Credit Card Companies vs. Small Business

As President Bush prepares to sign the lobbyist-written Bankruptcy Bill, it should be noted that consumers aren't the only ones who are getting abused by credit card companies and banks. As this new Wall Street Journal story shows, small businesses are also getting the shaft, as the finance industry charges them higher and higher transaction fees when consumers use credit cards to make purchases. As the Journal notes, "merchants swallow the per-transaction interchange fees they fork over when customers pay by plastic because they chalk it up to the price of doing business in a credit-card world" but "now they are incurring increasingly higher fees" as card companies try to maximize profits.

The National Retail Federation estimates that the latest round of interchange fees will raise rates anywhere from 2.7% for a basic Visa card transaction to 9% or more for a transaction made with a corporate card from MasterCard. While "bigger businesses can absorb the fees more easily or pass them along unnoticed by raising prices a few pennies" small businesses can't, and are either forced to raise prices, or swallow more of the cost.

In my earlier "Da Vinci Code" piece for the American Prospect, I touched on how the interests of Big Business is often diametrically opposed to the interests of small mom and pop businesses. This is a perfect example: huge credit card companies and banks are using the government's lax oversight to bleed small mom and pop businesses dry. Will lawmakers sit by and merely pay lipservice to small businesses as they always do? Or will they actually act to stop this abuse? Rep. Bernie Sanders (I-VT) already has a Loan Shark Prevention Act that deals with credit card companies ripping off consumers. A nice piece of companion legislation would be a bill regulating the fees that credit card companies are allowed to charge small businesses.