How Government Intrusion Hurts Small Businesses, Consumers: A Case Study

I don't know if it's really a case study, but it's a catchy title.

I've been noticing a lot more gas stations and other places putting up signs that say things like, "$0.35 charge on all debit/credit card purchases under [a specified amount]." I've also seen, "Cash only for purchases under [again, a specified amount]." I've been wondering what the heck's happening. Well, I got some information that makes it all clear.

Earlier this year, the government passed legislation aimed at "levelizing the playing field" regarding Visa and Mastercard. Basically, the law, which took effect on October 1, 2011, capped the amount of money that Visa and Mastercard are allowed to charge businesses for the use of their product, the credit and debit cards we have all come to know and love. The idea was "to protect" businesses from being gauged by Visa and Mastercard.

Well, Visa and Mastercard responded. These companies had been in the habit of giving discounted rates to small businesses like quick stop gas stations and coffee shops, beauty salons, privately owned restaurants, etc. When Visa and Mastercard could no longer charge the amount to big businesses like Walmart and McDonald's that they had been charging, they needed to make up the lost revenue to maintain their operating costs, so they discontinued the discounts they offered to small businesses. Now every business, whether it's a small coffee shop or McDonald's McCafe, Walmart or the local family owned grocer, have to pay the same percentage on every purchase.

Small businesses are now being forced to pay more to Visa and Mastercard than they were paying prior to this law taking effect. So the small businesses have to adjust in order to make up their lost revenue (the extra money they are now having to pay) to maintain their operating costs. So the small businesses are passing along this cost to the consumer, either by charging a fee or only accepting cash for small purchases.

Consumers don't like this. I don't like it. Why should I have to pay more money to use my money? So consumers are not going to small businesses anymore. They are going to McDonald's for their latte's (which you know is a desperate thing because McDonald's lattes suck). They are going to the big grocery stores when they just need to pick up that gallon of milk. They are going to big businesses, who can afford the loss on the credit or debit card purchase.

This is a perfect example of how government intrusion into the free market actually hurts small businesses and, ultimately, you and me as consumers. We seriously need to think about where our government is going, and who we vote into leadership. I'm becoming more and more libertarian.

I'm also standing more and more firmly with Henry David Thoreau:

"I HEARTILY ACCEPT the motto, — 'That government is best which governs least'; and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which also I believe, — 'That government is best which governs not at all'; and when men are prepared for it, that will be the kind of government which they will have."

The less government intrudes in our lives, the better we will all be.