How is it that the banks earn more from my three convenience stores than I do?

In fact, it’s been common in this industry for years. The reason: Since banks don’t compete on the prices they charge merchants, they gouge me and, in turn, you, the customer.

Congress decided this rigged market was costing consumers big money, and so introduced competition, starting with debit cards only, back in 2010, saving consumers and Main Street merchants billions of dollars.

Image: Bloomberg News
Image: Bloomberg News

But now the banks want that money back. They’ve talked a few members of Congress into killing reform. It’s not as if the banks were hurting. And debit card reform lets the banks charge as much as the market will bear, as long as they set their own prices and compete.

Reform did nothing less than try to transform what had been a rigged business utterly controlled by Visa and MasterCard into a fair and free market.

The two card companies so dominated this obscure yet crucial business that they could price-fix the bloated fees their member banks charge every time you swiped their debit or credit cards to pay for something. It was blatantly unfair – a distorted mockery of the free-market system that built the largest economy in the world.

And if you listen to the banks’ blather about why they shouldn’t have to compete with each other, you’ll never hear them deny that the card companies run a rigged game.

They can’t, because it’s undeniably the truth.

Here’s another fact: In its first year alone, debit reform saved consumers almost $6 billion, saved merchants another $2.6 billion they would otherwise have been gouged; and supported almost 38,000 jobs.

Extrapolate that across five years of reform and merchants and consumers saved more than $40 billion in these “swipe fees.” And we don't sit on
that saved money, but it’s simply not true, because it’s not possible. Unlike swipe fees, retailing is hyper-competitive; many retailers consider themselves lucky to hit a 1- or 2-percent profit margin.

If we don’t pass savings along, the convenience store or grocer or diner down the street will, and then we’ll be in deep trouble.

Or consider these figures: Since reform, the prices that retailers charge have grown at half the rate of what we pay for the gas and milk and clothes and computers we sell. That means retailers have kept prices down, and debit reform was a big reason they were able to do that.

This is the way retail works. It’s never been an easy business, and especially when the banks pile on to grab an extra-large chunk of our sales. It makes it harder to expand, to hire more people, to even stay in business.

And it’s not going to get any easier, with growing competition to bricks-and-mortar stores from the Internet, rapidly changing tastes and ways of shopping.

Yet retailing is a huge chunk of our economy, why would we want to unfairly make it harder than it already is for the sake of padding the bottom line of the handful of largest banks in the nation?

That’s why it’s so shocking to us small retailers to see a few in Congress considering turning back the clock to the bad old days of price-fixing debit cards, when the market looked more like something from the late-19-century heyday of the steel and coal and railroad trusts.

Instead of giving up that progress, we should be making credit card fees more competitive.

Credit cards have markups that run as high as 10,000 percent. That’s right , buy a pair of $100 shoes and the merchant takes a haircut of as much as $4 right off the top, money that goes right into the bank’s coffers for a service that costs the bank no more than a few pennies.

Are we going to have a free market, or are we going to repeal debit reforms and let the card business be an anomaly in our free-market system?

That’s the question Congress has to ask itself. Let’s hope it comes up with the right answer.