bankers v. merchants plus fearless Congressional investigating

The Huffington Post has been running a surprisingly good investigative series on the debate in Congress over debit and credit card “swipe fees” — the amount the credit card companies charge merchants every time you use your card. These fees are the reason your favorite pho restaurant demands purchases of $15 or more for debit/credit purchases. But obviously the Korean moms who run most pho restaurants aren’t lobbying Congress. Instead it’s the giant corporate retailers and franchise chains — Wal-Mart, Target, 7-Eleven — who are fighting the banks over this:

The fees incense many merchants. Sheetz Corp. operates nearly 400 gas stations and convenience stores from Ohio to North Carolina, and CEO Stan Sheetz is pressing lawmakers hard to lower swipe fees. But unlike most retailers, Sheetz also serves on the board of a small bank that makes a fortune from fees. “From the bank’s standpoint … it’s all gravy,” says Sheetz. “It’s a cash cow.”

Credit and debit swipe fees cost Sheetz $5 million a month, second only to labor costs among the company’s top executives, he says. “I am a die-hard capitalist pig,” Sheetz tells HuffPost. “That’s why Visa and MasterCard piss me off…. They treat us like shit. The arrogance is unbelievable.”

On the one hand, it’s hilarious to hear a self-professed “capitalist pig” bitch about being charged market rates for financial services. I mean, what did you expect from a bank? Monastic humility? Restraint in the pursuit of profit?

And on the other hand, there might be a serious trust-busting or anti-monopoly case to be made against the card-issuing giants, since a company like Sheetz has, essentially, no choice but to accept Visa and Mastercard if it hopes to stay in business.

Anyway, the really great thing about this swipe fee debate is watching our elected representatives whirl and twist to try to stay in the good graces of two warring parties who both contribute a ton of cash for electioneering.

Of course, a few brave souls in Congress, rather than trying to play both sides, conscientiously and diligently shill for just one party in the debate. Sadly, WordPress.com only allows you to embed video from a few major sites, like YouTube and Vimeo, so I won’t be bringing you an embedded version of this amazing exchange between freshman Congressman Sean Duffy and a Visa executive. But here’s a sample:

REP. DUFFY: Was this “debit card” philosophy developed by Visa?

EXECUTIVE: Um, we had a great hand in pioneering the debit category and growing that category, including the technology platforms needed to deliver instantaneous, guaranteed transactions.

REP. DUFFY: [smarmily] And what did it cost Visa? A hundred thousand, two hundred thousand dollars?

EXECUTIVE: Oh, Congressman, over the years, billions and billions of dollars —

REP. DUFFY: Okay….

EXECUTIVE: And if you include the issuers, tens of billions.

REP. DUFFY: Fair enough. And are you familiar with Mr. Canter’s organization?

EXECUTIVE: Oh, very well.

REP. DUFFY: Sure.

EXECUTIVE: …Part of a lawsuit challenging —

REP. DUFFY: Okay.

EXECUTIVE: — and….

REP. DUFFY: And were his clients investors in those billions of dollars that Visa spent in developing this technology?

EXECUTIVE: No they were not.

REP. DUFFY: So you took the risk, you innovated the product, and now Mr Canter’s clients enjoy that product. Is that right?

EXECUTIVE: Yes sir.

REP. DUFFY: And is it fair to say, by way of Visa, that sales have gone up for merchants who use this Visa product?

EXECUTIVE: Without doubt.

Representative, it’s perfectly obvious to everyone watching this interaction that your role here is to lead the witness and make the Visa executive’s case for him. But maybe avoid using phrases that indicate that’s you’re actually speaking directly on behalf of Visa, eh?

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