Small Business Owners Join Forces to Protect Electronic Payments System, Oppose Bad Policy

Small Business Owners and Entrepreneurs Come Together in New Coalition to Stop New Durbin-Marshall Bill, So-Called “Credit Card Competition Act

Washington, DC – A group of independent small business owners, entrepreneurs, and tradespeople have joined forces and formed the Small Business Payments Alliance (SBPA) to advocate on behalf of a modern, safe and secure electronic payments system that supports their businesses. The SBPA was formed in the wake of proposed changes to the electronic payments system that threaten to reduce credit card payment security, access and benefits. The alliance held its first gathering in Washington, DC this week to ensure that Congress hears directly from the small businesses that would be hurt by the new Durbin-Marshall bill, the so-called “Credit Card Competition Act” (CCCA).  

Credit card payments provide small businesses with a raft of critical benefits: they enable customer convenience, enhance transaction security, and provide a stream of rewards that small businesses can reinvest in their operations. From facilitating quick and easy purchases to bolstering consumer confidence with robust security measures, credit cards are integral to the modern small business ecosystem. Reward programs, in particular, often serve as a crucial financial lifeline, helping to offset operational costs and maintain cash flow. 

The Credit Card Competition Act has been introduced under the guise of enhancing competition and reducing costs for consumers and small businesses. The reality is a lot more damaging. The proposed Durbin-Marshall bill under consideration in Congress is a direct threat to the electronic payments system and, if enacted, would have a majorly detrimental impact on local businesses, entrepreneurs, and tradespeople by circumventing the existing free market with a government “routing mandate” that dictates which processing networks banks can accept, without regard to security or quality.

“If Congress implements these massive changes to our electronic payments system, it’s going to hurt my business and the community we serve. Big retailers are going to benefit from the Durbin-Marshall bill, but a small business like mine is going to be collateral damage. We just don’t have the infrastructure or the capacity to take advantage of this policy like these mega retailers. We need our elected leaders to stand with small business,” said Ken Katz, co-owner of Buenos Dias Cafe and La Bodega.

“When Congress set debit card price controls, all the promises made about consumer savings didn’t happen, and instead it made things harder for small businesses – in some cases, debit costs increased. The last thing small businesses need is another mandate from the government trying to ‘fix’ a system that isn’t broken,” said Bryan De Bruin, co-founder of VanRock Holdings

“The benefits we, along with our customers, gain from cash back rewards and credit card acceptance far outweigh the [credit card acceptance costs] we pay. Our customers spend more when using a credit card than they do using cash, and they get added payment security while we get liability protection. Plus, we can take advantage of e-commerce and mobile commerce, cut down on transaction time and reduce the costs and risks of handling cash. Rather than lowering consumer prices, this legislation will end up costing my business and our customers far more,” said David Collado, co-owner of Happy Howie’s.

Contrary to its name, the Credit Card Competition Act would not benefit competition in a meaningful way, as only mega retailers with huge volumes of transactions would benefit from this proposal. Under this legislation, the largest businesses could leverage their size to secure low credit card processing rates, leaving small businesses left to struggle with a new compliance mandate that likely would not result in any savings. With this drastic shift in the credit card market, rewards programs would be decimated and there would be an increased risk of reduced protections for local businesses, entrepreneurs, tradespeople, and consumers alike.

In 2010, Congress passed a similar provision that enforced price controls on debit card processing fees. However, studies have shown that this legislation only increased big retailer revenue, with no cost savings passed down to consumers. Instead, small businesses and consumers both witnessed reduced availability of free checking, higher monthly fees, higher minimum account balances, higher debit costs for “small ticket items,” and the disappearance of debit card rewards programs.

About the Small Business Payments Alliance 

The Small Business Payments Alliance (SBPA) is a coalition of independent businesses, entrepreneurs, and tradespeople who know the value of the electronic payments system for business and consumers. Our members rely on credit cards and rewards to lower operating costs, re-invest in their businesses and employees, manage cash flow, and give customers more choice, security, and convenience in how they pay. The modern, safe, and secure payments ecosystem is critical to our members’ success and contributions to local communities across the country. SBPA aims to educate, empower, and activate members to help ensure the electronic payments ecosystem continues to deliver access to credit, credit card rewards, convenience, and security and fraud protection for American small businesses and consumers.