Card Fees & The New York Times
Imagine reading the following after the Dallas Mavericks stunned the heavily favored Miami Heat to win the NBA title:
“Despite losing against the geriatric Mavs, the Heat showed brilliant tenacity and demonstrated clutch shooting. Jaw-dropping performances by LeBron James and Dwyane Wade reinforced their claims as the most dynamic duo in the sport’s history and have cemented their celestial legacies in the pantheon of sports memory.”
Such pathetic, revisionist gobbledygook would be dismissed by all but the PR flacks for the Assad regime of Syria. Yet on June 9, just 24 hours after the convenience-store industry’s extraordinary political victory, I was reading the front page of the Business section of the nation’s “paper of record,” The New York Times. After obligatory recognition of the official vote, here is what the Times said:
“Even with the defeat, the vote showed the results of a remarkable come-frombehind lobbying campaign by banks to recover from the anti-Wall Street drubbing they took during last year’s debate over financial regulation. The debit-card measure, sponsored by Sen. Richard J. Durbin, an Illinois Democrat, passed last year by a 2-to-1 ratio after little debate and no hearings.”
Hmmm. “Remarkable come-frombehind lobbying campaign,” “anti-Wall Street drubbing,” “little debate and no hearings.”
Do I smell the whiff of Assad’s propaganda machine masquerading as New York Times journalists? Is it not true that 18 lobbying firms were hired by Visa and MasterCard to persuade lawmakers to support continuation of their oligopolistic practices that last year alone cost the c-store channel $9 billion in debit- and credit-card fees?
Is it not true that credit-card fees from these two institutions outpaced the entire pretax profits of an industry of more than 146,000 stores with total sales in excess of $575 billion? Is it not true that retailers from momand- pops to behemoths such as The Home Depot and Walmart are basically hostage to everyday consumerism banked on plastic? Is it not true that Visa and MasterCard enlisted prominent former federal lawmakers from each party, Dick Gephardt, D-Mo., and Dick Armey, R-Texas, to catapult their side to victory?
And yet, in the mind of this Times writer, Visa and MasterCard were as much the underdogs as LeBron and Dwyane and their South Beach swagger. Ridiculous.
The working-class retailers got it right. NACS got it right and deserves credit for its decadelong battle on The Hill.
And in case you might be shedding crocodile tears for the nation’s biggest financial institutions, NACS chairman and c-store operator Jeff Miller said it well: “The Federal Reserve’s proposed rules would still allow banks to make a reasonable, if not sizable, profit on debit transactions.”
As I wrote in my April column, the Durbin amendment will leave these institutions with a healthy take, about 12 cents per debit-card transaction, based on a 1.5% per-transaction fee. What it will no longer permit is the absolute gutting of revenue that averaged 44 cents per ring.
For party fundamentalists in our industry, this was not a debate of Democrats vs. Republicans. In fact, the two Senate sponsors aiming to deep-six the Durbin amendment were Republican Bob Corker and Democrat Jon Tester.
When I was in D.C. a few months ago with NACS’ political team, I talked with the association’s senior lobbyist Lyle Beckwith about our industry’s tilt toward the GOP even when it’s to our detriment. In contrast, a review of NACS’ PAC contribution shows that while Republicans receive the majority of funds, plenty of Democrats share the pot.
“One of the things we talk about over and over again is it’s about the issues, not the political parties,” Beckwith said. “There are some issues where we’re lockstep with Republicans, and there are some issues where we partner best with Democrats. And there are some, like the credit/ debit-card fees, where we’re working on both sides of the aisle.
“If it’s a Republican or a Democrat who is helping us, it doesn’t really matter to me. What matters most is that we represent what’s in the best interest of our industry.”