NATO of California /Nevada REPRESENTATIVE TESTIFIES at HEARING on BANK INTERCHANGE FEES
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February 2010 NATO of California/Nevada February 2010 NATO of California/Nevada Information for the California and Nevada Motion Picture Theatre Industry NATO of California /Nevada INS I DE REPRESENTATIVE TESTIFIES AT PREV I EWS HEARING ON BANK INTERCHANGE FEES Hearing on Bank Interchange Fees By: Terri Thomas, Thomas Advocacy Inc. Page 1 • On January 25, 2010, Kelly Today there are over 200 and the Lyndon Golin Joins Ritchey-Davoren, Vice President percentage changes depending on NATO of CA/NV Board of Operations for ArcLight Cin- the sort of card the customer uses, Page 3 • emas, represented the National with reward cards the most expen- Deadline Approaching Association of Theatre Owners of sive. Visa and MasterCard publish for Scholarship California/Nevada testifying be- new interchange rates about twice Program! fore the California State Assem- a year; American Express and Dis- Page 4 bly Banker Committee Hearing cover do not publish their rates but • Gift Card Holders on Interchange Fees. She was ac- generally negotiate these rates on Would Get More Cash companied by NATO President an individual basis with merchants. Back Under Senate & CEO Milt Moritz as well as Interchange fees are set by card Bill NATO of CA/NV lobbyist Terri Thomas. networks such as Visa and MasterCard but are Page 5 • The hearing was prompted by Assembly- collected from retailers by credit card issuers, e.g. Movie Theatres man Pedro Nava (D, Santa Barbara) who is financial institutions. Every time a consumer uses a Blossom in the also a candidate for Attorney General. Nava credit card or debit card at any merchant including Downturn the internet, the merchant is charged a fee, ranging Page 5 and the committee are interested in the impact • of the fees not only on retail merchants and fi- from 1.6% to 2.5%. The fee is divided in three Academy Award nancial institutions, but more importantly on ways: between the merchant’s bank, the consumer’s Contest consumers. The hearing was composed of a bank, and the credit card company. According to Page 8 the American Bankers Association, more than half • series of panels which included a summary of New Registration the recent U.S. Government Accountability of total retail transactions since 2005 have been Procedure for Office (GAO) Report on Interchange Fees, a paid for using either debit or credit cards. Summer/Fall Film discussion by financial institutions and card Product Seminar Page 9 processors of their policies and a response by a Federal Action • variety of merchants including representatives Although three measures have been introduced In Memoriam Bonnie from the National Retail Federation, small busi- at the federal level, none of them eliminate or cap Sanborn nesses, 7-Eleven stores, theatre owners, and a interchange fees. Most of the emphasis of the Page 9 proposed federal legislation is on making the in- • costly consumer perspective. Avatar is formation regarding interchange fees more public Out of the World! What is the Interchange Fee? in order to give both retailers and consumers more Page 9 The interchange fee is the percentage choice as to which cards to use. The consensus of • the Assembly Banking Committee seemed to be Statistics tacked on to each sale when a credit or debit Page 10 card is used. These fees began in the 1960s that there is little beyond “shining the light on the • as a way for banks to cover the cost of process- subject” that a State can do - regulating these fees Calendar of Events & is more appropriately a federal issue. There was Holidays ing credit card transactions. Twenty years ago, Page 12 there were only a handful of interchange fees. Hearing, continued on page 2 NATO of California/Nevada February 2010 Hearing, continued from page 1 Previews also a difference of opinion as to whether or not consumers would suffer or gain if interchange fees is published by the were regulated. Most agreed that a large part of the problem is the invisibility of the interchange fees National Association of Theatre Owners of coupled with the wide variety some of which has evolved due to negotiations with merchants and California/Nevada some of which are of function of the type of card being used. 11661 San Vicente Blvd., Suite 830 Los Angeles, CA 90049 Results of GAO Report Phone: 310/460-2900 In late 2009, the GAO released a report that was intended to investigate how merchant fees have Fax: 310/460-2901 E-mail: [email protected] changed over time, the competitive nature of the credit card market, the benefits and costs to mer- www.NATOCalNev.org chants of accepting cards, and the potential impact of several options to reduce merchant fees. These options included limiting or capping the fees directly, requiring disclosure of these fees to consumers, loosening card network restrictions on merchants; and granting antitrust waivers. The GAO report OFF I CERS also pointed out the card network rules which limit the options that merchants have for accepting or Milton Moritz President & CEO denying cards. These include: no surcharges; honor all cards; no discrimination/differentiation; no Raymond W. Syufy minimum or maximum charges; and preferred treatment. Chairman David Corwin Vice President NATO Testimony Frank Rimkus In her presentation to the committee, Kelly Ritchey-Davoren discussed the shift from cash to credit Treasurer cards at the box office and snack counters which has occurred over the last several years. She stated Alan Grossberg “there are many positive effects of this shift including convenience for guests and the safety factor of Secretary having less cash present in the theatres. Unfortunately these positive effects are being neutralized as interchange fees have mounted. Interestingly increased use of credit cards does not lead to lower fees. Ritchey-Davoren pointed out that the combination of having low average transactions and multiple BO ARD O F DI RECT O RS transactions within a single visit has resulted in estimates of our industry paying about 3% in fees per Christopher H. Blevins Regal Entertainment Group average card transaction (this includes the negotiated flat transaction or “swipe” fee, discount fees Bruce Coleman and charge back fees; the interchange fee is not negotiated.). As the profit margins in the theatre Brenden Theatres business are tight, the increases in interchange fees have had to be made up elsewhere in the business David Corwin model in order to meet return on investment expectations. This can have a significant impact on Metropolitan Theatres price at the box office and payroll reductions – none of which is desirable for either the theatre owner Nora Dashwood Pacific Theatres or the people of the State of California”. Peter Dobson Mann Theatres Challenges to Regulating Interchange Fees Lyndon Golin The hearing pointed out the numerous challenges to regulating interchange fees which include: Regency Theatres Alan Grossberg Setting limits to interchange fees. If the limit is based on cost, determining which costs should UltraStar Cinemas be considered is problematic and considerable expense could be involved with collecting and analyz- George Krikorian ing the necessary data. Krikorian Premiere Theatres Requiring disclosure of interchange fees to consumers could result in lower effective fees paid by Scott Lotter Paradise Cinemas merchants, but only if the consumer decides to use this information to decrease their usage of the Ed Moyer credit cards that are expensive for merchants to accept. AMC Theatres Loosening card network restrictions on merchants has the potential to lower the costs that merchants Ted Mundorff face but it is unclear to what degree merchants would actually take advantage of rule changes. Landmark Theatres Frank Rimkus Granting antitrust waivers to merchant groups and payment service providers but the Department Galaxy Theatres of Justice is wary of granting such antitrust waivers. Hal Sawyer Cinemark USA Raymond W. Syufy Next Steps West Wind Drive-Ins It is not yet known whether Chairman Nava or any members will introduce legislation on this ❦ subject. NATO will stay closely attuned. Charlene Sievers Director, Member Services 2 NATO of California/Nevada February 2010 January, 2010 NATO of California/Nevada Board of Directors meeting Attending the Board of Directors meeting with a personal tour of Regal’s LA LIVE new downtown showcase theatre are Board Members and guests: (L to R) Scott Lotter, guest Bill Kartozian, Jerry Forman, Ted Mundorff, Chairman Ray Syufy, Secretary Alan Grossberg, Treasurer Frank Rimkus, Nora Dashwood, guest Tim Warner, George Krikorian, Bruce Coleman, Peter Dobson, Vice President David Corwin, Chris Blevins, Hal Sawyer and President and CEO Milt Moritz. The Regal LA Live is located in the heart of downtown Los Ange- les. Thanks go to Manager Mark Behrang who led the NATO of CA/ NV Board of Directors and their guests on a guided tour of this flag- ship theatre and to Promotions Manager, Wesley Ratliff, who helped with coordinating all the details for the meeting. Lyndon Golin joins NATO of California/Nevada’s Board of Directors It is with great pleasure that NATO of California/Nevada welcomes Lyndon Golin, founder and president of Regency Theatres, as a member of its Board of Directors. He is filling the position on our Board recently vacated by Gary Richardson of The Movie Experience. Mr. Golin joined the motion picture industry at an early age working in movie theatres owned and operated by his father Harry Golin. In 1985 he joined Cineplex Odeon Theatres as an usher and rose to the position of manager where he spent eight years and later held positions in film distribution with Universal and MGM/ UA. In 1996 he formed Regency Theatres and now operates 20 locations with 108 screens. Lyndon and his wife Monica are active members of many local charities in addition to his holding a Board position with the Variety Boys and Girls Club in East Los Angeles.