t gone anywhere, due in no small part to fierce lobbying by the credit card industry.
It contends the fees are a modest cost of doing business and a small price to pay for a host of benefits, including greater customer traffic.
Moreover, it says, there’s plenty of competition. Look at the plethora of credit card solicitations that flood consumer mailboxes if their credit’s halfway decent.
Retailers beg to differ.
Nearly $2 of every $100 consumers spend using credit cards goes directly to Visa and MasterCard, but most consumers don’t notice the fees because they’re built into prices and not delineated on receipts, according to the Merchants Payments Coalition, an umbrella organization of trade associations fighting for a more competitive and transparent credit card fee system.
If you’d prefer not to pay credit card issuers, there are a few alternate payment systems gaining traction, but they’re mainly concentrated in e-commerce.
Consumers can set up an account that allows them to pay a middleman who in turn pays the merchant. That way, their personal financial information isn’t floating around the Internet to be stolen by identity thieves.
Payments are made either by credit card (there’s that interchange fee, again) or by having money drafted directly from a checking account.
The two leading alternate payment brands are PayPal, owned by but not restricted to e-commerce giant eBay, and Google Checkout, owned by search engine behemoth Google.
Google Checkout declined to comment for this column.
PayPal says it’s not taking a position on the Conyers bill but is keeping an eye on it. Whatever happens, it expects to be a major player in the retail landscape.
The company has 73 million active account holders worldwide, and last year for the first time, PayPal transactions outside of eBay outnumbered transactions on eBay.
Some of that business went to Shabby Girls, which sells gifts and clothes for girls through a Web site (www.shabbygirls.com) and at a store in downtown Bakersfield.
Owner Angie Lundgren says she has all bases covered because she accepts PayPal as well as credit cards.
“PayPal charges a fee, too, so you’re going to pay somebody either way,” Lundgren said. “But it’s worth it for the extra security. My customers can feel safe shopping with me, and I can feel safe that PayPal has vetted the buyer and it’s not a bogus credit card.”
That may be the way to go until all this fee drama plays itself out.
The only other choices are cash only, or limiting your customers to the sweet, checkbook carrying elders I keep joining in line at the grocery store.
