Big-Box Stores Selling Smoke and Mirrors on Interchange

A recent Washington Post op-ed suggests that small businesses should be wary of the promises of big-box retailers. A study conducted by David Merriman and Joseph J. Persky found that a new Wal-Mart in a Chicago neighborhood contributed to the closure of up to 82 nearby independent businesses.

So it certainly seems odd that big-box retailers such as Wal-Mart are teaming up with small businesses to impose government price fixing on debit card interchange. While large retailers claim that government interference will help small businesses compete, their internal communications show other motivations. For example, a recent e-mail from a top official at Sears Holdings lamented efforts to delay debit interchange price fixing because it would mean $1 billion a month in lost revenue for merchants.

As the Merriman/Persky study demonstrates, this additional cash for mega-retailers won’t do small businesses a whole lot of good. What’s good for “big box” isn’t good for “mom and pop.”

Community banks, which are small businesses themselves, aren’t fooled by the claims on behalf of government interference in the debit card marketplace. The plan is simply bad news for community banks, small businesses and consumers, whether they are in Chicago or Main Street communities across the nation.

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