NRF: Retailers unlikely to surcharge for credit card use
Washington — Despite some groups’ claims, the National Retail Federation said that few, if any, merchants are expected to surcharge customers for using a credit card as theoretically allowed under a controversial proposed lawsuit settlement with Visa and MasterCard being debated in the courts.
“The ridiculous concept that merchants will start surcharging on any widespread basis is propaganda being spread by the card industry in an attempt to divert attention from their skyrocketing swipe fees,” NRF SVP and general counsel Mallory Duncan said. “The lawsuit sought to bring down swipe fees and the prices paid by consumers, not to increase prices. The card companies’ new surcharging proposal runs 180 degrees counter to the intent of the lawsuit.”
“While there conceivably could be exceptions, merchants in general have no intention of surcharging,” Duncan went on. “We have discussed the settlement with many of our members and other merchants, and not a single one has said they will surcharge.”
While the settlement would allow retailers to surcharge, a number of obstacles would prevent most merchants from actually doing so even if they wanted to:
Ten states representing 40% of all U.S. credit card transactions – California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas – prohibit surcharges by law.
Visa and MasterCard require a retailer to have the same card acceptance policies in all its stores. It is therefore questionable whether national chains or regional chains with stores in the 10 states above would be able to surcharge in the 40 other states.
“National and regional chains don’t want to surcharge and probably couldn’t,” Duncan said. “Small retailers are too busy running their stores to jump through the hoops required by Visa and MasterCard and could not afford the expense. The bottom line is that very few retailers would be able to surcharge, and the vast majority don’t want to surcharge even if they could.”
The surcharge provision is part of a proposed settlement announced in July in a federal antitrust lawsuit brought by merchants against Visa and MasterCard’s swipe fees. Averaging about 2%, swipe fees are a percentage of the transaction taken by banks each time a consumer swipes a credit card to pay for a purchase, and total about $30 billion a year nationwide. The fees have tripled over the past decade, but the settlement failed to take steps to bring them under control. The majority of the plaintiffs who brought the lawsuit have repudiated the settlement and have gone to court to block it from receiving final approval.
Consumer confidence hits new low
Consumer confidence in January fell to its lowest point since November 2011, according to the Conference Board.
The Conference Board’s index decreased to 58.6, down from a revised 66.7 in December. The figure was lower than forecast; Bloomberg predicted a median of 64.
The drop in confidence coincides with the 2% payroll tax increase used to fund Social Security.
“The thing that’s particularly troubling is the sizable decline in expectations,” Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott LLC told Bloomberg. “As those expectations deteriorate, it doesn’t bode particularly well for day-to-day consumer spending.”
The 8.1-point slump from December to January is the biggest since August 2011, and parallels other measures of consumer confidence. The Bloomberg Consumer Comfort Index dropped in the week ended Jan. 20 to the lowest level since early October and the Thomson Reuters/University of Michigan preliminary index of consumer sentiment dropped in January to its lowest point since December 2011.
Silicon Valley vet joins media solutions provider
LIVONIA, Mich. — Valassis, a provider of intelligent media delivery, has hiredSilicon Valley innovator Rajat Shroff as VP product development for Brand.net, a Valassis Digital Company.
Most recently, Shroff served as the head of personalization, advertising and merchandising products for Reardon Commerce, where he led the strategy and delivery of products for analytics, personalization, search, advertising and merchandising. His prior experience includes product management leadership positions with Permuto, Rhythm NewMedia and Oracle Corporation.
Valassis strengthened its digital presence in 2012 with the acquisitions of Brand.net and Circle Street; the launch of the first fully-integrated Facebook couponing app in RedPlum Social Savings; and the introduction of Purchase Precision Technology. A first-of-its-kind technology, it combines proprietary and syndicated online and offline geographical and behavioral data.
“We are all about intelligent media delivery. We have a unique ability to deliver advertising and promotional messages by combining precise targeting, powerful insights and proven media to influence purchase behavior,” said Valassis president and CEO Rob Mason. “As part of our vision, we are focused on shaping the right team to continually create new and better ways to help our clients connect with and engage consumers and drive their greatest success.”
“Rajat’s extensive background, detailed understanding of mobile technology and proven track record of success make him a huge asset for Valassis’ continued digital advancement as we push the boundaries of technology,” Valassis chief digital officer Jim Parkinson said.