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Durbin Repeal Would Hurt Merchants

In an op-ed, NACS member John Zikias touts increased competition on swipe fees as a positive outcome for the convenience store industry.
November 2, 2016

​CHAPEL HILL, N.C. – Overturning the Durbin Amendment would only benefit the biggest U.S. banks and card companies, wrote John Zikias, COO of Holmes Oil, which operates 25 Cruizers Convenience stores, in an opinion piece in PaymentsSource.com. A NACS member, Zikias pointed out that “under reform, there must now be two competitors available to handle transactions, bringing some competition to the market.”

The ability of MasterCard and Visa to price-fix transaction fees also became more limited, which provides banks with more incentives to offer competitive fee rates. These changes haven’t “ravaged big banks. According to the figures they report to the Federal Reserve, they’re still getting an average 500% profit markup on each transaction,” he wrote.

“In fact, those margins would be the envy of any retailer, whose margins are typically in the single digits on high volume products such as gasoline. Retailers have to figure the cost of these fees, which have become the second-largest operating cost after labor on average, into their prices. And retailing is so highly competitive that as these fees fall under reform, retailers must lower prices in order to compete,” he said.

Recently, the House Financial Services Committee passed a bill that includes a repeal of the Durbin Amendment . Zikias urged Congress not to overturn debit reform: “Don’t let Congress turn back the clock to big bank pay-offs to block competition and renewed price-fixing. Let the free market work, and let all benefit.”

NACS has pledged its support to halt this bill so long as the debit reform repeal is in it “and ensure that members of Congress and the Senate recognize the success of this vital reform in re-establishing competition in the debit-card market,” said Lyle Beckwith, NACS senior vice president of government relations, in a statement released in September in response to the new legislation.