Missing Something in the Battle Over Bucks
Perhaps somebody can explain what I’m missing in this:
Merchants across the nation, from powerhouses like Wal-Mart and Home Depot, to gas stations, mom-and-pop restaurants and 7-Eleven, have spent years unsuccessfully fighting the biggest of these costs, known as an interchange fee, which generates an estimated $40 billion to $50 billion in income annually for banks that issue credit cards.
But after Congress passed a law last month to protect consumers from excessive fees and interest on credit cards, merchants are mounting a fresh offensive.
This time, they believe the momentum in Washington has turned in their favor. Legislation is winding its way through Congress, a government audit has been ordered and petitions are surfacing in hundreds of convenience stores, including Ms. Orzano’s 7-Eleven, encouraging customers to voice their opposition to the fees. “Congress sort of already illustrated the willingness to take on the credit card companies and the big banks,” said Keith Jones, a lobbyist for 7-Eleven. “We just feel like the job is half done.”
In a nutshell, just under 2% of every credit card purchase is divided unequally among the merchant’s bank, the customer’s bank, and the credit card issuer (Visa, Mastercard, Amex, etc.). With customers using credit cards more extensively, greater percentages of stores’ total sales are going to the card issuers, so the stores are hoping the federal government will redirect the money back to them.
Here’s my question: Is there some reason that the stores don’t simply tack a fee on sales completed with credit? That $1.50 coffee would therefore cost $1.53, with the explanation being that three cents is the cost of using credit. If stores such as WalMart and Target can work together to petition the government, they should be able to agree to this practice, and banks would surely decrease their take to an amount that preserves the incentive for customers to whip out their cards.