Save financial reform, save small businesses

by: Regan Bartley

Thu May 26, 2011 at 10:01:36 AM EDT

Every day, over three-fifths of our customers use plastic, and when they do, we're charged a "swipe fee."  We understand the principle involved in paying a small fee for this convenience.  But with a credit card duopoly the fees have skyrocketed unaccountably, and small business has felt the pinch.

Small businesses are currently plagued with swipe fees.  These swipe fees are accrued when customers use a debit or credit card for a purchase.  Big banks and credit card companies charge an "interchange cost" on each purchase to process the transaction.  Swipe fees can add up quickly, especially for small business owners.  

I am one of these small business owners.  Whenever someone comes into one of my stores and uses a debit or credit card to make a purchase, I - along with all other business owners - must pay a swipe fee.  To add insult to injury, even if the item purchased is just a few dollars, the fee paid out to big banks can actually wipe out any profit I would have made on the purchase.

For most small business owners, swipe fees account for the largest expense right behind payroll and healthcare.   The big banks and credit card companies that taxpayers bailed out just a few years ago have had a stronghold on the interchange system, enabling them to charge out-of-control fees that continue increasing.  The situation has become increasingly grim for small business owners as these swipe fees have close-to tripled over the past decade.  

Last summer, there was light at the end of the tunnel.  Legislators took action to alleviate this unfair fee on businesses and passed common-sense swipe fee reform to rein in these excessive fees, and ensure that they are reasonable and proportional to the actual cost of each transaction.

The new legislation would give small business owners the option to offer discounts to cash paying customers.  Additionally, the law permits small business owners to set a minimum on credit card purchases to eliminate a loss in profit on small-ticket items.  This reform will not only help my business and other businesses around the country but it will also help consumer with the opportunity to offer lower costs.  

Unfortunately, big banks and card companies are fighting relentlessly to ensure that this new law, that would help businesses and consumers alike, will never take effect.  Greedy companies like Visa and Mastercard want to continue to drive large profits that only feed their mushrooming executive bonuses, while Main Street retailers continue to barely break even.

With no facts to back up their case, big banks and card companies have resorted to scaring the American public.  They have even indicated that small community banks and credit unions would be hurt by swipe fee reform - which is not true!  Debit card issuers with under $10 billion in assets are exempt from the new law and can issue cards with higher rates.

Sometimes the numbers and the financial jargon make it hard for people to really understand what's at stake here, but the consequences are very real for me, for my employees, and for all the customers who have to pay higher prices in hard times.

This unfair system, which negatively impacts retailers and customers alike, is why I went to Washington, DC recently to meet with the offices of Senator Manchin, Senator Rockefeller, Congresswoman Capito and Congressman McKinley and asked them to protect common-sense swipe fee reform.

Although West Virginia's elected officials listened to me and other small business owners while we were in Washington, not all retailers could take a day off of work to make the trip to Washington.  They need to hear from everyone on Main Street.