The Small Business Payments Alliance (SBPA) issued a report today featuring new polling data on the importance of credit cards and electronic payments for small business. The report found that an overwhelming majority of small businesses oppose new government mandates on payment networks, are more concerned with inflationary pressures than the cost of processing credit cards and rely on the security offered by leading credit card networks to operate their businesses and serve their customers.
Legislation currently under consideration in Congress – the Durbin-Marshall credit card bill – was introduced last year as the “Credit Card Competition Act” (CCCA). Despite its name, this legislation would circumvent the competitive market with a new government “routing mandate” that would dictate processing networks, without regard to security or quality, the SBPA states. A recent study revealed that the bill would “disproportionately benefit the top five businesses in the U.S.” while “costing small businesses over $1 billion in lost rewards as well as a decline in access to credit.”
SBPA conducted a survey of small business owners and decision makers to find out how they feel about legislation that would impact this system.
“The message from small business owners is loud and clear: no new government mandates that would weaken the modern and secure electronic payments system,” said SBPA Spokesperson Peter Kauffmann in a news release. “The survey shows that small business owners see the Durbin-Marshall credit card bill for what it is – needless government regulation that would benefit corporate mega stores at the expense of small business.”
Small Business Owners Oppose New Government Mandates
According to the survey, most small business decision makers do not support government regulation that imposes new payment networks and they have reservations about the Credit Card Competition Act or other forced adoption of processing networks. When asked how much government regulation there should be on payment processing fees, most (83%) small business decision makers say government regulation should stay the same (48%) or decrease (35%).
Two-thirds (64%) believe that the CCCA would benefit large retailers more than small businesses, with 60% of small business decision makers saying that Congress is pushing through changes to digital transactions without considering the impact on their businesses. Similarly, around two-thirds (64%) say that forced adoption of new/updated processing networks will place an unfair cost burden on business owners, with more than half (57%) expecting to see lower profits if new network processing changes are required.
The Electronic Payments System is Critical for Small Business Growth
According to the survey, digital transactions are widely accepted by small businesses and are attributed to helping them grow and manage the business in a more effective way. When thinking about digital transactions, 88% of small business decision makers say they are somewhat or very important to their business.
Most (88%) mention that customers utilize credit cards or digital payments for at least some (23%) or most (65%) purchases. Around three-quarters (71%) say that accepting credit cards and digital payments has helped their business’s profitability grow. Two-thirds (67%) say that accepting digital payments has made bookkeeping easier.
Small Businesses Think Electronic Payments Systems Are Worth Paying For
The survey states that small business decision makers trust, rely on and value the secure transactions, fraud protections and data privacy of their current payments system. Nearly all (99%) believe that their customers place importance on keeping their payments secure, and 66% say that their current payment processing fees are necessary for digital privacy. Eighty-one percent believe they can trust their current payments system to protect their customer’s data.
Small Businesses More Concerned with Inflation
According to the survey, payment processing fees are not a top business cost for small business decision makers and have a smaller impact on the businesses bottom line than inflation.
Payment processing fees are also not a top cost for small business decision makers, the survey states. Cost of labor (46%), cost of goods sold (34%), inflationary costs (29%) and taxes (29%) are the largest expenses, while only 14% indicated payment processing fees as a top business expense.
More than half (61%) of small business decision makers say that payment processing fees do not have a high impact on their business’s bottom line. Two-thirds (64%) believe that inflation has hurt their bottom line more than payment processing fees.
