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By Don Longo
CHICAGO -- "We can’t outspend them, but we can outwork them," said NACS chairman Richard Oneslager as he called on c-store retailers to step up their lobbying efforts to obtain relief from skyrocketing credit card transaction costs. Speaking last week at a NACS conference, Oneslager reported that credit card fees paid by c-store retailers last year increased by $1 billion, or 15.2 percent, to $7.6 billion.
"Meanwhile, industry pretax profits dropped by roughly the same amount, $1.4 billion," said Oneslager. "The net effect is that the industry's credit card fees are now more than double the industry's pretax profits."
He also noted with frustration that the federal government continues to give more and more scrutiny to the key c-store product categories of motor fuels and tobacco, but appears to be ignoring the impact of rising credit card fees.
The NACS chairman, who is also president of Balmar Petroleum/First Hand Management LLC, asked every c-store retailer to write a check to the NACS Interchange Action Fund, for any amount, although he suggested that retailers could calculate their donation amount by multiplying their number of stores by $180.
Oneslager also asked retailers to let their local congressman know about the issue and seek support for House Bill 5546, The Credit Card Fair Fee Act, and he told suppliers that this "injustice" also affects them. "We [c-store retailers] would have more capital to invest in our stores if we weren't sending $1 billion to the credit card companies."
In other feature presentations at the conference, economist David Nelson and technical analyst Walter Zimmerman presented mostly downbeat assessments of the current and future state of the U.S. economy. Zimmerman, chief technical analyst for United Energy, offered two possible scenarios for the economy. "One outlook would be for a mild recession, where crude oil falls to $60 per barrel, followed by a period of hyper-inflation," said Zimmerman. The other scenario has crude oil falling to $40 per barrel followed by a "severe, prolonged economic recession."
Nelson, professor of economics at Western Washington University, said that the economy was already in recession for all intents and purposes, and that this recession will be more gradual and longer than those in 1990 or 2001 because the economic fundamentals are weaker today, housing in particular. However, he did find a few bright spots on the horizon. "Government fiscal policy is highly stimulative which should keep spending up," said Nelson, adding that tax rebates of $168 billion will help stimulate spending in the second half of this year. He also noted that retailers can take advantage of enhanced expensing options and a temporary bonus depreciation allowed under the recently passed stimulus plan. In addition, the weaker dollar is a plus for U.S. exporting companies and nonresidential construction was actually up 20 percent in December.
"I don't see us going through a recession like the 1980-82 double recessions in which unemployment peaked at 10.9 percent and inflation was over 10 percent," said Nelson.