Credit Card Debt Management

Gas station owners profited $3.4 billion in 2007. Sounds like a lot, until compared to the $7.6 billion in fees they paid to the credit card companies for processing card transactions. This data, provided by Virginia-based National Association of Convenience Stores, highlights a serious problem in the U.S. economy. According to an article in the Fort Worth Star-Telegram:

“We are really talking about a situation where the cart is leading the horse,” said Peter Guidi, vice president of sales for National Payment Card, a new company that is offering gas stations cheaper fees with its own payment-processing system. “You could argue that the credit-card company now owns the customer and the convenience store has become a stakeholder in their business. This is really backwards.”

The interchange fees that credit card companies demand of merchants can range anywhere from 1.75% to 2.5% of the total transaction amount. It’s significantly cutting into convenience store owners’ profits, and Congress has been trying to get something done about it with the Credit Card Fair Fee Act, which would make the fees negotiable.

Of course, credit card companies are claiming that a lessening of the fees would significantly hurt their business and force them to cut back on card rewards. Apparently, money isn’t too tight in the plastic headquarters because MasterCard alone spent $720,000 on legislative lobbying in the first quarter of 2008. That is almost a quarter-mill per month. This interchange fees business is at the forefront of industry lobbyists’ radar, but other congressional issues are causing them some concern.

According to CNNMoney.com, MasterCard lobbied on a bill that would “limit the interest and penalties credit card issuers could charge customers.” What? Regulation and oversight? Wouldn’t that just be a terrible thing?