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BRONX TIMES REPORTER, N 12 OV. 12-18, 2021
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BY LOURDES ZAPATA
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 Black and Latino community,
we’ve seen worse economic downturn
than the national average. Research
from Small Business Majority earlier
this year discovered that Black and
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
fi nancial proposals that will alter our
credit market and shift $40-$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
Sen. 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 fl at 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
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.
The Bronx is home to approximately
27,000 small businesses with
some of the largest commercial districts
in the city. The South Bronx for
one is home to many minority owned
small businesses with more than
350,000 daily visitors just to the Third
Avenue business district, which is
the Bronx’s oldest shopping district
and busiest outside of Times Square.
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 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 small
business owners in our city who rely
on credit and debit cards as a crucial
part of their business.
During a pandemic that wreaked
havoc on New York’s Black and Latino
small businesses, we absolutely
cannot afford to increase our business
costs just so big corporations can
have another payday. Sens. Schumer
and Gillibrand should say no to these
changes.
Lourdes Zapata is the president
and CEO of SoBro, the South Bronx
Overall Economic Development Corporation.
Closed businesses on East 170 Street.
Photo courtesy Whedco
Increased swipe fees regulations don’t
benefi t N.Y. small business
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