NRF CEO describes threat of swipe fees to retail’s continued resiliency

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Just as the Shop.org Annual Summit has grown in strength and popularity over the past ten years – increasing ten-fold from just 400 attendees in 2002 to over 4,000 in 2012 – the online retail industry has boomed as well. E-commerce has grown from a $40 billion dollar industry in 2002 to an anticipated $225 billion dollar industry in 2012.

These figures were part of NRF President and CEO Matthew Shay’s opening remarks before thousands of digital retailers in Denver on Tuesday. Shay attributed the industry’s durability to the resiliency of its talent, supported by their adaptive, enterprising spirits. While other sectors have faded during recent and challenging economic times, retail was a source of strength, Shay said, and digital retail played a significant role in maintaining steady growth. The incorporation of innovation and technology provides a more-personalized shopping experience – especially with the emergence of mobile technology in retail – creating a “virtuous cycle,” Shay said, a cycle in which engagement, analytics and feedback drive even greater value, innovation and job creation.

Despite these strengths, a larger legal battle presents tough challenges for all retailers. The recently proposed $7.25 billion settlement is a lose-lose-lose for merchants, consumers and competition. Specifically, online retailers are particularly impacted because most of their sales are paid for by plastic, and the “card not present” rates Visa and MasterCard charge for online transactions can be a third higher than those paid by other merchants. And while swipe fees are the third-highest expense for retailers, these fees also cost the average U.S. household $427 a year.

That’s why Shay announced yesterday NRF’s formal opposition to the proposed settlement between merchants and the credit card companies. In the video below, Shay explains the rationale for seeking appropriate action to block the settlement, and why the Federation cannot allow a provision to pass that restricts future litigation by retailers to challenge credit card companies over swipe fees again.

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