A 7-Eleven Anti-Interchange Petition ‘Touches a Nerve’

7-Eleven Inc. has gathered between 1 million and 1.2 million signatures on in-store petitions asking Congress to regulate interchange rates, and expects to have 3 million customer signatures by the time the petition drive ends Aug. 10, according to an executive with the Dallas-based convenience-store chain. The response, says Keith Jones, director of government affairs at 7-Eleven, has gone well beyond the original goal of 1 million signatures. “To be honest, we're a little surprised,” he says. “We've touched a nerve.” He says the company has distributed some 9,500 petition booklets and bases his current estimate of the signature count on “reports from folks in the field and anecdotal evidence.” 7-Eleven may soon be joined by at least two other c-store chains. These unnamed companies are readying efforts to rally customers in support of interchange regulation, according to the National Association of Convenience Stores, an Alexandria, Va.-based trade group and a long-time critic of interchange. “There are at least two talking about doing something?I'm not sure what,” says a NACS spokesman. The 7-Eleven petition drive, which began in late June, features a spiral-bound booklet placed at the checkout counters of some 6,300 stores across the country. Language on the booklet's cover says the store has been “hurt” by “unfair credit card fees” and appeals to customers as a “neighbor and friend” to “help tell Congress to do something about unfair credit card fees now.” Interchange is the largest component of the discount fee merchants pay to accept credit and debit cards. It is set by the bank card networks and paid by acquirers to issuers. Acquirers then pass it on to merchants. The 7-Eleven corporate entity and its franchisees paid $160 million in discount fees last year, a fourfold increase from five years ago, says Jones, who adds the expense now ranks as the third-largest on the chain's financial statement, behind only rent and salaries. He says the fee especially hurts franchisees, often owners of single stores. Indeed, he says, some 4,500 of the 6,300 participating stores are owned by franchisees. Another exacerbating factor, he says, is the increasing use of credit cards for small-value items. The chain's average ticket is $6, a level at which it's difficult to make money after deducting interchange, Jones argues. Currently, credit cards account for about half of sales. “We're at a point where we needed to do something,” Jones says. The petition drive follows the introduction in Congress this spring of three separate pieces of legislation that in one way or another would regulate interchange. Two of these bills, one in the House and a similar bill in the Senate, would grant limited exemption from antitrust law to permit merchants to negotiate interchange directly with the card networks. “We'd like to be able to negotiate in good faith with Visa, MasterCard, and the banks about fees, but we're not able to do that,” says Jones. For their part, both Visa Inc. and MasterCard Inc. responded to the 7-Eleven petition drive with statements charging that the chain is recruiting its customers to support regulation that will only end up transferring costs to them. “Unfortunately, 7-Eleven…is asking consumers to sign a petition that would ultimately shift 7-Eleven's costs of doing business onto consumers while 7-Eleven enjoys all the benefits of accepting electronic payments,” says the statement from Visa. “7-Eleven is misleading its customers into thinking that a reduction in the store's cost of acceptance would lead to lower pricing,” says the MasterCard statement. Both card networks point to the experience in Australia, where interchange caps did not lead to lower prices for consumers, they say. Both statements point out that 7-Eleven is free to accept other payment instruments. Jones says customers are signing the petition out of a sense of loyalty to a neighborhood store. “We get about a thousand customers a day at our stores, and a core of these are very loyal,” he says. “When asked to help out, they help out.” The idea to gather customer signatures for a petition came from a franchisee, Jones says. 7-Eleven has made something of a contest out of the effort. The company will send the top gatherer of signatures to Washington, D.C., to present the petitions to Congress, and will pay the store's acceptance costs for a year, Jones says.