Viewpoints

Connective Politics Pay Off in Interchange Reform

RSS

It's safe to say that Rich Niemann Sr. and Sen. Dick Durbin, D-Ill., don't see eye to eye on all issues.

Niemann, chairman of Niemann Foods in Quincy, Ill., favors a minimally intrusive style of government in which businesses are subjected to less regulation. Durbin, the Senate Majority Whip, is a leader in the Democratically controlled Congress, which has been actively promulgating new legislation, from health care reform to finance reform.

But despite their ideological differences, Niemann had long ago forged a personal relationship with Durbin built around open communication and mutual respect. That relationship turned out to be a factor in the inclusion of debit-card interchange fee regulation in the financial reform bill, which President Obama signed into law last week.

“I have been laying this issue out in front of him for five years,” Niemann told SN, noting that credit- and debit-card interchange fees — assessed by card issuers on every transaction — can eat up much of a retailer's margin.

Durbin added an amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act while it was in the Senate that will for the first time regulate those interchange fees. The amendment was preserved in the version of the bill that was reconciled with the House version, and has now become law.

The Federal Reserve will now set regulations resulting in “reasonable and proportional” interchange fees for debit cards in an effort to curb what retailers have long claimed were abusive practices by card issuers. It also includes rules that will give retailers more flexibility to reduce their costs through marketing alternative forms of payment to consumers and by allowing them to shop for low-cost payment processors.

Retail associations, including Food Marketing Institute, National Grocers Association and National Retail Federation, all praised the legislation. Both FMI and NGA emphasized the importance of the grass-roots efforts on behalf of the interchange issue by retailers, and FMI cited Niemann's relationship with Durbin in particular as an important element of the legislation's passage.

“It started a real grass-roots thing,” said Niemann, who has discussed issues with Durbin for years, dating back to when the senator was a member of the House of Representatives representing his district in the 1980s and 1990s. “The message here is that you have to make that initial contact with your legislator. You have to get in front of them every so often. If you like something they do, you have to let them know, and if you don't like something, you have to let them know that as well.”

Niemann's efforts to maintain a strong relationship with Durbin illustrate how important it is for retailers to stay in touch with legislators on both sides of the aisle. In an age when political discussion is often described as being “divisive,” it is good to know that behind all the posturing, there are some genuine “connective” political discussions taking place as well.

Contributors

David Orgel

David Orgel is executive director, content & user engagement, of Supermarket News (SN) and its website, SupermarketNews.com. Orgel delivers his opinions on industry trends through a bi-weekly...

Jon Springer

Jon Springer has been writing about food, food retailers and food retailing for more than 10 years, and is in his second tour of duty with Supermarket News. His prior experience includes covering the...
What's Viewpoints?

In their Viewpoints columns, SN editors give their perspectives on current industry issues.

Blog Archive
Penton Media Food Group and Related Sites

Sponsored Introduction Continue on to (or wait seconds) ×