Deeds: Credit card changes hurt small business | Columnists – About Your Online Magazine


The road to post-pandemic economic recovery hasn’t been easy. For over a year, my fellow small business owners and I struggled to make ends meet and keep our life’s work afloat. While our businesses and our employees received some much-needed help via President Joe Biden’s American Rescue Plan, I believe that I speak on behalf of all small businesses when I say that we still need economic help wherever and whenever we can get it.

However, for the last decade I’ve watched big corporations such as Target and Amazon reap huge profits at the expense of small businesses.

Back in 2011, Sen. Dick Durbin of Illinois snuck in an amendment that capped interchange fees on debit card transactions to 22 cents, instead of just a small percentage of the transaction, and added routing mandates to debit transactions. Even though corporations got an extra $90 billion in profits, more than 98% of them either raised prices or kept them the same.

As a result of the changes, banks lost big and predictably made changes to earn back their lost revenue. From eliminating free checking accounts to increasing account fees, banks made it difficult for consumers to access affordable banking services. A 2014 study from George Mason University reported that the Durbin amendment led to an increase in the unbanked population by 1 million Americans.

Worse yet, banks passed their losses onto small businesses by making it expensive for us to handle small debit card purchases. We went from paying 1% on small debit card transactions to a flat rate of 22 cents, a nearly 1,000% increase in many cases.

Paula Fonseca