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Featured Article filed under Independent Business | Written by Olivia LaVecchia | No Comments | Updated on Aug 14, 2017

Visa Wants to Rule How We Pay for Purchases. But Its Market Power Has a High Cost.

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/visa-wants-to-rule-how-we-pay-for-purchases-but-its-market-power-has-a-high-cost/

In July, Visa announced a new initiative. It would offer a select number of restaurants and food vendors as much as $10,000 each to upgrade their payment technology. There was one catch: The businesses had to agree to stop accepting cash.

The initiative was the “opening salvo,” as one Visa executive put it, in the credit card company’s plan to increase its market power by eliminating cash. “We’re focused on putting cash out of business,” Visa CEO Al Kelly told the company’s investors.

There’s a clear incentive for Visa to take on cash. That’s in part because the company has already conquered the market for credit cards. In 2016, 59 percent of credit and debit card purchases in the U.S. were made with a Visa card. Another 25 percent of purchases were made with a Mastercard, meaning that just two card networks now have a near lock on the market.

For the businesses on the receiving end of this push, though, a cashless future could be quite costly. That’s because of one of the other incentives Visa has for getting rid of cash. Every time a customer pays for a transaction with Visa, Visa gets a cut, along with the bank that issues the card, in what are known as swipe fees. Visa and the banks decide what that cut is. It averages about 2 percent [PDF] of the purchase amount. In other words, on a $100 purchase, that’s $2 that gets eaten up in swipe fees that would otherwise go to the business. Smaller businesses, which have no leverage to negotiate, often pay even more; in our survey of more than 3,000 independent business owners, retailers reported a median of 3 percent of their total revenue spent on swipe fees.

For many businesses, especially retailers and restaurants, swipe fees’ cut of their revenue is often more than their entire profit margin. As one business owner, the head of a fourth-generation supermarket in the Cleveland area, explains it, “Swipe fees have ballooned into my second-largest operating cost after labor… my profit margins don’t go much above a single percent.” Another business owner, who employs 400 people at eight gas station and convenience store locations in Minnesota, echoes the experience: “As with almost every other convenience store, the banks take more in swipe fees than I earn in profits.” Continue reading

Featured Article, Resource filed under Independent Business | Written by Nick Stumo-Langer | No Comments | Updated on Jun 29, 2017

How Big Businesses Get Big Subsidies – Episode 23 of the Building Local Power Podcast

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/big-businesses-big-subsidies-episode-23-of-the-building-local-power-podcast/

In the latest episode of Building Local Power, guest host Stacy Mitchell, ILSR’s co-director,  interviews Greg LeRoy, Executive Director of Good Jobs First. Good Jobs First promotes corporate and governmental accountability and smart economic development by shining a light on subsidies that local governments give to big corporations. The two discuss Good Jobs First’s research into… Continue reading

Photo: President Franklin D. Roosevelt.
Featured Article, ILSR Press Room filed under Independent Business | Written by Stacy Mitchell | No Comments | Updated on Jun 20, 2017

The Rise and Fall of the Word ‘Monopoly’ in American Life

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/the-rise-and-fall-of-the-word-monopoly-in-american-life/

If “monopoly” sounds like a word from another era, that’s because, until recently, it was. The term was reliably used through the middle of the 20th century in newspaper headlines and State of the Union addresses alike, but starting in the 1970s, it began to retreat from public consciousness. The story of why carries lessons for how an economic policy’s effectiveness can be its own undoing — and about how people are thinking about corporate power today. Because monopoly is back.

In this piece for The Atlantic, ILSR’s Stacy Mitchell looks at the history of the anti-monopoly movement in the U.S., and how today, as economic concentration soars, monopoly could again be just the word we need. Continue reading

Photo: Amazon.
Featured Article, ILSR Press Room filed under Independent Business | Written by Stacy Mitchell | No Comments | Updated on Jun 25, 2017

Amazon Is Trying to Control the Underlying Infrastructure of Our Economy

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/amazon-is-trying-to-control-the-underlying-infrastructure-of-our-economy/

In this op-ed for Motherboard, we look at how Amazon is trying to control the underlying infrastructure of our economy. We also examine how buying Whole Foods would expand Amazon’s control of commerce — and why regulators should block it. Continue reading

Monopoly Report: Cover Image
Featured Article filed under Independent Business | Written by Nick Stumo-Langer | No Comments | Updated on Jun 12, 2017

ILSR Report on “Monopoly Power and the Decline Small Business” Receives Award for Antitrust Scholarship

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/ilsr-report-on-monopoly-power-and-the-decline-small-business-receives-award-for-antitrust-scholarship/

A report published by ILSR is recognized as “Best Antitrust and Small Business Article” as part of the annual Jerry S. Cohen Award for Antitrust Scholarship. Continue reading