By Fred Hormell
Running a small business means paying attention to every detail that keeps customers confident in the buying process. I manage an e-commerce platform specializing in antiques and collectibles—items that often carry significant value and history. When customers make a purchase, they expect the payment process to be secure, reliable, and seamless.
That’s why a proposal now being debated in Congress raises serious concerns for businesses like mine.
The Credit Card Competition Act, sometimes referred to as the Durbin-Marshall bill, is being promoted as a way to increase competition in the credit card marketplace. In reality, the legislation would impose a government routing mandate that requires banks to allow credit card transactions to be processed over multiple payment networks chosen under regulatory rules.
For small businesses, that’s not competition—it’s a government directive that could disrupt a payment system we depend on every day.
The businesses most likely to benefit from this proposal are the largest retailers in the country. Chains such as Costco, Home Depot, and Best Buy process enormous volumes of transactions and already have the leverage to negotiate favorable terms with payment networks.
If this bill passes, retailers of that scale could route transactions through whichever network offers the lowest cost.
Small businesses don’t operate that way. Most of us rely on bundled payment systems that integrate credit card processing with the software we use to manage sales, inventory, shipping, and customer service. Even if a cheaper network existed, many independent businesses wouldn’t have the infrastructure or negotiating power to take advantage of it. The biggest retailers could capture the savings while small businesses see little benefit.
We’ve seen a similar policy play out before. In 2010, Congress imposed price controls on debit card processing with the promise that it would lower costs for consumers and small businesses. But studies later showed that much of the savings went to large retailers. Meanwhile, consumers faced fewer free checking accounts, higher banking fees, increased minimum balance requirements, and the disappearance of many debit card rewards programs.
There’s also the issue of security. The proposed routing mandate could push transactions onto alternative networks that may not invest in fraud protection and cybersecurity at the same level as existing systems. At a time when cyber threats continue to grow, weakening the safeguards around electronic payments could create new risks for businesses and customers alike.
Other consequences could follow. Credit card rewards programs that many small business owners rely on to offset everyday expenses could disappear if the funding behind them is disrupted. Community banks and credit unions could also face reduced revenue, potentially limiting their ability to provide loans to local businesses and entrepreneurs.
Small businesses are the backbone of communities across America. Whether we operate online platforms, neighborhood stores, or family-owned service companies, we depend on a payment system that is secure, stable, and dependable.
Congress should be careful about changing that system in ways that primarily benefit the largest corporations. Lawmakers should reject the Credit Card Competition Act and focus instead on protecting the payment infrastructure that small businesses rely on every day.
