MasterCard Fights Back with Facts:New Survey Results Reveal Serious Concerns About 7-Eleven Petition Consumers Say Merchants Should Pay Their Own Bills for Payment Card Acceptance, and Not Pass Those Costs on to Their Customers
They Also Say No to Interchange Legislation When They Understand How it Would Impact Their Wallets
Purchase, N.Y, September 29, 2009 - Three quarters of respondents in a new consumer survey believe the fees merchants pay for accepting credit cards are just a cost of doing business, and that merchants should pay those fees. These consumers recognize that merchants receive significant benefits from accepting payment cards, and that merchants should pay for those benefits.
“Electronic payments provide extraordinary value to consumers, merchants and the economy,” said Chris McWilton, President, U.S. Markets at MasterCard Worldwide. “Consumers appreciate that the ability to use a payment card is a win-win for them and for the merchants they visit. It’s undeniable that electronic payments drive value for all merchants.
“It’s surprising that 7-Eleven, a company that prides itself on convenience, would mount such an aggressive campaign against the most convenient form of payment. Even 7-Eleven itself has said many times that accepting payment cards increases their sales, enhances safety and convenience for store operators, and improves customer satisfaction,” said McWilton.
Over the summer, 7-Eleven and other convenience store operators ran a highly questionable petition drive, encouraging their customers to support legislation that would regulate the fees merchants pay for the many benefits they receive from accepting credit and debit cards.
Recent research found, however, that many consumers may have been duped into signing the petition. While initially many consumers said they would support legislation to regulate merchant fees, that support dramatically shifts to opposition once consumers understand the truth. A full 75% of consumers said they would oppose the legislation once they understood that it would cost them more through higher fees to use their payment cards.
“When you look closely at the petition, it looks like 7-Eleven sold consumers a bill of goods by implying consumers would save money if Congress regulates merchant fees,” McWilton said. “7-Eleven never mentioned what really happens when you regulate interchange fees and consumer support for their petition evaporates once they understand its consequences. Congress should not allow 7-Eleven and other merchants to use legislation to shift their costs to consumers.”
Shawn Miles, Head of Global Public Policy at MasterCard stated: “To understand what would happen to American consumers if 7-Eleven got its way, you only need to look at what happened when the government of Australia artificially lowered interchange. Consumers there are now paying significantly higher fees to use their credit cards and receiving fewer benefits, while no one has found any real evidence that merchants lowered prices. Merchants simply pocketed the savings, and consumers were disadvantaged. None of that, however, was explained in 7-Eleven’s petition.”
A report on the consequences of the Australian regulation by an economist with the London-based economics group CRA International found that fees on some cards have gone up almost 80%, benefits have been reduced, and some customers face excessive surcharges when they choose to use their cards.
The consumer research, which was designed to assess consumer opinion on card acceptance fees and consumer perceptions of the recent counter-top petition promoted by 7-Eleven and other convenience store operators, found that three in four consumers are opposed to being charged more for using a credit card and 73% agree that the debate over fees is really just a fight between merchants and banks.
Highlights of the research include1:
- Even among initial supporters, three in four (75%) oppose the legislation when it would end up increasing the fees they pay for their payment cards; including 55% who strongly oppose it.
- Almost three in four (73%) say that “the cost of accepting credit card payments” is something merchants should pay as part of their costs of doing business.
- Almost three in four (71%) agree that it would not be fair for consumers to pay the merchants’ cost of operating a credit card system.
- Almost three in four (73%) agree that paying for card acceptance is a good investment for merchants because accepting credit cards helps their business.
- Support for 7-Eleven’s petition was associated with a fundamental misunderstanding of the impact of reduced merchant fees on consumers. Of those consumers who were inclined to sign the petition, 80% mistakenly believed that consumers would directly and immediately benefit from a reduction in merchant fees.
“What is clear from the results of this survey is that not only do consumers believe that merchant fees are a reasonable cost of doing business and something merchants should pay, but they also recognize that a retailer’s acceptance of payment cards is an investment in growing their business,” said Miles.
Eric Grover, a principal at Intrepid Ventures, a leading payments industry consultancy, said: “In my view 7-Elevens’s campaign was willfully deceptive. It invited unsuspecting consumers to petition for government regulation that will cause higher card fees and a reduction of the benefits they take for granted. Would people have signed a petition asking them to pay additional fees on their credit and debit cards and give up benefits so merchants could pay lower fees? I doubt it. I find it troubling that merchants want Washington to get involved in what their fees are, rather than letting competition determine them.”Editor's Note: Touche'
About MasterCard Worldwide
MasterCard Worldwide advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes approximately 21 billion transactions each year, and provides industry-leading analysis and consulting services to financial-institution customers and merchants. Powered by the MasterCard Worldwide Network and through its family of brands, including MasterCard®, Maestro® and Cirrus®, MasterCard serves consumers and businesses in more than 210 countries and territories. For more information go to www.mastercard.com.
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