Mark Athitakis is a contributing editor to Associations Now.
The small fees in credit- and debit-card transactions have made for a major legislative and legal battleground in recent years. The coalition led by the National Retail Federation's Mallory Duncan shows how a multi-pronged approach—from shoe leather on the Hill to crafting the right media message—can score the win. [Titled "The Big Win" in the print edition.]
A simple piece of plastic can be rife with legal complications. In recent years, the National Retail Federation's main advocacy effort has involved interchange fees—the small but not insubstantial charges that are assessed with every credit- and debit-card transaction. In the battle over those charges (more commonly known as swipe fees), Mallory Duncan, NRF's senior vice president and general counsel, has a complicated job: Not only does he need to spread the word about the problem, but he also has to identify the appropriate legislative responses and find allies to bolster NRF's advocacy goals.
The jury is still out regarding credit-card swipe fees, where the NRF is fighting a $7.25 billion settlement of an antitrust lawsuit, calling it, in a letter to congressional leaders, "a bad deal for merchants and their customers." But the NRF scored a clear win in 2010 when the Dodd-Frank financial reform bill placed caps on fees for debit cards. That success, Duncan says, was a function of smart partnerships with similar organizations, effective communication both through mass media and direct conversation with legislators, and working with multiple levels of membership, from leaders of large chains to owners of the corner store.
"Because it's a large issue, it's not something that can be attacked with only a single arrow," he says. "There are elements of this that are amenable to regulation. There are elements that are amenable to litigation, elements for legislation, elements that just require education of the public."
You needn't be on NRF's side of the debate to appreciate what Duncan and NRF have accomplished. His story shows that a multipronged approach can be effective for any association, exemplifying how powerful each element of advocacy can be when it's bolstered by an environment of cooperation.
Retailers represented by the NRF and other trade associations have been debating swipe fees with credit- and debit-card companies since at least the late 1990s. In 2005, a group of those associations formed the Merchant Payments Coalition, with Duncan as its chairman. The goal was to build public awareness around the fees—which the MPC says costs consumers $50 billion annually—through a show of strength in a variety of retail categories. (Its executive committee members are the National Association of Convenience Stores, the Food Marketing Institute, the National Grocers Association, and the National Restaurant Association, along with NRF.)
|Small Groups Can Win Big Too|
When Reba Campbell, deputy executive director of the Municipal Association of South Carolina, joined the organization in 2005, her first priority was to merge its communications and advocacy efforts. MASC serves mayors and council members from all 270 cities in the state, and effectively winning support for them in the statehouse meant blending hard numbers and consistent messaging.
"Telling stories and mining data—those were the two things that we found worked with the legislature," she says.
Campbell's effort was long-term and disconnected from any particular piece of legislation. That's tricky for an organization like MASC, whose members are elected officials who don't always have the luxury of long-term thinking. So MASC emphasized off-the-shelf storytelling opportunities members could use: guidelines for writing op-eds and heavy doses of data about the value of cities to economies—a line of discussion more persuasive to legislators "than just how much it costs to run a city."
MASC's advocacy staff—two lobbyists, a policy researcher, a grassroots manager, and two communications staff members—worked with a relatively small budget of $40,000, much of it dedicated to a publication, Cities Mean Business, produced in partnership with a statewide business journal and delivered to its subscribers along with legislators and 500 key influencers. The win was clear: Last year, the Local Government Fund, which distributes tax revenue to municipalities, increased $30 million over the previous year.
Campbell credits that success to the consistency of the message and the consistency of members participating with lobbyists to deliver the message. "One of the best things a lobbyist can say when they come back from the statehouse is, 'I had legislators coming up to me today and saying, 'Call your people off. I get it.'"—M.A.
"The first thing was to realize that this was not a singular effort by any one trade association," Duncan says. "All of us represent merchants, and merchants and their customers are being affected by this."
One benefit of a wide coalition was it could play to each organization's individual strengths: One might mobilize grassroots efforts, while others, like NRF, could take advantage of their strong communications capacity. The complexity of the legislative effort also demanded a wide range of expertise, and the coalition would need to identify legislators who could see the issue from its perspective. "Obviously, this affects commerce, so we talked to people in the Energy and Commerce Committee," Duncan says. "This is an antitrust problem, so you talk with the folks in the Judiciary Committee."
Naturally, a counterpart organization called the Electronic Payments Coalition, composed of banks and credit-card companies, was making its own case, arguing that swipe fees are relatively low in the United States and that merchants are capable of negotiating lower fees without legislation. The MPC's efforts helped lead to an amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which required the Federal Reserve to set a cap on debit-card interchange fees—dropping from a typical 43 cents to about 22 cents per transaction.
Partnerships and shoe leather on the Hill were just part of NRF's approach. To make its message meaningful to legislators, it needed to show that the message was also meaningful to its member retailers and to those retailers' customers.
One MPC partner, the National Association of Convenience Stores, helped organize member chains like 7-Eleven to have customers sign petitions protesting swipe fees. Ultimately, NACS claimed a total of 3.7 million signatures delivered to Congress. That's a big, impressive number that looks good on a press release; it may even have caught the attention of a few members of Congress. But its most significant effect, Duncan says, was to generate support among the merchants. "It sends a message to the members that their time is not wasted," he says.
Advertising can help too, Duncan says, but only to a limited degree. "At critical moments, advertising is important, but we had a very well-funded opponent, and you have to expect they will advertise," he says.
A better tactic for NRF was to establish the swipe-fee issue as an important consumer-news story and draw the media to it. So it was critical to establish the problem as one that hit consumers directly. A common talking point for the NRF is that swipe fees cost the average American more than $400 annually.
"When you find something that's been hidden and you bring it to light, oftentimes the press is interested in saying, 'This is something new we weren't aware of before.' That itself tends to generate interest," Duncan says.
Though the debit-card issue is settled for now, Duncan says credit-card swipe fees remain "the big nut to be cracked." (Last December, retailers asking for an expedited appeal of the $7.25 billion settlement were rebuffed by a federal appeals court; the appeal is still pending.) The upside for the organization is that the common cause has made the MPC a sturdier partnership than many are.
"This one was remarkably easy to come together because we were all suffering a common pain," he says. "Anytime you have a marriage you have disagreements, and if you have five people in a marriage you have more disagreements. But this has been remarkably easy."
Mark Athitakis is a senior editor at Associations Now. Email: [email protected]