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For years now, the retail community has been working hard to educate members of Congress and other policy makers across the country regarding the abusive tactics of the banks and credit card companies in their dealings with retailers over interchange fees. Nobody has played a bigger role in that effort than the convenience store industry, and a significant share of the credit for passage of last year's Durbin amendment should be attributed to this sector.
Convenience store owners and other retailers did a remarkable job of shedding light on the everyday practices that the credit card companies employ when dealing with business owners both large and small, and underscoring the punitive measures they employ on retailers who push back. Of significant importance to small business owners were provisions that empowered the Federal Reserve Board to, among other things, set reasonable limits on the amount of money that credit card companies could assess retailers for debit card transactions. No longer were the big banks and credit card companies going to be allowed to unilaterally extort ridiculous transaction fees from retailers every time a consumer chose to access their own money -- or so we thought.
Empowered by the election results that brought us a new House majority, those same banks and credit card companies are back with a vengeance and trying to turn back the clock on the progress retailers made last year. One of their more reliable friends in the Senate, Sen. Jon Tester (D-Montana), introduced legislation on their behalf to "delay" implementation of the new law and the banks have subsequently launched a full-scale carpet bombing of Capitol Hill. Senators are being told in no uncertain terms that either they support this legislation, or they will face the full political wrath of the banking industry in their next election. And because the banks have been generously bailed out by taxpayers while at the same time had free reign to fleece retailers and consumers, they had accrued a formidable and daunting war chest. It's really a pretty good deal if you look at it -- beg Congress and the Bush Administration for a handout from taxpayers to stay solvent and once you are, thank the taxpayers by threatening their representatives in Congress unless they protect Visa and MasterCard's anti-consumer stranglehold on the marketplace. They went from being too big to fail to too big to derail. Talk about a love/hate relationship -- they love us to death as taxpayers but once we put on our consumer hat all they have is pure contempt for us.
The banks are a uniquely powerful political adversary. First, they have almost unlimited funds (Thank You, Taxpayers!) and will do whatever it takes to pressure elected officials into acquiescing to their position. This is nothing new in Washington, and I really don't have a problem with that. The second aspect of their political effort that is the most problematic for us is their willingness to say both publically and privately anything -- anything -- to help make their case regardless of whether it has any relationship whatsoever with the facts. Their total ambivalence towards the truth and their curious relationship with candor make them an opponent that is hard to counter -- you never know what's coming next. No matter how long this debate goes on, this is not likely to change.
There are a couple of things that have to change, however. First and foremost is the urgency with which small retailers must engage their elected members of Congress, correct the record and have them understand what a small retailer goes through when dealing with these credit card companies. That education, echoed by hundreds of small business owners in each Congressional district, is critical to countering the misinformation campaign being perpetuated by the banks. We have to give them exacting clarity that this is a fundamental choice between Wall Street and Main Street and they need to pick a side. Secondly, and probably most important for the long run, is that the retail community has to exact a political price for undermining us on this issue. The banks are drawing a clear line in the sand and taking names on this -- if you are against them now, they will be against you later when you run for reelection. Will we do the same? Will all the affected sectors of the retail community return the favor to Sen. Tester when he runs again and raise significant dollars for his opponent? Will we do the same for the co-sponsors of his bill? That's a fundamental question before us right now. The banks are certainly telling Congress that the answer to that question is no. Could they finally be telling the truth for once?
Joe Kefauver is Managing Partner of Parquet Public Affairs, a national issue management, communications, government relations and reputation assurance firm specializing in service sector industries. Parquet's clients include Fortune 500 corporations, trade associations, regional businesses and non-profit organizations. www.ParquetPA.com.
Editor's note: The opinions expressed in this article are the author's, and do not necessarily reflect the views of Convenience Store News.