Sandy Kennedy is the President of the Retail Industry Leaders Association.
President Donald Trump has been swept into office with a clear mandate from the American people — to reform government, drain the swamp and protect “the little guy.”
However, one of the first steps that Congress has considered this year is to actively advocate for big banks at the expense of Main Street with their push to repeal debit-card swipe fee reform.
In 2010, the Dodd — Frank Wall Street Reform and Consumer Protection Act was signed into law. While this onerous legislation imposed many unnecessary regulations on businesses, it did include one key bipartisan reform that benefitted retailers, small businesses and consumers alike by making a necessary fix to the way debit-card swipe fees are paid.
The so-called Durbin Amendment to Dodd-Frank brought much-needed transparency and competition to a debit card swipe fee market previously dominated by a duopoly of the behemoths, Visa and MasterCard — allowing American consumers to realise more than $US5.8 billion in savings and supporting more than 37,000 jobs in the first year of reform.
Prior to debit-card swipe fee reform, there were virtually no safeguards on the rates banks could charge in fees, cutting into many retailers’ — particularly mum and pop shops’ — bottom lines and forcing them to in turn increase prices on consumers. Swipe fee reform was one of the areas where Dodd-Frank got it right, protecting consumers and merchants from billions of dollars in new fees and levelling the playing field for small businesses that were adversely affected by exorbitant swipe fees, compared to their larger counterparts.
However, a provision of the CHOICE Act, currently under consideration by the U.S. House Committee on Financial Services, will eliminate these protections and drastically drive up costs for small businesses and local retailers — from your local supermarket, to your neighbourhood gas station and your community drugstore. By repealing debit-card swipe reform, costs will be raised on every business that accepts debit cards — Americans’ most preferred method of payment.
This would be extremely detrimental for retailers, many of which operate on razor thin profit margins of only 1% to 3% — whereas giants like Visa and MasterCard operates at margins upward of 40%. Not to mention, this is the type of Wall Street hand out President Trump promised to protect against as he campaigned against Hillary Clinton, whom he labelled as a candidate “owned by Wall Street.”
In fact, 63% of voters who supported President Trump agree that big banks are taking advantage of the retailers that create jobs in our local communities and provide the goods and services that Americans rely on every day. At no place was this more evident than in the excessive debit swipe fees of the late 2000s. Furthermore, 76% believe big banks already got a taxpayer-funded bailout during the financial crisis, while millions of Americans suffered — there’s no need to give them one more.
Congress was sent to Washington to advocate for the forgotten Americans who feel like they have been left behind, and to finally get America back to work. But rolling back swipe fee reform at the behest of America’s biggest banks would hurt the very people they advocated for the most.
Congress should repeal excessive overregulation enacted in Dodd-Frank, while leaving swipe fee reform intact. The CHOICE Act, as it currently stands, is not about loosening regulations on small businesses and cutting bureaucratic red tape alone — it’s a gift to Wall Street that allows big banks to impose even greater fees on Main Street retailers, for the simple purpose of padding their bottom lines. President Trump and Congressional Republicans must stand with America’s small retailers and ensure this critical protection remains in place.
This is an opinion column. The thoughts expressed are those of the author.
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