Much ink has been spilled over the beneficial aspects of the Durbin-Marshall bill and other proposals meant to regulate payment processing for small businesses. A group that is surprisingly rarely asked about these measures is the very small businesses most affected. The Small Business Payment Alliance has alleviated this discrepancy with a recently published survey on the opinion of hundreds of small business decision-makers (SBDMs) across the country, and the results are not what Senator Dick Durbin (D-Illinois) would like you to believe.
Payment processing is a core component of how any business operates in the modern economy. The system can involve credit and debit card processing or other forms of digital payments. As much as 71 percent of SBDMs believe these systems have been integral to their business growth.
Durbin was the architect behind a Dodd-Frank Act amendment, which capped fees paid by merchants on every purchase using a credit card, also called “swipe fees.” The amendment failed to lower prices but instead destroyed the debit card reward program. Despite this failure, Durbin hopes to extend these measures to credit cards through the Credit Card Competition Act (CCCA).
Ostensibly, this decision is for the benefit of small businesses that must pay these swipe fees. Yet, 83 percent of SBDMs prefer the same or less regulation in payments, not more. It’s not surprising, however, that Durbin’s office has disregarded this information, as 60 percent of SBDMs don’t believe their opinions are considered when lawmakers craft legislation on this issue.
Even when the survey specifically asks about the CCCA, 64 percent of respondents believe that the bill would disproportionately benefit large retailers. Since large retailers carry more market weight, it’s easier for them to make deals with credit card networks for favorable terms. Larger retailers generally handle more transactions, so it only makes sense that they have a greater interest in controlling it.
Roughly 1 in 10 SBDMs marked payment processing as a top expense, while expenses like inflation and labor costs routinely ranked higher. Coupled with their support for the current system and distrust of the CCCA, it becomes clear that small businesses are not interested in the government getting involved in their payment systems. While Durbin will likely continue to claim that his bill enjoys robust support from small businesses, these businesses know that the government can’t just cap prices to fix problems.
Moreover, SBDMs understand why swipe fees are set the way they are: to benefit their customers. For instance, 66 percent of SBDMs trust that the payments they make via payment processing are necessary for securing the digital privacy of the consumer. That is in staunch contrast to the belief that credit card networks are exploitative and need to be heavily regulated.
The Small Business Payment Alliance survey perfectly illustrates the disparity between what politicians like Durbin say and what small businesses think. Nearly every policymaker invokes the plight of the small businessperson at some point in their career, yet few stop to consider what these people truly believe. It’s not good enough to say you are working in the interest of the local retailer; it is incumbent on those making policy to explore their true opinions first.
Isaac Schick is with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on X @ConsumerPal.