business news in context, analysis with attitude

In a story yesterday about the tense relationship between credit card companies and retailers, we commented that “our biggest complaint is about the branded debit cards that have been supported by millions of dollars in advertising and that are costing far more in transaction fees than, say, PIN-based debit cards. Retailers and customers don’t seem to realize that these increased fees lead to higher prices.

“So here’s what we think ought to happen. The Food Marketing Institute (FMI) and other retailing associations ought to join together and urge ALL their members to stop taking the signature-based Visa and MasterCard debit cards. Just boycott them…and link that to a broad-based marketing campaign informing consumers about how these cards are costing consumers a fortune.

“Among other things, this would reinforce in the minds of consumers the notion that retailers are working for consumers…which certainly is a positive message to get out there.”

As well-intentioned as our idea was, there apparently are some legal problems with the suggestion.

MNB user Jenny Keehan wrote:

Please don't call for a boycott of signature-based, branded cards, especially in the name of a trade association! It's against antitrust laws for a trade assn., or its members, to be involved in any such activity.

Sorry to burst your bubble.

MNB user Neal Gregoire wrote:

Love MNB. Read it every day. But with respect to today's story on the friction between retailers and the credit card companies, a couple of things need to be clarified.

1) Any merchant who is paying the least bit of attention to their electronic payment fees is well aware of the difference in price between PIN debit and the branded signature debit cards. Most are also well aware of what escalating EPS fees means to their cost structure, and I don't think there is any illusion about who ultimately bears the burden (the customer).


2) Whether FMI "encouraged" the process or not, any collective boycott of the credit card products that even hinted of an underlying agreement to do so, would land the participating merchants in court facing anti trust litigation. This goes to the whole issue around interchange; the fact that the issuing banks can collectively set rates via their "associations," but any attempt to collectively combat those rates is a violation of law. Since only the largest of retailers have the clout to effectively "negotiate" rates with VISA and MasterCard, you can guess where that leaves everyone else.

And MNB user Catherine Lanna chimed in:

Even though I left the electronic payments profession (acquirer-side) at the end of ‚04 after 12 years, I still have to comment about this article. The card associations depend on consumers‚ confusion and/or apathy when it comes to their products, particularly the signature debit card. I’ve yet to meet an FI employee that can explain or understand my inquiries when I ask them for a pin debit card vs. a signature debit card. They persist in labeling them “debit” and “ATM.”

As far as FMI goes, as a former EPS Committee member, we worked very hard (and I assume continue to) on industry-wide solutions and education. Unfortunately your suggestion that each individual retailer should launch an educational campaign for its customers is unrealistic as many of the players don’t understand the electronic payments industry to the depths required. Sadly, I think the same is true of the retailers understanding their own business in today’s environment.

In a story yesterday that we headlined, “Mamas, Don’t Let Your Babies Grow Up To Censors,” we wrote yesterday that “Wal-Mart reportedly has decided to censor 72-year-old Willie Nelson.

“Or, at least, the cover art on his new album, ‘Countryman,’ which features marijuana leaves against a background that looks like rolling papers.

“But not at Wal-Mart. If you buy the CD at Wal-Mart, you’ll instead see a palm tree instead of marijuana leaves – a change that was made by the album’s producers because of Wal-Mart’s guidelines about album content and packaging.

“The marijuana leaves aren’t just a reference to Nelson’ public and long-held love for what in other contexts might be called Dope, Mary Jane, Pot, Bud, The Green Guy, Weed, Grass, Reefer, or Ganja. The CD is made up of reggae versions of old Nelson favorites, as well as covers of Jimmy Cliff reggae songs.”

We did ask one question: “Does Wal-Mart sell Doobie Brothers albums?”

Clearly, we disapproved of Wal-Mart did, mostly because we think it is silly.

MNB user Jerry W. Sheldon disagreed:

While I recognize that your Doobie Brothers comment was meant somewhat "tongue-in-cheek" for many reasons I applaud Wal-Mart's decision to not be viewed as supporting marijuana's acceptance, not the least of which is as the parent of two young children. We have enough legalized filth in our society - it is nice when you have an instance where Wal-Mart can use its purchasing power to do something viewed by this consumer as positive.

Willie Nelson? Legalized filth?

Are we talking about the same singer?

MNB user Ron Cook also disagreed with our position:

I am not WM apologist. I feel every retailer has the right to choose the product marketed to sell. The story claims the record producers chose to change the album cover so that WM will place the product on their shelves for purchase, not that WM forced the record producer to change content or that WM changed content. The choice to change was the producers to make and they chose the profits WM sales can bring them over the promotion of crime. There is nothing to indicate WM would make a change to the packaging.

Now for a short rant. Would ones opinion be the same if the album cover showed carjacking, a shop owner robbed shot, a rape and murder of the victim or family violence? Would the claim of censure be so strong? Not every user of marijuana is a happy Liberal Arts student learning to regurgitate the professor’s opinion while having a little fun at Mom and Dads expense. (Or a million dollar hippies like Willie.)

Enough of that; however, I am a bit curious as to why one who feels so strongly about retailers working to stand apart from the herd is so appalled when a retailer does make a stand and show some respect for customers, family and perhaps even law?

We actually think that while you are correct that Wal-Mart didn’t actually force anybody to do anything, the fact remains that having that much economic power vested in one company allows that company to have too much cultural sway.

If Wal-Mart didn’t want to sell the album, that would be fine. It is the changing of the cover, or, in some cases, the content – that bothers us.

We also think equating this record cover – which, if you’ve seen it, is pretty innocuous – with scenes of rape and murder is stretching things a bit.

Finally, we should point out that we have three kids – two teenaged boys and a preteen girl. We hope we’ve taught them to make intelligent decisions. And most of all, we hope that we’ve taught them that they shouldn’t change the way they live based on an album cover.

Regarding the McDonald’s franchisee who is paying student workers if they stay at work an hour after they finish working and do their homework, MNB user Patti Pagels wrote:

My first response was "outstanding!" Life as a teen today has some unique challenges, including interesting family dynamics (or lack thereof) for many. So, any and all positive, responsible adult guidance should be applauded. Sure, it may set some kids to thinking they should get paid for doing what it just simply "the right thing to do." But, others will see that adults really do care and have provided an opportunity to get into a great (study) habit.

Then reality hit me.

This probably won't become the norm, once some group of non-student advocates gets wind of it. Someone will decide it's discrimination and will either demand the practice stop or force the company to add an hour's pay to everyone's check.

I know that's an extremely pessimistic viewpoint. But, it seems likely.

In the meantime, Bravo! to the store managers/owners for implementing the concept. I live in Michigan and will try to find out if these stores are nearby. Might give me the excuse I've needed to increase my French fry consumption! (I know. They have salads, too . . . )
KC's View: