As the president of Houston Jewelry, a fifth-generation family business that has served Texans since the 1850s, I've seen plenty of proposals that were ill-fated from the start. If Texas legislators follow Illinois’ lead by saying "I do" to a proposal to radically change the way credit cards are processed in Texas, our economy could be in for a real wedding disaster, where big retailers walk away with the gifts and small businesses are left paying the bills.
The issue involves what merchants pay for processing credit cards and ensuring transactions move instantly and securely for stores like mine and our customers who use credit or debit cards. I personally prefer dealing with credit cards because handling cash and checks is less convenient, significantly less secure and ultimately more expensive for small business owners. Unfortunately, the largest corporate mega-stores are banding together to chip away at a successful model to save themselves big money, disregarding the impact on small businesses like mine and the customers who trust us to process their payments securely.
These corporate mega-stores want the legislature to carve out a portion of your transactions from the overall card processing costs. The Walmart’s, Targets and Amazons of the world wouldn’t mind the administrative nightmare this would cause, but small businesses certainly would. Worse yet, for this to work, stores would have to share details about your purchases, jeopardizing your purchase privacy.
Large retailers are pushing this idea because they could save tens of millions of dollars, according to recent research. Small businesses like mine, on the other hand, would save about $21 per month. That minimal “savings” to me would come at the cost of implementing an entirely new payment processing system that doesn't currently exist.
The current electronic payment system works efficiently because it's standardized and secure. Every transaction processes instantly through established networks that protect both small businesses and consumers. The system handles fraud prevention, improves customer service, and applies increasingly necessary security measures.
As a small business owner operating on thin margins, I'm grateful for instant fraud protection that flags suspicious charges without my employees getting involved. I also appreciate how much credit card chips and debit card pins are helping to deter fraud in my store. This security allows us to focus on serving customers and maintaining trust built over generations.
Claims about "hidden junk fees" don't hold up – there's nothing hidden or junk about card processing costs. They're a transparent cost of doing business that funds the system making secure electronic payments possible. My business couldn't absorb the cost of fraud these systems prevent.
The federal courts recently blocked a similar law in Illinois. The Office of the Comptroller of the Currency called their law "ill-conceived," "largely unworkable," and "bad policy" that would create a "fractured payment system" and lead to "higher fees, reduced services, and weakened fraud protection." Chicago-style mandates are something we should NOT import to Texas.
Modern payment solutions have helped us stay in business by handling processing simply and securely. Texas has always supported small business growth and innovation. Should some version of this ill-considered legislation earn the Governor's signature, the consequences would be hugely destructive for small businesses.
Let's not fix what isn't broken. Let's say "I don't" to any proposal that threatens the convenience and security of our business processes.
Rex Solomon is the president of Houston Jewelry, a fifth-generation family business that has served Texans since the 1850s.
