Dan DeBone: Small businesses can’t afford experimental changes to credit and debit cards

The commonwealth of Pennsylvania has a well-earned heritage of economic resiliency and strength. And despite setbacks in recent years, western Pennsylvania is on the path toward recovery.

An important part of that recovery is being driven by our local small businesses. As the president of an organization charged with ensuring our business community and economy remain strong, I am deeply concerned about a policy proposal advancing in the state Legislature that would exempt sales and use taxes from interchange fees.

Interchange fees, often referred to as “swipe fees,” are a necessary and valuable part of commerce. These small fees are paid by merchants to cover the costs associated with processing credit and debit card transactions. They benefit both businesses and consumers as they help fund critical banking services such as fraud protection and transaction security.

Unfortunately, state proposed legislation/policy would exempt sales tax from interchange fees on purchases made by credit and debit cards. This untested change would impose a slew of challenges and complications on consumers and small businesses alike.

Currently, when customers swipe their credit or debit card to make a purchase, they don’t have to think twice about how a business will process the transaction. Under this new proposal, however, goods and services would be subject to interchange fees and sales tax would not, potentially requiring customers to pay sales tax separately or by cash or check. This would result in confusion and inconvenience for Pennsylvanians who are accustomed to the simplicity of a single transaction.

It would also have a detrimental effect on small businesses, who will be forced to reckon with the added complexity of processing a single purchase in two separate transactions. Small business owners may face a scenario in which they are forced to purchase new software technology and dedicate staff time to managing unnecessary, tedious transactions. Instead of focusing on growing their bottom line, small businesses would be consumed with burdensome accounting processes and paperwork.

I’m respectfully requesting that our lawmakers don’t overlook the fact that this policy proposal is entirely experimental at this point, and should be further vetted to understand the effects to our small business communities. No other state has implemented the same policy change. In fact, 29 states have wholeheartedly rejected the proposal, which amounts to a monumental change to the way debit and credit cards work. It could also discourage out-of-state vendors from doing business with Pennsylvanians, and we shouldn’t force our own small business owners to be a test case for changes that will ultimately harm their ability to operate.

All current and future legislation should correlate with pro-business policies that support, not hurt, small businesses as they pursue a path toward economic recovery.

Dan DeBone is president and CEO of the Westmoreland County Chamber of Commerce.