Running a small business is not easy, and high credit card fees make it even more difficult. That was a message repeated Monday during a meeting with Sen. Dick Durbin (D), who outlined legislation to increase competition and choice in the credit card network market.
Mr. Durbin met with small business owners in Springfield to explain the Credit Card Competition Act and discuss sales fees that merchants are forced to pay every time a customer swipes their card.
“Retailers and consumers are paying $3.8 billion in credit card interchange fees to line the pockets of Wall Street's biggest banks,” Durbin said. “These institutions increased their fees last October and are planning further increases in April. For many small and medium-sized businesses, exchange fees are the second-largest cost after operating costs. Consumers I don't even know it exists.”
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According to Durbin, Senate Bill 1838, the Credit Card Competition Act of 2023 (CCA), introduced in June, aims to reduce credit card competition and customer It is said to enhance options.
“Every time you swipe your card, we're paying at least 3 percent,” said Gordon Davis, co-owner of Whimsy Tea Company, where the meeting with Durbin and press conference took place. he said. “As soon as you add in service fees and all the fun stuff, he jumps to 7.8 percent. That's why Sen. Durbin's Credit Card Competition Act is so important and gives us options.”
The bill would require the nation's largest credit card issuing financial institutions (those with $100 billion or more in assets) to offer at least two credit card networks instead of one. Additionally, at least one of these networks must be a network other than Visa or Mastercard.
Giving them the freedom to choose between specific cards could lower fees and increase competition. That's exactly what Davis wants: the freedom to choose the future of his business.
“Being a small business owner is not easy. To put this in perspective, when your store had $100,000 in gross sales, $5,000 had already gone to your credit card company. …Rather than We Have a Choice, “Credit card companies want us to have no choice: Save that money and spend it growing your business.'' Credit card companies don't want us to have a choice.'' Several other Springfield business owners said about the impact of absorbing credit card costs and not passing it on to customers. Told.
“We are thrilled to be partnering with Laundry Center and Service,” said Pamela Frazier, president and CEO of All-in-One Laundry Center and Services. “We pay over $1,200 in credit card fees every month at 4%. We know that for some people, our laundry facility is the only place they can go to get their clothes done. Therefore, we are currently absorbing that cost so as not to pass it on to our customers.
“We are proud to support our customers and our community,” Frazier said. “That feels important to me. Running a small business isn't easy. Every penny counts, and high credit card bills only make it more difficult to make ends meet. .”
CCCA supporters include American Beverage Licenses, Armed Forces Marketing Council, Energy Marketers of America, and more than 200 state and local business associations. But the bill faces opposition from opponents like Americans for Tax Reform, who say it would likely eliminate credit card rewards programs while putting consumers' personal data at risk. That's because banks will suppress future investigations into fraud prevention for specific cards.
Karen Conn of Conn's Hospitality Group said, “Unless we address these credit card fees, we won't be able to maintain staffing and team member levels. Simply put, it's the workforce that will suffer. That doesn't make sense to me because our business is really about people.”
Some companies, like Stellar Coffee and Tea, work through a third-party financial setup that determines the final price customers pay for drinks and breakfast, compared to lower prices if they paid in cash. It costs a few cents more for the customer.
“We encourage customers to pay in cash,” said co-owner Rich Van Dorn. “So it's not a cost to us and it's not a cost to them. They don't want it either.”
A floor vote on the bill is not scheduled.
