Illinois retailers compete every day for customers on price, selection, service and convenience. Retailers of all sizes strive to keep prices low for their customers. They do this while supporting one of every five jobs throughout the state and investing in the communities they serve.
Illinois retailers strive to keep their prices low by seeking out efficiencies in every aspect of their business and constantly negotiating lower costs. One area where they have never been able to negotiate their costs is in accepting credit and debit cards. U.S. merchants pay nearly $80 billion annually to the banks and credit card companies in hidden acceptance fees, which is more than is paid anywhere else in the world. These hidden fees have stifled growth, driven up the costs of consumer goods and hurt small businesses for long enough.
In 2010, Congress recognized the lack of competition in the debit card market and made modest reforms that have benefited Illinois consumers and helped ensure our transactions are safer. Illinois’ own Senator Dick Durbin wrote the reforms after hearing how the hidden costs and strong-arming by the card brands was hurting Main Street businesses in Illinois and throughout the nation. The 2010 debit reforms introduced and incentivized competition while beginning to make the actual cost of acceptance to Illinois retailers transparent and predictable for the first time.
Any time retailers find savings, they pass them along to the consumer. The hyper-competitive nature of retail demands it. Take grocers as an example. Since debit reforms went into effect, the producer price index that supermarkets specifically pay for their products has increased by 19.6 percent. However, the actual shelf prices of those goods increased less than eight percent, a clear savings for consumers and evidence that merchants pass any savings they can find along to the customer.
Unfortunately, these pro-competitive reforms are now under assault in Washington. The mega-banks and giant card companies are spending millions of dollars to convince Congress that competition is bad for their business and should be repealed. Apparently $80 billion a year in hidden fees is simply not enough for them. At a time when we should be focused on greater competition, creating jobs and growing our economy, they want to do just the opposite. Main Street Illinois retailers deserve better from Congress, not more hidden, uncompetitive fees.
Congress should reject this blatant attempt to harm Main Street businesses, remove competition and only help the mega banks rake in even larger profits. It is time Congress stands against those giants and stand up for the Main Street employers here in Illinois.
Rob Karr is president and CEO of the Illinois Retail Merchants Association (IRMA), one of the largest state retail organizations in the United States.