NACS Vice Chairman Pens Op-Ed on Swipe Fees

Opinion piece in Orange County Register shares how credit cards are hurting the free market economy.

December 09, 2014

CORONA, Calif. – Last week, the Orange County Register published a guest opinion piece authored by NACS Vice Chairman and Treasurer, Jack Kofdarali, president of J&T Management. In the op-ed, Kofdarali described how his family came to the United States from Lebanon in 1980, based on the belief that “the free-market system that built the world’s largest economy would be a place the family could prosper.” What began with one liquor store in the 1980s has become J&T Oil Co., which operates 25 gas and convenience stores around California.

Unfortunately, Kofdarali writes, “Visa and MasterCard have subverted our free-market system so that they gouge every single merchant in the country in the murky and uncompetitive card business. And that’s not just unfair to merchants; it means higher prices for consumers.”

He gives examples from his own experience as a retailer, explaining how the banks take $2.40 out of every $60 gas purchase a customer makes (a 4% fee), even though processing the transaction costs banks only a few cents. Kofdarali discussed the futility of disputing the banks’ charges: “A guy came in recently and used his wife’s credit card to buy $100 worth of gas. The wife disputed the charge, saying the husband didn’t have permission to use the card,” he explains in the column. “The card company grabbed the $100 from my pocket and gave her back the money, even though her husband drove away with a tank full of my gas.”

“It’s the biggest fee most people have never heard of,” Kofdarali wrote. Several of his stores pay $250,000 to $300,000 in credit card fees annually, while only netting $150,000 to $200,000 in profits. These fees add 7 to 8 cents to the price of a gallon of gas at these locations, whether consumers pay with a credit card or not.

American merchants pay the highest swipe fees in the world for this kind of treatment — seven times what they pay in the European Union. It’s a burden on retailers — who comprise a big chunk of our economy — and it costs consumers more. “It’s gotten to the point that the banks have everything go their way, and we merchants have to swallow it; we can’t drop credit cards if customers demand them,” he writes.

Read the full text of Kofdarali’s op-ed here.

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