Monday, November 13, 2023
But not all merchants are keen on the idea. The Small Business Payments Alliance, a new group made up of small business owners, entrepreneurs and tradespeople, opposes what it calls "bad policy."
The group stated it was in Washington last week "to ensure Congress hears directly from the small businesses that would be hurt" by the legislation. "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," the SBPA said in a press release.
Rather than helping merchants, the group asserted, the legislation "is a direct threat to the electronic payments system and, if enacted, would have a majority 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."
The CCCA, authored by Senator Dick Durbin, D-Ill., architect of the Durbin Amendment to the 2010 Dodd Frank Act that regulated debit card interchange, boasts backers from both sides of the aisle in the Senate and the House. Rather than regulate interchange directly, the CCCA takes a different tactic, aiming to increase network competition for processing work, which, in turn, will drive down interchange fees and lower consumer prices, lawmakers believe.
The same argument was offered in 2010 for passage of the Durbin Amendment. As studies have shown, however, some merchant saw interchange go up, and among those who registered savings on interchange, very few passed along those savings to customers. Other changes ushered in by debit interchange regulation included reduction in rewards programs and the elimination of some low-cost bank accounts built around debit cards.
If enacted, the CCCA would require issuers to enable their cards to process across multiple networks, not just the Visa and Mastercard networks. That way, every merchant would get an opportunity to choose from one of two networks to run transactions though, but only one of the choices offered could be owned by Mastercard or Visa.
"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," said Bryan De Bruin, co-founder of VanRock Holdings, a South Carolina-based private equity and real estate investment firm. "The last thing small businesses need is another mandate from the government trying to 'fix' a system that isn't broken."
David Collado, co-founder of Happy Howie's," a Detroit business that sells natural dog treats, added, "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."
"If Congress implements these massive changes to our electronic payments system, it's going to hurt my business and the community we serve," said Ken Katz, co-owner of Buenos Dias Cafe and La Bodega in Atlanta. "We just don't have the infrastructure or the capacity to take advantage of this policy like [the] mega-retailers [do]." 
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