DES MOINES, Iowa – When millions of Americans are out of work and businesses struggle to remain viable, it is simply crazy for Congress to pave the way for higher costs to consumers and retailers, and to cut off an avenue to job creation.   

Last year, as part of broader financial reform, Congress voted to limit swipe fees and bring some certainty to the costs associated with those fees.  But the big banks that make a killing under the current system mobilized against the change.  Now, on the eve of the law’s implementation, big banks, who issue the bulk of America’s debit cards, want Washington to put off the effective date for up to two years.  And, they have pulled out all the stops, including a LOT of mis-information, to “delay” (I would call it KILL) debit card interchange fee reforms.  Sen. Jon Testor is prepared to offer an amendment in the Senate this week that will delay and effectively kill the Durbin Amendment.

We have compiled a list of 14 “Debit Card Fast Facts” to cut through all the mis-information being put out by the banks, credit card companies and credit unions.  You can get them by clicking here.

Debit card interchange fees don’t show up on consumer’s bank statements, but they are embedded in the cost of everything we buy.

When retailers started accepting debit cards in the 1990s, banks actually paid retailers a few cents per transaction. It was more efficient for businesses, customers and naturally the banks since they would have less paper checks and cost savings. In a free market you assumed that with these efficiencies, improvements in technology and increased volume we would see economies of scale and our costs would go down.  But the complete opposite has been true. According to the Federal Reserve Bank of Kansas City, debit card swipe fees have quadrupled since the 1990s, far outstripping price increases for anything I can think of – including gasoline!

Today, debit card swipe fees are one of a retailer’s highest costs, exceeding even healthcare for employees.

Retail is super-competitive and transparent. Gasoline stations post their prices on the corner of the sidewalk for everyone to see, and in the grocery industry, profit margins for the past 50 years have never exceeded two pennies on the dollar. When we see cost increases of the magnitude we have on debit card swipe fees, it impacts our ability to keep prices low for our customers. There is no doubt that in a very competitive and transparent retail environment a reduction in swipe fees will benefit our customers; it’s no different than a reduction in any other operating cost we face.

Lastly, don’t buy into the banks false arguments that merchants receive a payment guarantee when a debit card is swiped in our stores because that is absolutely untrue. In the current system, card networks reserve the right to charge a merchant back for a fraudulent transaction, in which case the merchant is out the sale and merchandise. As a result, merchants are bearing billions of dollars of fraud losses in the system.

The Federal Reserve’s own survey found that merchants bear 43% of all losses, and that number rises to 76% if it’s a transaction at the gas pump or over the Internet, which is known as a card-not-present transaction. Not to mention, our payments system is anything but world class. The June Consumer Reports Magazine compared U.S. payments card technology to non-industrialized countries in western Africa since U.S. financial institutions, and card networks continue to utilize fraud prone 1970’s technology. Why wouldn’t they when merchants are shouldering the majority of fraud in the system?

The fact is that high debit swipe fees resulting from banks’ price-fixing with card networks such as Visa and MasterCard hurt competition, innovation and economies. The delay sought by the major banks to “study” the impact of reform will derail creation of thousands of jobs and cost consumers over $12 billion a year through the continuation of excessive swipe fees.

Again, all of this is ludicrous when our economy remains fragile, with both consumers and retailers fighting to keep their heads above water.  Congress must ignore the big banks’ demands and move ahead now to restore fairness to the debit card fee system.

In the grocery business, the extra burden for swipe fees threatens to eat away at already-small profit margins (which have never exceeded 2 percent over the past 50 years).  That can threaten the very viability of grocer’s operations, endangering the jobs of our employees and the well-being of the families who depend on our workers.  In fact, a two-year delay proposed by Sen. Testor in implementing swipe fee reform would cost more than $24 BILLION and eliminate or prevent creation of almost 200,000 new jobs.

Senators Chuck Grassley and Tom Harkin deserve strong praise for supporting reform last year and for continuing to work to ensure Iowa small businesses and the customers they serve in communities across the state see some relief from growing debit card swipes.  Call and thank them for supporting Iowa consumers!

There is nothing wrong with paying a fair fee for a service, but on the issue of debit card swipe fees, many American banks are just being greedy.  It’s time to rein them in.

For additional information, or to schedule a time to speak with IGIA President Jerry Fleagle, please contact IGIA Communiciations Specialist Jordan Williams at 515-270-2628. 

Want to know more about the debit card interchange fee issue?  Click here and go to the www.iowagrocers.com website for a primer on debit card interchange fee facts.  This is great information as you argue with your local banker at the next coffee klatch or cocktail party you both attend!  Believe me, the bankers response will be so weak (I have seen the American Banking Association responses, and they have got to be living in another galaxy to think they are even actual!); you can't help but win the argument with anyone with logical reasoning skills!

Supermarket SMARTS, anyone?  We will have over 30 retailers taking this superb training course by industry expert Harold Lloyd in the IGIA office May 3-5 in Urbandale.  IGIA must help educate the next leaders in the Iowa grocery industry, and we found one of the best in the industry to teach it - Lloyd. It has made a transformation in several people’s careers who took his previous courses in 2007, 2008 and 2010.  Just let me show you their testimonials! 

Build With Bags: The original purpose behind a plastic bag recycling program was to head off any plastic bag bans or taxes in Iowa.  After Build With Bags (BWB) was kicked off, it has silenced any effort on plastic bag taxes or bans in Iowa.  In fact, other areas of the country are now requesting details on the BWB program to deal with ongoing taxes and bans. The program is not only getting state-wide recognition, but is often cited by environmental groups across the country as a great voluntary solution.

And, in just a few days, BWB grants will be awarded, totaling nearly $50,000 across the state.  The grants will help buy recycled plastic parks and playground equipment to help reinforce the message that plastic bags can be turned into a positive in the recycling process, and not just a litter and waste headache.

But, what is most satisfying is the willingness for towns, schools, etc. that want to collect plastic bags, and partner with their local grocer or c-store operator to help the BWB goal of doubling the amount of plastic bags recycled over the next two years!

And, one last thing on Build With Bags: We need you to help brand your plastic bag recycling with BWB!  It’s easy- we have posters available that we will ship you free of charge.  Most stores are already recycling plastic bags, and we want you to continue to do so!  Many stores ship the bags back on their grocery trucks to their wholesaler or warehouse, and if you are now, continue to do so.  BWB signs and posters help consumers recognize a brand that the grocery and c-store industry has established for environmental responsibility.  Several of you have called and asked about barrels or wraps that we had available last year. Unfortunately, we do not have them this year, due to the minimum quantity, space and logistics required.   We WANT AND NEED ALL TO SUPPORT BWB. I guarantee it is great, positive publicity for your store and industry!

Scholarship Golf Classic: This annual event will be held May 19 this year in Norwalk, and is the single biggest fundraiser for the Iowa Grocers Education Foundation.  It’s a great way to network, have some fun playing golf and raise money for a great cause - IGIA member kids needing funds to go to college.  We had over 540 apply this year - a new record!  If you haven’t registered yet, fill out the registration form on page 12 in this issue of the Scanner.

Speaking of Scholarships…We will be announcing the 2010-2011 IGEF Scholarship winners and “Piggyback” scholarship winners in the next few weeks. Over $138,000 in scholarships will be awarded, which points out the need to play in the Scholarship Golf Classic!

Convention: Another strong lineup of speakers, and we will have even more to be announced soon!  We will have NGA President & CEO Peter Larkin, as well as FMI Chairman and Hy-Vee CEO Ric Jurgens give us the latest on Health and Wellness, Spindustry founder Michael Bird will “expand your mind” on social media, and give you some real life examples on what you can use in your business shortly after you get back to work from the convention!  So come to Okoboji for some outstanding motivation and learning!

Comunications: Have you looked at the E-Scanner that has been in your e-mail box every other week lately? IGIA members with e-mail get a 2-3 page “quick-hitter” newsletter (the E-Scanner), with links for more in-depth reading, every other week.  Jordan Williams, IGIA’s Communications Specialist, has also added new features to the E-Scanner you will find interesting, such as “Your Hometown Grocer”, “Jerry’s Jargon” and some editorial features.  We also distribute a separate Legislative Update e-mail to all members weekly while the legislature is in session.  We  have a Twitter account, which we have seen with other associations is a great way for members to stay in touch with what is happening, and we have opened a Facebook page; you can easily click on the links in the E-Scanner to follow IGIA!

IGIA will still send a printed newsletter (the Scanner) out every other month, and will not change the schedule of our quarterly iowa grocer magazine.  And, of course IGIA will continue to send out special e-mail alerts as needed.  Remember: www.iowagrocers.com is open 24/7 and is the gateway for information for the Iowa grocery industry!

We believe this will give IGIA members quicker news, and will help IGIA control costs servicing our membership.  If you are not getting the e-mailed product, and would like to, please give us a call so we can get you on the list! 

That’s what we have done for you lately!!