According to Eater New York, more than 1,000 NYC restaurants have shut their doors for good since March 2020, and the list keeps growing. Every day, more restaurants and other beloved local businesses are forced to close due to the relentless COVID-19 pandemic.
In the Latino community, we’ve seen worse economic downturn than the national average. Research from Small Business Majority earlier this year discovered that Latino small businesses were more likely to temporarily close or consider permanently closing their businesses than their white counterparts. Many were forced to take drastic actions like laying off employees, cutting employee hours, or reducing wages.
It’s clear that Congress needs to focus on helping our small businesses out of this crisis, which is why I was glad to see that President Biden included special aid provisions for minority businesses in the American Rescue Plan. Other included programs like the Paycheck Protection Program and the Restaurant Revitalization Program are the types of progressive policies I hope to see more of.
Yet while some in Washington are doing the work to help us, others have chosen instead to cater to big corporations. In the coming months, massive retailers like Amazon and Walmart are trying to push through harmful financial proposals that will alter our credit market and shift $40 to $50 billion annually from consumers and small businesses to big retailers.
The concept of adding damaging regulations to parts of our electronic payment system is not new. Years ago, these companies were actually successful in pushing through routing mandates and price controls on debit card interchange fees as part of Senator Durbin’s (D-IL) amendment to the Dodd-Frank Wall Street Reform Act. Interchange fees, often referred to as “swipe fees” that retailers pay to process credit and debit transactions, were capped at a flat rate of 22 cents instead of a small proportion of the transaction total.
Congress passed this amendment on the grounds that it would help everyday people and our small businesses, assuming that when retailers saved money on interchange fees they could lower their prices for their customers. Instead, big retailers gained an extra $90 billion in revenue from the Durbin Amendment, while either keeping prices the same or raising them.
Even worse, big retailers may have fared well but small businesses like mine suffered. When banks lost billions of dollars in interchange fees, they took drastic measures to regain their lost funds like charging the full interchange fee cap on every single transaction that retailers processed, no matter how small. For big retailers that sell tons of goods in large quantities, this was great. But for local New York businesses that rely on small transactions, many saw their small-ticket debit fees double or triple from what they paid before Durbin’s amendment.
If we let these giant retailers push their policies onto our credit market too, banks will charge the full interchange fee cap on all our credit transactions and make the small purchases that businesses like mine rely on an expensive cost. It’ll be even worse this time, since our country’s credit market is so much bigger than our debit market. We need to protect the 2 million Latino business owners in our country who rely on credit and debit cards as a crucial part of their business.
During a pandemic that wreaked havoc on New York’s Latino small businesses, we absolutely cannot afford to increase our business costs just so big corporations can have another payday. Senator Schumer and Senator Gillibrand should say no to these changes.
Alfredo Angueira is the Co-Founder of The Hoodspitality Group.