Harmful Credit Legislation Targets Main Street

The following content is sponsored by the Electronic Payments Coalition.

Any time you take a stroll through a beautiful, charming small town Main Street, the bustling mom-and-pop shop storefronts should serve as a reminder of how crucial small businesses are to the U.S. economy.

Unfortunately, Senators Dick Durbin (D-IL) and Roger Marshall (R-KS) are wreaking serious havoc on the financial future of the small business economy and the hardworking Americans who keep it running. Their proposed credit card legislation would restrict card issuers’ ability to fund rewards programs, financially harming American families and benefiting those who don’t need it: corporate mega-stores like Walmart and Kroger.

A recent Electronic Payments Coalition study found that nearly 70 percent of working-class American cardholders utilize rewards cards. While all cardholders prefer “cash-back” rewards, Americans earning less than $60,000 a year utilize them the most, with their usage spiking during peak seasons like back-to-school and the holidays. As families look to offset extra expenses during vulnerable financial periods, they turn to rewards benefits to lower costs. The report also shows that the boost in income from rewards redeemed is three to four times larger for working-class cardholders than for upper-income cardholders. For example, the rewards accumulated by working-class families translates to approximately a 17-cent per gallon discount at the gas pump annually, offering genuine savings for working-class households. If this harmful legislation is passed, these benefits will no longer be possible.

Rewards programs aren’t the only thing at risk for American families. Durbin and Marshall’s proposed credit card bill also stands to harm Main Street. A report from the University of Miami revealed the devastating effect this legislation would have on small businesses, which would bear the brunt of the proposed changes. Meanwhile, Durbin and Marshall’s corporate mega-store allies would reap the benefits. The study states that America’s top 100 retailers could see a benefit of nearly $3 billion, with about 40 percent going to the top five largest retailers alone: Walmart, Amazon, Costco, Kroger, and Home Depot. The report concludes that this would put small businesses at an even greater competitive disadvantage.

In case that’s not bad enough, the report also found that small businesses would likely lose out on their rewards, as small business operators receive roughly $12 billion in credit card rewards when they make purchases on credit themselves.

While the businesses and people who represent the economic backbone of this country would suffer, grocery conglomerates would see nothing but dollar signs. Earlier this year, the Federal Trade Commission (FTC) released a report highlighting how grocery conglomerates exploited their size and purchasing power during the COVID-19 pandemic to inflate prices of essential items. According to the report’s findings, grocery stores such as Kroger, Walmart, and Amazon saw a “substantially higher” increase in profit compared to their previous peak profit in 2015. The FTC stated that the findings “cast doubt on assertions that rising prices at the grocery store are simply moving in lockstep with retailers’ own rising costs.”

If Durbin, Marshall, and their corporate mega-store friends truly care about the well-being of hardworking Americans and small businesses, they’ll put an end to this bill once and for all.