Minnesota retailers and bankers are squabbling over a few cents that add up to tens of billions of dollars. The fight is over the penny or two of every dollar that banks and credit card companies charge when a consumer buys something with a debit or credit card.
Nationally, retailers say the fees cost them about $50 billion a year. And they're asking Congress to pass legislation that could drive the fees down.
"We have no real ability to negotiate these fees," Eric Hausman, a spokesman for Target. "We're looking for a way to have fair pricing, transparency, an ability to control these fees."
Hausman says the fees cost the retailer hundreds of millions of dollars a year. Target supports the legislation before Congress that could cut the charges.
The National Retail Federation says fees average one percent for debit cards; two percent, for credit cards. The trade group says consumers pick up the cost by paying higher prices.
But banks argue the fees charged merchants are appropriate and justified by the benefits they bring merchants. They include increased sales and better protection from fraud and theft.
Each side blames the other for gouging consumers.
TCF Bank president Bill Cooper says retailers are looking to government for help in fattening their profits.
"The consumer would pay," Cooper said. "Now, now it's free for the consumer. It doesn't cost him anything. The merchant pays the bank for the cost of doing this transaction. If you legislate the thing below a certain level, then the banks charge the consumer for it."
TCF Bank is the country's tenth largest issuer of debit cards. Last year TCF had about $100 million in fee income from those cards. Most of the money came from merchants. TCF's says the average fee charged was about 1.3 percent.
Like many banks that issue debit or credit cards, TCF is quite worried that Congress will slash fee income from cards. TCF has asked customers to write Congress to oppose such legislation. And Cooper says about 120,000 customers have responded.
The bank has also asked employees for support. At one point, an e-mail went out to TCF executives asking them to keep track of which employees wrote Congress. That could have gotten the bank in legal trouble, and the request was withdrawn within a few hours.
Cooper said it wasn't his idea.
"Somebody may have done that," Cooper said. "If that did happen, I don't know about it. And I can assure you that if that happened, it wasn't instructed."
It's not unusual for banks and retailers to enlist employees and customers in this financial fight. Target has asked its employees to write Congress. And if you've been in a SuperAmerica store, you may have noticed a petition calling for a reduction in card fees. Marathon Oil, which owns SuperAmerica, says more than a million customers have signed the petition.
In this big-stakes debate, a leading consumer advocacy group aligned itself with retailers.
Ed Mierzwinski, consumer program director of the U.S. Public Interest Research Group, said consumers would benefit if retailers could negotiate lower fees and other changes, but they can't.
"Visa and Mastercard refuse to negotiate the prices that they charge. It's a take-it-or-leave-it proposition.," Mierzwinski said.
Mierzwinski said the credit card companies even prohibit merchants from offering cash discounts, setting minimum amounts for credit or debit purchases or steering customers toward cards that are less costly for merchants to accept. Debit cards, for instance, carry lower merchant fees than credit cards that provide frequent flier miles.
Last November, the U.S. Government Accountability Office (GOA) released a report on credit card fees charged to merchants. And the GOA concluded there really isn't any competition.
Alicia Cackley oversaw the report.
"The card networks have the market power to set the interchange fees at whatever they choose and the merchants' only redress would be to stop accepting credit cards," Cackley said. "And that's not something that's feasible, because consumers wouldn't stand for it basically."
The GAO report laid out several options for Congress to consider, including capping fees and allowing retailers to collectively negotiate them. Bank critics are pushing to amend a massive Wall Street reform bill to give retailers some breaks on card fees. And given how unpopular banks are with the public and politicians, banks could be headed for a big defeat on the issue.