Viewpoint: Protect Montana’s small businesses

As someone who’s worked in the Montana tourism industry for decades – from spending nearly 25 years at Big Sky Resort to serving as director of the Montana Department of Commerce from 2013-2016 – I know just how important small businesses are to our tourism economy.

Now I run M2O Group and help local businesses and community organizations thrive in our great state. I’ve made it my mission to support Montana’s small businesses and assist them in job creation, which is why I can’t in good conscience sit idly by as massive corporations like Target and Walmart threaten to harm them.

Currently, big box stores are lobbying for proposals in Congress that will bolster their bottom line at the expense of small businesses. More than ten years ago, a hurried Congress passed the Durbin Amendment as part of the Dodd-Frank Act. The amendment imposed routing mandates to give merchants more choice in how they process debit card payments and placed a 22-cent cap on debit card interchange fees, or “swipe fees.”

Senator Tester was one of the loudest voices rightfully urging caution on the Senate floor, even introducing the Debit Interchange Fee Study Act of 2011 which would have given Congress some much needed clarity on potential negative impacts. The goal of the Durbin Amendment was to lower debit card processing costs for merchants so they could lower costs for consumers, but we know now that this was wishful thinking. Big box stores did in fact save $90 billion after the Durbin Amendment dramatically cut their debit processing costs. Yet studies
show that this had almost no impact on their pricing.

Small businesses did not fare so well. When banks saw this dramatic drop in interchange fee revenue, they tried everything they could to make up for this loss, like charging the full interchange fee cap for every single debit transaction processed. This helped big box stores who sell large quantities of goods and couldn’t be charged more than 22-cents per transaction but hurt small businesses who rely mainly on small purchases. Some small businesses saw interchange fees double or triple from what they had previously paid, forcing them to add purchase minimums or extra fees for customers using a debit card.

Big box stores are now lobbying to extend the Durbin Amendment to our much larger credit card market. If they succeed, banks will again try to shift their losses and perhaps just like debit cards they’ll charge the full fee cap for all credit card purchases, forcing small businesses to choose between absorbing these extra costs or disincentivizing consumers from using credit by adding new fees and purchase minimums.

Studies show that consumers spend up to 83% more when using a credit card instead of cash, meaning small businesses could also lose out on that extra spending. All in all, this will transfer an estimated $40 to $50 billion per year from consumers and small businesses to big box stores.

Montanans know exactly how important our local businesses are. They serve the unique needs of our rural towns, keep our tourism industry booming, and give back to our communities. We should say no to any policies