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Digital Media, Key Performance Indicators, Retail Operations Management.

QSRs voice opposition against card swipe fees


CKE Restaurants Inc., parent company of Carl’s Jr. and Hardee’s brands, has announced that it has joined other quick-serve restaurant and convenience store chains in filling an amicus brief in support of a lawsuit against the Federal Reserve regarding high swipe fees charged by major banks.

CKE was joined by 7-Eleven Inc., Auntie Anne’s Inc., Burger King Corporation, International Dairy Queen Inc., Jack in the Box Inc., Starbucks Corporation, and The Wendy’s Company, in support of the existing lawsuit. The brief was accepted by the court earlier this week.

The pending lawsuit states that the Federal Reserve failed to follow key requirements of a 2010 law when it adopted a cap on debit card swipe fees.

This coalition of restaurant and convenience store chains represent tens of thousands of small-business franchises, which accept debit transactions that are almost exclusively small-ticket transactions of $15 or less. QSRs are the fastest-growing debit segment and the impact of these increases will intensify over time as more customers continue to use debit cards for small-ticket transactions.

The pending lawsuit was filed in federal court last November by the National Retail Federation, other trade groups and two retailers. The suit states that the Federal Reserve failed to follow key requirements of a 2010 law when it adopted a flawed cap on debit card swipe fees that took effect last fall. According to the suit, the groups say the failure has allowed big banks to continue charging unjustifiably high swipe fees and has discouraged price competition among credit card networks.

“Congress originally passed this law to cap swipe fees. Unfortunately, instead of creating a competitive environment that would benefit small-business owners — and ultimately consumers — the swipe fees charged by big banks have climbed dramatically higher for quick-service restaurants,” said Andrew F. Puzder, CEO of CKE Restaurants Inc. “Big banks are profiting, while consumers and small business are losing during a time of economic distress.”

The Consumer Protection Act of 2010

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 required the Federal Reserve to set guidelines that would result in debit card swipe fees that are “reasonable” and “proportional” to banks’ costs in processing debit card transactions.

In December 2010, the Fed determined that it costs banks an average 4 cents to process a debit transaction and proposed that the fees be capped at no more than 12 cents per transaction — triple banks’ actual cost. However, after lobbying by banks and the credit card industry, the final regulations set the cap at 21 cents, plus 0.05 percent of the transaction and, in most cases, an additional 1 cent for fraud prevention.

This fall, however, both Visa and MasterCard announced that they would charge the maximum amount even on small-ticket transactions the card industry previously processed profitably for an average of 6 to 8 cents. According to a press release from CKE Restaurants, the move impacted many members of the NRF’s National Council of Chain Restaurants division, whose transactions often amount to only a few dollars.

via QSRs voice opposition against card swipe fees | QSRweb.com.

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About Bob Innes

Who am I and what I do best! I am a skilled Sales and Marketing team player known for performing behind the scenes miracles that increase base distribution, improve customer relationship management, exceed annual sales volume,and profitability for Consumer Packaged Goods companies. And I've been doing it for over 15 years. My successful contributions include such clients as Kraft Foods, Mars, Bumble Bee Foods, Unilever, Johnson and Johnson and SC Johnson, and JM Smuckers.

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