New federal protections for credit card customers go into effect this month. Now a group of small business owners from Tennessee is advocating for similar rules protecting merchants.
Every time you swipe a card to make a purchase, the store pays a percentage to a company that processes the transaction. How much a store pays varies depending on what company they use, or in some cases, what credit card you have.
Josh Hammond is the president of the Tennessee Wine and Spirits Retailers Association. He says credit card processing fees can become as big an expense as rent or health care for a small business like his Memphis store, but he says they’re not optional.
“I could choose not to accept cash or even checks at this point, but I have got to use credit cards. It’s 75 percent of my base. I would lose half my business if I didn’t accept credit cards.”
In addition, Hammond says processing companies often change rates without notice.
“We’ve actually switched credit card processors eight times. Eight times in seventeen years. Now why is it I cannot stay with somebody? It’s because they bait and switch.”
Seven small business owners, including Hammond and two from Nashville, met with members of Tennessee’s Congressional delegation Thursday. They’re asking for limits on the rates paid to processing companies. They also want rules requiring clear documentation of what fees are charged and why.
According to a press release, the entrepreneurs met with Senators Alexander and Corker and Representatives Wamp, Blackburn and Cooper.