February 2, 2011 The Honorable Ben Bernanke, Chairman Board of Governors of the Federal Reserve System 20th Street and Constitution Avenue, NW Washington, DC 20551 Dear Chairman Bernanke: On behalf of the retail industry, including restaurants, supermarkets, convenience stores, drug stores, and many others, we are writing to express our gratitude for the time and thoughtful consideration the Federal Reserve Board of Governors and Federal Reserve Board Payments staff have dedicated to the proposed regulations on debit card interchange fees and routing. The proposed debit card interchange fee and routing reforms are a positive first step toward creating competition and certainty in the debit card market. We were pleased to see the Board acknowledge that initially interchange fees flowed to the merchant from the card issuer. There is no reason for interchange to flow from merchants to card issuers as those issuers save money on every debit card transaction because it is already cheaper than a check transaction. For this reason, among others, the final rules can move further toward the check system that has served the nation and the economy very well for many years without interchange fees. The current debit card system, riddled with uncertainty, has made it extremely difficult for us to plan for our businesses. We are confident the final debit card reforms the Federal Reserve will issue this April will take us one step closer to fair and transparent debit card fees, and will provide much-needed certainty as we plan ahead, budget, and make hiring decisions. We also look forward to the end of exclusive network arrangements, which should open the door to competition that will benefit both merchants and consumers on all debit transactions – whether those transactions are initiated by entering a PIN, signing or by any other method. We have watched our cost of accepting debit cards increase year after year powerless to impact or even predict what these cost increases will be. These debit fees have continued to increase since the Dodd-Frank Wall Street Reform bill was enacted – further proof we are subject to a broken payments card market. As business-people, we compete for customers on price and service. The card companies, however, have centrally set interchange fees for over a decade, and have increased these fees with complete disregard to the impact on merchants and consumers. As with other costs, we expected these fees to decrease with technology improvements, but that has not been the case. Now, with debit cards rapidly replacing paper checks, the card companies have more opportunities to abuse their position. The current system of unchecked central price-fixing by the card companies has led to an inefficient market with complex and unpredictable rates, and we look forward to the implementation of the debit interchange fee and routing reforms this summer that will provide much-needed relief to Main Street businesses and our customers. We understand that some of the big banks who benefit from these excessive fees want to delay your work and are willing to take extreme measures to attempt to do so. If they are successful it will simply allow them to further injure retailers, consumers and our economy as a whole with their anti-competitive behavior. We urge you to move forward to implement these reforms and continue to move toward the beneficial model set by the check system. Thank you again for your diligent work. If there is any way in which we can be helpful as you finalize these regulations, please do not hesitate to contact us. Sincerely, The undersigned companies & associations CC: United States House of Representatives United States Senate 2 Alabama Boom Foods, LLC Birmingham, AL Calhoun Enterprises, Inc. Montgomery, AL Geo. H. Green Oil Inc. Fairburn, AL Gregerson's Foods, Inc. Gadsden, AL Tacala, LLC, Birmingham, AL The Spencer Companies Incorporated Huntsville, AL Western Supermarkets, Inc. Birmingham, AL Minto Energy Mobile, AL C&S Canopy, Inc Clanton, AL CDG Engineers & Associates, Inc Dothan, AL Chapman Canopy, Inc Hueytown, AL Commercial Refrigeration, Inc Birmingham, AL McKenzie Oil Company, Inc Eufala, AL McKinney Petroleum Equipment Mobile, AL Superior Petroleum Service, Inc. Saraland, AL Quality Petroleum of Alabama Birmingham, AL 3 Gitty Up N GO Andalusia, AL Eidson Petroleum Inc Cullman, AL Petroleum Sales Inc Decatur, AL RS Lord LLC Troy, AL Crew Distributing Company Opp, AL 6040 LLC Birmingham, AL Watkins Oil Company, Inc Athens, AL Brown Oil Co. Gadsden, AL Chattahoochee Oil Co. West Point, AL DC Oil Co. Birmingham, AL Baggett Oil Co. Florence, AL Max Oil Co. Greenville, AL Hill Petroleum Co. Goodwater, AL Jet-Pep Inc. Holly Pond, AL GOV Ltd. Butler, AL Home Oil Co. Cowarts, AL United Food & Fuel Montgomery, AL 4 Alabama College Bookstore Association Alabama Grocers Association Alabama Restaurant Association Alabama Retail Association Petroleum and Convenience Marketers of Alabama Alaska S&P Adventures Inc Girdwood, AK Arizona Bashas' Inc. Chandler, AZ Fleming's Prime Steakhouse & Wine Bar, Scottsdale, AZ Macayo Mexican Restaurant Phoenix, AZ Pro's Ranch Markets Phoenix, AZ Tuscon Truck Terminal, Inc. Tucson, Arizona Viad Corp Phoenix, AZ Wildflower Bread Company Scottsdale, AZ Brown Evans Distributing Co. Mesa, AZ Quik Mart Stores Bennett Oil Calvert Oil Union Distributing Cooperative Mercantile Colorado City, AZ 5 Double D Market Dolansprings, AZ Arizona Restaurant and Hospitality Association Arizona Retailers Association Arizona Food Marketing Alliance Arizona Petroleum Marketers Association Arkansas American Pie Pizza North Little Rock, AR Bartlett Hicks Realty North Little Rock, AR Best Western Eureka Inn Eureka Springs, AR Big Creek Golf & Country Club Mountain Home, AR Brown’s Catfish Russellville, AR Coulson Oil Company Little Rock, AR CenterPoint Energy Little Rock, AR Comfort Inn Mountain Home, AR DeVito's Restaurant, Harrison, AK The Faded Rose Restaurants Little Rock, AR Frost Oil Co. Van Buren, AR Hicks, Dowty, McCauley and Schell - Architects + Interior designers, Inc., North Little Rock, AR 6 Sassafras Group, Inc., dba Maddie's Place Little Rock,AR Saddle Peak LLC Little Rock, AR Wal-Mart Stores, Inc. Bentonville, AR Arkansas Hospitality Association Arkansas Oil Marketers Association, Inc. Arkansas Grocers and Retail Merchants Association California Bristol Farms, Inc. Carson, CA Harvest Market Fort Bragg, CA Jax Markets Anaheim, CA K.V. Mart Co. Carson, CA Marchbanks Truck Service, Inc. Bakersfield, California, Mi Pueblo Food Center San Jose, CA Mollie Stone's Markets Mill Valley, CA Northgate Gonzalez Market Anaheim, CA Sacramento 49er Travel Plaza Sacramento, California Save Mart Supermarkets Modesto, CA Safeway Inc. Pleasanton, CA 7 Stater Bros. Markets San Bernardino, CA Unified Grocers, Inc. Commerce, CA Pacific Sales Torrance, CA Napster Los Angeles, CA DealTree.com Irvine, CA Olio e Limone Ristorante Santa Barbara, CA Olio Pizzeria Santa Barbara, CA Cracked Crab® Pismo Beach, CA La Trattoria Ventura, CA Viking Shop Barstow College, CA Shadowbrook Restaurant Capitola, CA Luna Park Restaurants Los Angles, CA Henry's Hat Los Angles, CA Da Giovanni Inc. Carmel, CA SYSCO of Central CA Oakdale, CA J & T Business Management, Inc. Corona, CA Robinson Oil Corporation Santa Clara, CA 8 Gil Moore Oil Company Wilton, CA Mt. Counties Supply Co. Redding, CA Western States Oil Company San Jose, CA Access To Money Los Angeles, CA Davidson Tank Bakersfield, CA California Association of College Stores California Independent Grocers Association California Retailers Association California Independent Oil Marketers Association California Grocers Association Colorado Craftwood Inn Manitou Springs, CO Village Markets Genwood Springs, CO Clarks Markets Basalt, CO Columbine Market Gypsum, CO Cedar Edge Mercantile Cedar Edge, CO Don's Market Paonia, CO Dover Creek Market Dover Creek, CO Family Food Town Palisade, CO 9 Family Market Naturita, CO Gateway Supermarket Gateway, CO Hayden Mercantile Hayden, CO Keystone Grocery Vail, CO Kremmling Merc Kremmling, CO The Market at Mountain Village Ridgeway, CO and Steamboat Springs, CO Orchard Mesa Market Grand Junction, CO Prathers Market Fairplay, CO Rancho Liborio's Market Denver, CO Redd Mercantile Nucla, CO Ridgeway Mountain Market Ridgeway, CO Select Supermarket Oak Creek, CO Shop and Hop Edwards, CO Silverton Grocery Silverton, CO Sim's Market Vail, CO Watts Ranch Market Meeker, CO 10 White River Grocery Ridgeway, CO Offen Petroleum Denver, CO Colorado Petroleum Marketers and Convenience Store Association Colorado Retail Council Colorado Restaurant Association Rocky Mountain Food Industry Association Connecticut Wilcox Fuels Incorporated Westbrook, CT Gulf Oil LP Madison, CT The Melting Pot Darien, CT American Steak House Bozzuto's Inc. Cheshire, CT Geissler's Supermarkets, Inc. East Windsor, CT Highland Park Market, Inc. Manchester, CT Connecticut Retail Merchants Association Connecticut Food Association Independent Connecticut Petroleum Association Delaware Caffé Gelato Restaurant and Catering Newark, DE Delaware Restaurant Association District of Columbia 11 Restaurant Association Metropolitan Washington National Council of Chain Restaurants Florida Muvico Theatres, Inc. Fort Lauderdale, FL Winn-Dixie Stores, Inc. Jacksonville, FL Publix Super Markets, Inc. Lakeland, FL W.S. Badcock Corporation Mulberry, FL Darden Restaurants Orlando, FL Brunchery Restaurants Tampa, FL Cafe Tu Tu Tango Orlando, FL Original Tiki Bar & Restaurant Ft. Pierce, FL The Blue