The following content is sponsored by the Electronic Payments Coalition.
Throughout our nation’s history, hardworking and dedicated small businesses owners have helped our economy thrive. Yet for years, these business owners have had to compete against corporate mega-stores like Walmart and Target, who come to town and all too often pull business away from Main Street and out to highway bypasses.
A bill in Congress being pushed by Senators Dick Durbin and Roger Marshall would make it harder for these mom and pop retailers to compete, while lining the pockets of those mega-stores.
Durbin and Marshall are claiming their bill “boosts economic competition” by altering the credit card routing system as we know it. These proposed routing changes, they argue, will help small businesses and save families money; but study after study has shown this simply is not the case.
A recent report from the University of Miami revealed the devastating effect this legislation would have on small businesses, as they will bear the brunt of the proposed changes. In the meantime, Durbin and Marshall’s mega-stores allies will reap all the benefits.
According to the study, America’s top 100 retailers could see a benefit of nearly $3 billion, with $1.2 billion going to the top five largest retailers alone–Walmart, Amazon, Costco, Kroger and Home Depot.
In case that’s not bad enough, the report also found that small businesses would likely lose out on their rewards, as small business operators receive roughly $12 billion in credit card rewards when they make purchases on credit themselves.
Americans would lose out on their rewards as well. Credit rewards programs would become too expensive, threatening the airline points and credit card rewards programs that Americans have grown to rely on. This would make finances even tighter for already struggling Americans.
A recent Congressional Research Service (CRS) report supports many of the University of Miami’s findings, questioning the bill’s impact on small businesses and raising concerns that the new mandates could increase consumer data security risks. By allowing retailers to cut costs and make their own routing decisions, the Durbin-Marshall credit bill will allow mega-stores to cut corners with data security and expose consumer data to malicious actors, as they have done many times in the past.
Durbin has a long history of pushing harmful, mega-store-backed legislation. Let’s not forget the eerily similar 2010 Durbin Amendment, which required the Federal Reserve to cap interchange for purchases with debit cards and put billions of dollars in the hands of the largest corporate retailers. Rather than using this wealth to help customers as previously promised, a 2014 study by the Federal Reserve Bank of Richmond showed that more than 98 percent of businesses raised prices or kept them the same despite the interchange adjustment. Another study from the University of Chicago estimated that consumers lost roughly $25 billion after the enactment of the policy.
Yet here we are again, doing the exact same thing. With all of this overwhelming evidence, it is astounding how this bill is still even being discussed.
Small businesses and consumers deserve better.
It’s time we put a stop to Durbin and Marshall’s disastrous bill once and for all.
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