Op-Ed: For the sake of small businesses, Congress needs to reject the Durbin Amendment

Woman hand showing credit card
Close up of young woman hand holding credit card. Woman extending hand to give credit card to cashier. Close up of a girl paying with blue creditcard.
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There are more than 32 million small businesses in the United States, with more than 2 million in New York State alone. We should appreciate the way these businesses boost our economy, but we also must acknowledge the struggles they face. The Bureau of Labor Statistics reports that more than 20% of small businesses fail in their first year. That number jumps up to almost 50% within their first five years.

Despite the odds, younger generations are still dreaming of the economic possibilities and freedoms that owning your own small business can provide. In 2019, Salesforce discovered that Gen Zers and Millennials are 188% more likely than Baby Boomers to want to create a side business. We need to encourage this entrepreneurial spirit that makes our country great.

Creating an environment where small businesses can thrive means supporting legislation that will foster meaningful growth in this sector of our economy and rejecting policies that hurt them. That’s why I am calling on Congress to put a stop to the resurgence of a decade-old economic policy making its way back to the Senate floor: the Durbin Amendment. 

This 2010 policy added routing mandates to the debit market, forcing banks to add an alternate, unaffiliated payment network to their debit processing system, and placed a cap on debit card interchange fees. Banks lost billions, and we paid the price.

Banks saw immediate revenue losses from both the heavy administrative cost of adding unaffiliated payment networks to their debit processing systems, and the cap on interchange fees. In turn, they simply shifted these losses onto consumers and small businesses. They cut back on free checking, raised fees and increased account minimum balances for consumers. They also started charging the full fee cap for every single debit transaction, essentially penalizing any businesses that primarily handle small purchase amounts. This forced small retailers to go from paying 1% on small debit card transactions to a flat rate of 22 cents—nearly a 1000% increase for some.

On the other hand, big box stores like Walmart and Amazon rejoiced. They now could no longer be charged more than the fee cap to process debit purchases of any size. They choose a network on which to route debit payments, often choosing the cheapest and rarely the most secure. They made off with a $90 billion corporate payout at our expense.

These same huge retailers are now back for more. Despite the terrible effects of the Durbin Amendment on small businesses, big box retailers are now lobbying to get the same routing mandate added to the credit market. We already know how this goes. Banks will lose billions and pass those losses onto small businesses and our customers, putting an estimated $40 to $50 billion in the pockets of big corporations annually.

On behalf of our state’s small businesses, I am urging Congress to reject Durbin Amendment routing mandates for our credit card market.

Lisa Sorin is the president of the New Bronx Chamber of Commerce. 

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