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7-Eleven Store Owners Ask Congress to Reduce Credit Card Fees

Posted by: Nick Leiber on October 5, 2009

This is a post by guest blogger Don Sniegowski, the founding editor of the daily franchise news site BlueMauMau.

7-Eleven franchise owners stormed Washington on Sept. 30 to deliver 15,000 petition booklets to Congress, with 1.66 million signatures. Thousands of the convenience store chain’s franchisees asked customers to sign a petition calling for Congress to prohibit credit card networks and card-issuing banks from charging high transaction fees to merchants. The signature drive ran from June 22 through August 10 at store counters coast to coast.

Joe DePinto, 7-Eleven’s CEO, said, “Customers share our frustration over the hidden fees that American retailers and, ultimately, consumers are forced to pay. They, too, want Congress to take action to regulate these unfair fees, which are the highest in the industrialized world.”

According to the chain, the signatures are the largest number of signatures collected for a public policy issue on record, beating a healthcare reform petition submitted to Congress earlier this year with 1.3 million signatures.

Rep. Peter Welch (D-VT) told the crowd of franchisees and attendees gathered at a press conference organized outside Capitol Hill, “This is democracy in action.” And Rep. Zoe Lofgren (D-CA) added, “Who owns this country? It’s not the banks.” He added, “It’s the people who signed these petitions.”

David Hendricks, a franchise owner of two 7-Eleven stores and a board member of 7-Eleven’s independent franchise owners association for Greater Los Angeles, observes that since 7-Eleven Japan took over in 2005, 7-Eleven North America eventually got to the point where the franchisor decided to share the processing fees 50-50 with their franchisees. “Franchise owners didn’t have input or a voice on that choice,” he says. “By 7-Eleven transferring 50% of the costs to the franchisees, they had 6,000 members who were now motivated to go to Congress to ask for regulation of interchange fees.”

Franchise owner Navdeep Bassi collected the most signatures of any 7-Eleven, gathering 5,726 at his Costa Mesa, California store. “Every issue has to begin somewhere, and I have an obligation to the local community because they are also my clients,” Bassi told the National Association of Convenience Stores about his support of the petition drive. “These fees affect my customers as well as me, and I am just doing my part to fight the unfair practices of these credit card companies.”

However, credit card companies and others have been highly critical of the retail chain’s petition efforts. Chris McWilton, president of U.S. Markets at MasterCard, accuses 7-Eleven of having tricked customers to sign the petition by implying that consumers would save money. “It’s surprising that 7-Eleven, a company that prides itself on convenience, would mount such an aggressive campaign against the most convenient form of payment. Even 7-Eleven itself has said many times that accepting payment cards increases their sales, enhances safety and convenience for store operators, and improves customer satisfaction,” said McWilton.

Shawn Miles, Head of Global Public Policy at MasterCard stated: “To understand what would happen to American consumers if 7-Eleven got its way, you only need to look at what happened when the government of Australia artificially lowered interchange. Consumers there are now paying significantly higher fees to use their credit cards and receiving fewer benefits, while no one has found any real evidence that merchants lowered prices. Merchants simply pocketed the savings, and consumers were disadvantaged. None of that, however, was explained in 7-Eleven’s petition.”

Franchisee Hendricks strongly disagrees with MasterCard. “I think Australian merchants pay half a percent. In Britain they pay one percent. American merchants pay as much as three percent,” he observes. “United States is one of the only countries in the free world where credit card companies won’t lower interchange fees.”

Hendricks emphasizes the hurt that exorbitant credit card fees have on convenience store owners. “We have two stores in California. 50% of our credit card processing fees is about $800 per month. The other store is almost a $1,000 a month. Our [interchange] fees are based on the total transaction, not on a merchandise purchase. If a customer bought a thirty-five cent pack of gum and received $30 cash back so that $30.35 was run on the card, I would pay the percentage of fees based on the money I gave back as well, not just on the merchandise that was sold. My store allows customers $40 or $50 cash back, and it has typically 50 of those in a day. I have to pay interchange fees on all of that.”

Don Sniegowski is the founder and editor of Blue MauMau, a daily business news site for franchise buyers and owner-operators. Previously, he led global field operations and franchise development for a quick-print franchising firm. Sniegowski also helped lead global publishing efforts for trade publisher Global Sources Media and led Asia-Pacific retail and operations for Franklin Covey.

Reader Comments


October 5, 2009 10:45 AM

Me and the wife went back to cash transactions just because of the 'mafia' tactics the CC industry has.
We only use our debit/cc card to withdraw cash from the auto-teller machine.
Time to find a 'real' line of work you loser CC companies !!

Patricia Hines

October 5, 2009 11:41 AM

On June 9, 2009, Senator Richard Durbin introduced Senate Bill S.1212 (Credit Card Fair Fee Act of 2009), "to amend the antitrust laws to ensure competitive market-based fees and terms for merchants' access to electronic payment systems." Predictably the payments industry lobby reacted quickly. The Electronic Payments Council issued a press release stating: "This legislation is an attempt by giant retailers to make consumers pay for one of their business expenses - the cost of accepting credit and debit. It's simple: merchants do not want to pay their fair share to accept debit and credit cards, and they want consumers to foot the bill. If this legislation passes, American families will end up footing retailers' bills when it comes to accepting debit and credit cards. Merchants that accept credit and debit cards benefit from more sales, lower costs and greater profits. It is only fair that they pay a fee for this service." At present, the Durbin bill is languishing in the Committee on the Judiciary. Merchants (who are primarily small businesses) and consumers must figure out a way to effectively organize their own Congressional lobbying efforts and get this bill out of committee.

Pat O.

October 6, 2009 7:49 AM

A fee is justified, but not 3%.

I really am sick of the tactic of 'in your face' arguments that banks make such as in this article. They aren't believable and they have lost our trust.


October 7, 2009 11:17 AM

I would like to point out that the interchange income received by financial instituations helps to cover the cost of fraud loss as well as the cost of running a card program and card rewards programs. This is how your bank or credit union can afford to reimburse you for fraud on your account. While I could understand putting a cap on the interchange rate, I also know that fraud in the U.S. is much higher than in other countries and that must be taken into consideration. I would also like to point out that none of the plans currently being proposed by retailers would require those retailers to pass on the savings to consumers. I believe that they are trying to pass on their justified business expenses to someone else in order to fatten their own pockets.


October 8, 2009 2:11 PM

Check out:

"7-11 Demands that Congress Raise Slurpee Prices" ?!

Peggy Barker

October 10, 2009 7:28 PM

@AVC - You are correct in your analysis of the situation. Nobody makes a move like this until they have done the research, comparisons, strategic planning and/or have critically weighed the pros and cons as in considering the backlash. A company wants to bank on potential customers, not lose the ones they already have.

Brian J. Donovan

October 12, 2009 7:11 AM

The average interchange fee in the U.S. is seven times the interchange fee set by Visa and MasterCard in countries throughout the rest of the world. The following article discusses this issue and the need for comprehensive, standardized, simplified, and transparent credit card reform legislation.

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