A legislative committee is reviewing the fee grocers receive on every purchase made with the electronic debit cards that replaced food stamps for low-income Iowans. Grocery stores receive seven cents every time the debit card is used in a store.

The executive director of the Iowa Community Action Association, Lana Ross, says Iowa’s payment to grocery stores is an unnecessary subsidy that diverts money from other assistance programs. Ross says,"No other state comes even close to paying this high fee, and most states don’t pay anything." She says the policymakers in other states know that the grocery stores are already making profits off the food assistance purchases."

Department of Human Services spokesman, Roger Munns, told the legislative committee Monday the other states didn’t see the need to make payment to stores for handling the food assistance cards. Munns says 43 states moved to the debit card system without offering the payment, with the rationale being the retailers wanted the system too, as it is a benefit to retailers.

Munns says retailers should absorb the cost of the transaction just as they down when a customer pays with a traditional debit or credit card. Munns says there is a cost in processing the cards, but he says it’s D-H-S’s view that the transaction cost is a "cost of doing business, not a cost for government."

The president of the Iowa Grocery Industry Association, Jerry Fleagle, says if the state doesn’t pay, someone else will. "There is not fee lunch. Eventually the cost is going to be passed on and paid by the consumer," Fleagle says. Fleagle says grocers now collect just over one million dollars a year in transaction fees, with half paid by the state, and half by the federal government.

He says Iowa retailers are trying to hold down the costs to consumers, as in other states, the costs are being passed on to consumers. The state began paying the seven cents to retailers in 2003 when it switched from the paper food stamps to the debit card system. Feagle says the seven cents is a reimbursement for processing, not a subsidy.

Fleagle says for the state to come back now and say they’ve save all their costs for the program and now want to take away the retailers reimbursement, "Well, we really struggle with that."

Member of the legislature’s government oversight committee say they will need more input before deciding on whether the food assistance fee paid to grocers is fair.