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NRF PUSHES AMENDMENT TO CREDIT CARD REFORM BILL

The National Retail Federation today urged the Senate to approve an amendment that would make it easier for retailers to offer discounts to customers who use cash or other low-cost forms of payment rather than credit cards that carry increasingly high processing fees.

“Retailers should be able to offer discounts to their customers in any legal way they choose without interference from the credit card companies,” NRF senior vice president for government relations Steve Pfister said. “By reinforcing retailers’ ability to offer discounts, the Durbin-Bond amendment will directly help reduce the prices that consumers pay for goods and services.”

Pfister’s comments came in a letter to members of the Senate, which is expected to vote on legislation that would block a number of abusive credit card industry practices such as applying interest rate increases retroactively to existing balances or “double cycle” billing, where interest charges are computed on outstanding balances from more than one billing cycle.

Senate majority whip Richard Durbin, D-Ill., and Senator Christopher “Kit” Bond, R-Mo., plan to offer an amendment to the legislation that would make it easier for merchants to offer a discount to customers who use low-cost forms of payment.

Current federal law allows merchants to offer a discount in such cases, but complicated credit card company rules make it extremely difficult to do so in practice. The Durbin-Bond amendment would add debit cards to cash and checks on the list of payments for which a discount can be offered, and would prohibit credit card companies from penalizing merchants for offering a discount, for the way in which they display discounts or for directing customers toward a discount payment option.

The legislation would also direct the Federal Reserve to gather and publish information on credit card interchange fees, other credit card fees and rules governing them. “These rules are essentially hidden today,” Pfister said. “Both retailers and the public have a right to more complete information given the billions of dollars involved and the impact these fees have on the cost of everyday goods.”

The amendment is aimed at credit card interchange, a fee averaging close to 2 percent that Visa and MasterCard banks charge merchants to process the transaction each time a credit card is used to pay for a purchase. Visa and MasterCard rules effectively require the fees to be built into the price of merchandise, driving up costs for all consumers regardless of whether they pay by cash, check or plastic. The fees totaled $48 billion in 2008 and cost the average household $427, according to NRF estimates. Both numbers are three times the levels seen when NRF began tracking interchange in 2001. The interchange fee varies from as little as about 1.5 percent to as high as about 3 percent, with “premium” cards offering rewards programs to the users carrying the highest fees. In addition to adding debit cards to the list of payments for which discounts can be offered, the Durbin-Bond amendment would allow merchants to offer discounts to customers who use low-fee credit cards rather than high-fee cards.

APRIL RETAIL SALES SHOW CONTINUED FOCUS ON NECESSITIES

Consumers need more proof that the economy is slowly turning around as April retail sales show people continuing to cut back on their discretionary spending.

According to the National Retail Federation, retail industry sales for April (which exclude automobiles, gas stations, and restaurants) decreased 0.4 percent seasonally adjusted from March and dropped 1.7 percent unadjusted over last year. April retail sales released by the U.S. Commerce Department show total retail sales (which include categories such as autos, gasoline stations and restaurants) decreased 0.4 percent seasonally adjusted over March and decreased 9.4 percent unadjusted year-over-year.

“A depressed labor market and lack of consumer confidence continues to play a role in what people buy and how much they spend,” said Rosalind Wells, chief economist for NRF. “Noticeable changes in consumer spending will take some time as the economy continues to rebuild itself through the rest of the year.” Spring weather helped get many people out of their home and into stores to buy sporting goods. Sporting goods, hobby, book and music stores sales increased 0.3 percent seasonally adjusted month-to-month but decreased 2.4 percent unadjusted over last April.

Thanks in part to consumers focusing on necessities instead of discretionary items, sales at health and personal care stores increased 0.4 percent seasonally adjusted month-to-month and 5.4 percent unadjusted year-over-year.