January 1, Durbin-Marshall Bill: Don’t Give Mega-Stores A Leg Up on Small Businesses

Small businesses have long been the backbone of America’s economy, their hardworking owners dedicated to their craft. However, these small businesses have been in a constant struggle to compete against corporate giants like Walmart and Target. These mega-stores often divert business from local Main Streets to the outskirts of town, a trend that could be exacerbated by a new bill being pushed by Senators Dick Durbin and Roger Marshall.

This proposed legislation, according to Durbin and Marshall, is designed to “boost economic competition” by altering the existing credit card routing system. They argue that these changes will benefit small businesses and save families money. However, numerous studies have contradicted this claim.

“A recent report from the University of Miami revealed the devastating effect this legislation would have on small businesses, as they will bear the brunt of the proposed changes. In the meantime, Durbin and Marshall’s mega-stores allies will reap all the benefits.”

The study indicates that America’s top 100 retailers could gain nearly $3 billion from these changes, with $1.2 billion going to the five largest retailers alone–Walmart, Amazon, Costco, Kroger, and Home Depot.

Furthermore, the report suggests that small businesses could lose their rewards. Small business operators currently receive about $12 billion in credit card rewards when they make purchases on credit.

“Americans would lose out on their rewards as well. Credit rewards programs would become too expensive, threatening the airline points and credit card rewards programs that Americans have grown to rely on. This would make finances even tighter for already struggling Americans.”

A recent Congressional Research Service (CRS) report echoes many of the University of Miami’s findings. It questions the bill’s impact on small businesses and raises concerns about potential increases in consumer data security risks. The Durbin-Marshall credit bill would allow mega-stores to make their own routing decisions, potentially compromising data security and exposing consumer data to malicious actors.

Durbin has a track record of supporting legislation that favors large corporations. The 2010 Durbin Amendment, which required the Federal Reserve to cap interchange for purchases with debit cards, put billions of dollars into the pockets of the largest corporate retailers.

“Rather than using this wealth to help customers as previously promised, a 2014 study by the Federal Reserve Bank of Richmond showed that more than 98 percent of businesses raised prices or kept them the same despite the interchange adjustment. Another study from the University of Chicago estimated that consumers lost roughly $25 billion after the enactment of the policy.”

Despite the overwhelming evidence against it, this bill is still on the table. It’s high time we put an end to Durbin and Marshall’s disastrous bill once and for all.

Why It Matters (op-ed)

The Durbin-Marshall credit bill is a wolf in sheep’s clothing, masquerading as a boon for small businesses while actually serving the interests of mega-store behemoths. The University of Miami and CRS reports have debunked the bill’s supposed benefits, revealing its true nature.

Small businesses losing $12 billion in credit card rewards, coupled with consumers losing their beloved rewards programs, spells disaster for Main Street America. The potential data security risks only add insult to injury, exposing innocent consumers to malicious actors.

Durbin’s track record speaks for itself, with the 2010 Durbin Amendment failing to deliver on its promises. We must stand against this disingenuous legislation and protect the backbone of our economy—small businesses.

As our loyal readers, we encourage you to share your thoughts and opinions on this issue. Let your voice be heard and join the discussion below.

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