Back to top Jump to featured resources

Featured from Independent Business

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 Sep 7, 2017

With Whole Foods Deal, Amazon’s Empire Grows – Episode 28 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/whole-foods-amazon-episode-28-of-the-building-local-power-podcast/

The latest Building Local Power podcast episode features a discussion between ILSR initiative director Christopher Mitchell and co-director Stacy Mitchell on the Amazon-Whole Foods deal. The conversation features a number of issues, including why Amazon’s growth isn’t that innovative after all due to their market power as a crushing force for consolidation. Much of the conversation is an extension of our Amazon’s Stranglehold report, co-authored by Stacy and ILSR researcher Olivia LaVecchia. Continue reading

Featured Article, Resource filed under Independent Business | Written by Stacy Mitchell | No Comments | Updated on Aug 28, 2017

8 Policy Strategies Cities Can Use to Support Local Businesses

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/8-policy-strategies-cities-can-use-to-support-local-businesses/

Although they play a central role in healthy communities, and are among the best engines that cities have for advancing economic opportunity, independent small businesses are disappearing in many places. This decline isn’t because local businesses aren’t competitive. It’s because misguided public policies and concentrated market power are working against them. Here are 8 ways that cities can level the playing field and ensure that local businesses can thrive. Continue reading

Featured Article, ILSR Press Room filed under Independent Business | Written by Nick Stumo-Langer | No Comments | Updated on Sep 7, 2017

Press Release: Amazon Angles for Subsidies in Search of Second HQ

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/press-release-amazon-subsidies-hq/

In response to Amazon’s announcement that it is seeking a location for a second North American headquarters, Stacy Mitchell, co-director of the Institute for Local Self-Reliance and co-author of Amazon’s Stranglehold, issued the following statement:

“Amazon’s announcement that it’s opening a search for a second North American headquarters is only the latest play in Amazon’s long-time strategy of financing its growth through public subsidies. Over the last decade, as Amazon has mastered this strategy, it’s come to employ site location experts and lobbyists in its efforts to pit local and state governments against each other for the largest subsidy package…. Continue reading

Featured Article, Resource filed under Independent Business | Written by Nick Stumo-Langer | No Comments | Updated on Aug 24, 2017

What Neighborhood Retail Gets Right – Episode 27 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/neighborhood-retail-episode-27-of-the-building-local-power-podcast/

In this week’s Building Local Power podcast episode, ILSR co-director Stacy Mitchell interviewed Gina Schaefer, a Washington D.C.-based founder of several Ace Hardware stores and a board member of the Institute for Local Self-Reliance. The two discuss a number of topics, including how her Logan Circle neighborhood reacted to her first store opening and the… Continue reading