Well, not quite—but it got your attention.  Recently, 7-11 delivered 1.6 million petitions to Congress demanding that 7-11 be allowed to charge extra to customers who use credit and debit cards.  Never mind that this is asking Congress to rip up a contract 7-11 has signed agreeing not to do this to us.  

What’s the issue?

Whenever we go to the store or online to make a purchase, we often choose to use a credit or debit card.  These aren’t free.  Some company has to process these transactions, make sure everyone gets paid, etc.  In order to pay for this convenience, merchant card companies charge the businesses that accept cards—usually somewhere in the neighborhood of 1.75% of the cost of whatever you and I buy (known as an “interchange fee”).

Naturally, the businesses selling things to us would like to be able to pay less for this service.  Paying less for the same service is certainly attractive.  I would like to pay less for my NFL Sunday Ticket package on DirecTV, but that's what it costs.

7-11 is trying to get around this little problem of reality by getting Congress to do their negotiating for them.  House Financial Services Committee Chairman Barney Frank (D-Mass.) is marking up a bill this week, H.R. 2382, the “Credit Card Interchange Fees Act of 2009.”  It would for the first time use the force of law to nullify valid contracts negotiated in good faith between the merchant card industry and retailers.  The most pernicious action would be to allow businesses to charge us more for the privilege of using a merchant card (a practice we’re protected against by the current merchant card contract).  The hope is that this Congressionally-obtained bargaining chip can be used to negotiate a lower interchange fee.

The retailers and Congressman Frank will tell you they want to be able to charge less to those who pay with cash.  But unless Congress is going to get into the business of setting the price of everything from lattes to licorice, the reality is this will leave the base price the same and become a surcharge for card-swiping customers.  The practical effect of this legislation is that everything we buy could cost more if we use a credit or debit card rather than cash.  

You might remember that when preening Congressmen bash merchant card companies this week.

Posted by Ryan Ellis on Thursday, October 8, 2009 9:37 AM EDT

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