Archived: POINT/COUNTERPOINT: SB 933 – Putting Small Business Between the Rock and the Hard Place


That spot between the rock and the hard place is a bad place to be.

In fact, it’s a very tight fit.

And the California Legislature is about to make it a bit tighter.

The Rock

When you visit your local bookstore, restaurant or dry cleaner, you may have noticed the kindly-worded sign letting you know that the business charges a small fee for you to use a debit card. Well, the debit card surcharge imposed by the mom-and-pop store is not there to squeeze you for a little more profit; a small business charges this fee to cover the ever-increasing cost imposed by the big electronic payment networks such as VISA, Mastercard and Interlink, and those mandatory fees may be 2.5 percent of the purchase price or higher.

Meet the Hard Place

Senate Bill 933 by Senator Jenny Oropeza prohibits your favorite local coffee shop from recouping this significant cost by charging a small fee for the use of a debit card.  By prohibiting a small retailer from covering the transaction costs, SB 933 puts the local bookstore or family-owned-and-operated restaurant between a rock of rising transaction fees and the hard place of a ban on covering that cost.

Faced with this ban, small retailers will be forced to take one of several undesirable actions.
—Increase prices on all their goods to pay fees owed to Big Payment Networks. This places small retailers at a competitive disadvantage to large chain retailers who pay far lower debit card fees if at all.

—Absorb the 2.5 percent fee and cut expenses in other areas. This eats into the bottom-line of your local store owner who must now use their limited (if any) profits to cover yet another increased cost.

—Set a minimum price for use of debit cards or refuse to accept debit cards. When fees for credit card transactions were banned years ago, many small retailers reacted by setting a minimum purchase price or refusing to accept credit cards altogether. A ban on debit and credit cards could leave cash as the only option for consumers.


A struggling economy plagued with tight credit, a lack of consumer confidence, and a heavily-regulated environment makes one wonder how bills like SB 933 find the light of day. What’s worse is that SB 933 favors the big payment companies who can charge massive fees. Oh, and that fee can be increased with little notice to the small business.
So, let us take count of the winners and losers:

—Winners: Big National Payment Companies, Trial Lawyers (after all, to them, what’s a law without a lawsuit?)

—Losers: Consumer Choice, Small Business
Nickel-and-diming small businesses with bills like SB 933 just grinds them into the ground and makes a horrible small business climate tragically worse for the owner and customer alike. It’s time for the legislature to stop adding burdens to California’s job creators and start making it easier to grow and expand their businesses and get Main Street and our economy moving again.

John Kabateck is the Executive Director of National Federation of Independent Business/California. For more information, visit

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