Maine Small Businesses Take On the Credit Card Industry

Members of the Maine Small Business Coalition (MSBC) have made their voices heard this year, both in the Maine Legislature and on several national issues and have experienced increasing success in countering the agenda of groups like the National Federation of Independent Businesses and the Chambers of Commerce.

Coalition members took action almost immediately after Governor LePage’s appointment with the collection of 700 postcards to Governor LePage and Attorney General Schneider from small business owners opposed to the State joining the Florida-based lawsuit against the federal Affordable Care Act. During the legislative session, hundreds of MSBC members weighed in on issues like the Informed Growth Act, the state budget, toxics in consumer products and the slew of environmental and regulatory rollbacks that were part of the original LD1 legislation. The Governor’s health insurance rate hike bill (LD1333) drew perhaps the most interest of the coalition’s members; 1,400 small business owners signed a letter of opposition to this legislation, expressing concern about its harmful effects on Maine’s small business community.

MSBC members also weighed in on several national issues, including an issue that affects thousands of Maine business owners (and amounts to billions in profits for Wall Street)—debit card swipe fees.

Every day, businesses that rely on frequent transactions incur charges, known as debit swipe fees, charged by the consumer’s card-issuing financial institution. For example, every time you purchase a pack of gum ($0.30) at a convenience store with your debit card, the big banks charge the business ($0.44) for the transaction.

For some businesses, these interchange fees have grown to the point that they rival other operating costs and mean the difference between turning a profit and going in the red. This is despite the fact that the cost to banks and card companies of processing debit transactions is minimal, and only a fraction of the fees they charge.

There is no such thing as fair competition in this market: the card companies have a duopoly. Limiting these fees would free small businesses from disproportionate and burdensome costs, and help Maine’s business owners to do more to support job creation and economic growth, especially in this time of stubbornly high unemployment.

Debit swipe fees have been rising for the past 10 years. A major cash-cow, swipe fees now amount to $16 billion businesses fork over to the card companies and Wall Street banks every year. Maine small businesses can't be the economic driver they should be with Wall Street siphoning off their profits.

While these enormous fees were on track to be limited thanks to last year’s passage of financial reform, the Restoring American Financial Stability Act of 2010, the banking industry’s army of lobbyists worked tirelessly to undermine the new limits and see this aspect of financial reform die a quiet death.

The Maine Small Business Coalition, along with its national partner, the Main Street Alliance and other state affiliates, set to work organizing member businesses to voice their opposition to delaying action on swipe fees. In Maine, nearly 120 business owners signed a letter urging Senators Olympia Snowe and Susan Collins to oppose delay of the new debit fee rules. MSBC staff and members worked directly with Congressional staffers to keep the pressure on Maine’s two senators, painting a clear Main Street vs. Wall Street picture on this issue.

On June 8, 2011, Senators Snowe & Collins voted with the majority in the Senate to cap debit swipe fees at “reasonable and proportional” rates, putting an end to overly burdensome fees on transactions that line the pockets of Wall Street bankers to the tune of $16 billion every year.

This reform came in large part due to MSBC members’ collective advocacy. Starting in mid-July, debit swipe fees will be dramatically reduced from $0.44 to an average of $0.12 per transaction. For Maine businesses, especially those that rely on frequent debit transactions, this is advocacy that literally pays off.

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