The Pantry is taking its fight against high credit card fees directly to its shoppers, asking customers at its nearly 1,700 convenience stores to sign a petition protesting the fees.
The fees, which the Cary chain says are too high and unfairly calculated, are paid on each transaction that uses a debit or credit card - a substantial number if you're in the business of selling gasoline.
"The use of credit has grown really fast in the last few years," said Crystal Fish, The Pantry's manager of credit card development. "The projections are that by 2012, the debit will surpass cash as a form of credit."
The Pantry's fight is part of a larger petition effort by the National Association of Convenience Stores, and it's one example of the ongoing battle between credit companies and retailers nationwide.
At stake are billions of dollars in fees charged for processing credit or debit card transactions.
As more shoppers pay with plastic, even for small purchases, many retailers are stepping out against the fees and organizing formal protests. There have even been some lawsuits charging wrongdoing by the credit card companies.
Though stores like The Pantry are more concerned with how fees are calculated, as a percentage of the transaction total rather than a flat per-transaction fee, other retailers are fighting other issues. Among them: They must pay a higher fee if a customer signs for a debit card transaction rather than just typing in a PIN.
"Every year, [retailers] do pay more money," said David Robertson, publisher of the Nilson Report, which tracks credit card payments. "There has been a secular shift in the way Americans pay at the cash register. ... But it's not the clear-cut problem the merchants say it is. The merchants would have you believe they were in the garden of Eden and they weren't in the garden of Eden anymore."
The Pantry has been collecting signatures at its convenience stores for a month. Today is the final day of the signature drive. The company is hoping to collect 1.8million signatures.
A major expense
Sixty percent of the Pantry's sales are paid for with a card, and the fees are the company's third-largest expense after payroll and rent.
In the last two fiscal years, The Pantry estimates it has paid $168million in fees for credit and debit card transactions.
Because the rate The Pantry pays is a percentage of the total sale, sometimes things outside the company's control can influence the bottom line, Fish said.
For instance, last year, the federal and state taxes on cigarettes increased by 72cents per pack. If a person pays for that pack of cigarettes with a credit or debit card, The Pantry has to pay 2 percent on the total amount, which is now 1.5 cents more per pack because of the increased taxes.
"We're talking tenths of a cent sometimes, but when you're doing 15million transactions a month, that adds up," Fish said.
For their part, the credit card companies say the retailers' effort is misguided. They cite research from the U.S. Government Accountability Office, which did not result in any call for action from Congress
"Unfortunately, some retailers have chosen to ignore these facts and instead are asking consumers to sign a petition that would ultimately shift retailers' cost of doing business onto consumers while retailers reap all the benefits of accepting electronic payments," according to a prepared statement from Visa. "If they are successful, we will likely see higher costs and reduced benefits as we have witnessed in Australia where free market approaches were rejected and consumers now pay higher costs for less choices and fewer benefits."
Headed to Congress
The Pantry's petitions will join others collected by the National Association of Convenience Stores and presented to Congress this spring. Spokesman Jeff Lenard said 11,000 convenience stores nationwide are participating.
"We'd like to see the ability to talk to the banking and credit card industry about how these rates are set and how we can together find rates that work," he said. "It's just a one-way conversation now."
But merchants do have negotiating power with their banks, which collect many of the fees retailers pay, Robertson said.
"The amount of money that Visa or Mastercard gets [per transaction] is pennies," he said. "Visa and Mastercard are not siphoning off chunks of cash. ... Visa and Mastercard are in the volume business."
Still, despite the widespread discontent, a true standoff between retailers and card companies may not be likely since many retailers feel they now have to offer credit and debit as payment options.
"Our top priority is the convenience of our customers," Fish said. "As a business owner, it's very easy to sit back and say, 'You know what, I'm just not going to take credit cards anymore.' But in reality our business depends on our customers."
