7-11 Rallies Against The Credit Card Industry

7-11Next time you are paying for your big gulp at 7-11, the cashier will probably be asking you to sign a petition. From coast to coast, this chain of convenience stores is protesting what’s known as credit card interchange fees a.k.a. the transaction fee when a credit card is processed. These amounts include a flat fee, plus a percentage fee. For most purchases, these aren’t a problem because they only work out to be 2-3%. However with small purchases (such as those at 7-11) the fees ends up being higher on a percentage basis, since the flat fee portion of it skews it higher. For example, if the flat fee was 10 cents, and the percentage fee was 2%, that would equal 13 cents on a $1.50 coffee…. or around 8 to 9% of the purchase price. So as you can see, it’s understandable why this could be a problem when it comes to tiny purchases.

Indeed, there should probably be an alternate payment structure when it comes to smaller purchases. But there are a few important advantages businesses have when they’re accepting card payments. First of all customers have the ability to spend money they may not otherwise be able to afford with cash, this in turn means more sales for the business. If the customer doesn’t pay their charge card bill, the store owner is not responsible and still gets the money no matter what. It’s the credit card company that takes the hit, and with most of them seeing a 10% default rate right now by cardholders, it’s definitely a big hit to take. The same applies to fraud, and criminals are notorious for using stolen cards at places like convenience stores because they know they’re not likely to be asked for ID. In addition, card payments simplify payment processing because it’s all done electronically. Otherwise, someone has to manage and account for all the coins and cash that comes in and goes out. This is a tedious and time consuming process to say the least – meaning an employee on the clock would be doing this.

So there are a number of benefits that debit and credit cards bring business owners, but it’s true, the fees can definitely be a pain in the butt when it comes to smaller purchases… like a big gulp at 7-11. Hopefully, the banks and businesses can work out this problem and find a happy medium.

Written July 2009

 
Comments
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And it’s that 7Eleven owner that now paying the fee. With ever raising cost prices That $1.59 or $1.69 Slurpee should have had a price increase spring of ’09. The fact that 7Eleven owners know thier customers are feeling the strain of the economy is what’s keeping the price down.
The ‘interchange fee’ is just another hand in someone else’s pocket. The major credit companies haven’t lowered thier rates in years and with more poeple using debit and credit cards it just means for ‘interchange fees’ Makes you wonder with the strong arm banks have, why they needed a bailout.
Thnks to 7Eleven and the owners for tring to stand up to the system!

screw the people about me talking crap about 7-11. their pop is so good bec u can mix the flavors. who cares if they hate credit cards!

I hate 7-11 their stuff is crap and screw them for the fees they need to realize its part of doing business for crying out loud!

I agree with the comment above me they are already pricey as it is

I like the coffee at Chevron better hehe

I just co-wrote a blog about interchange today for First American Payment Systems. During my research, I read all about the controversies, and of course, I know the merchant point of view, just from hopping on interactive sites like these. Not speaking on behalf of the company, I have to say that all entities, merchants included, need revenue in some form. Merchants mark up costs to gain revenue from customers, as D says. Even card issuers have to make money to provide this service. Good for 7-11 to be aware and take action, but I’m not sure I agree with them. That’s just me.

Being that 7-11 charges $1.59 for a frigging regular cup of coffee I cant feel too bad for them.

Fees need to be capped. They should do away altogether with the flat fee part of it.