FinTech Fridays | Credit Card Competition Act of 2022 - Walmart & Target Urge Support of Bill | B2B Vault: The Payment Technology Podcast

Yo, what's up everybody? It's Justin live from B2B Vault, the payment technology podcast sponsored by Nationwide Payment Systems with your host Allen Kopelman., and we'll be providing you educational information about small business fintech payment processing and the technology businesses use in today's world. And in today's podcast, it's Fintech Friday. We're going to be talking about the, uh, Durbin 2.0. I can never remember what it's really called. What's the bill called?

The Credit Card Competition Act.

There it is. 2022. Uh, that's a bill in Congress aimed at, uh, breaking up the credit card networks, basically saying that there's not enough competition. American Express, Visa, MasterCard basically have cornered the market and there is a monopoly within their— within, within that group. Uh, so I guess Dick Durbin is saying that there needs to be more options when it comes to these credit card networks.. And Allen is very passionate about this. He's very familiar with Dick Durbin because Dick Durbin had tried doing this previously in 2006.

Well, no, no, in 2010 they passed the Durbin Amendment.

In 2010 they passed the Durbin Amendment. But yeah, so, you know, he wants to get into it. He drew up a nice whiteboard. That's why the, you know, the set looks a little different today. But he wanted to explain it so that people can understand exactly what it is that they're trying to do.

So first off, let's talk about— it's been in the news like crazy, like all week.

There's tons—

there's a few posts on LinkedIn discussing it. There's been a bunch of articles, right? And so let's talk about— let's go over the first issue. The first issue is there's 1,600 or 1,700 companies complaining, which is led by Target and Walmart. I mean, I don't know about you, Justin, but do you think Target and Walmart represent the SMB, small and medium business community? No. Okay, so that's—

I mean, there's no way in hell that Target and Walmart represent a small business retail, right?

And then there's this merchant coalition, and they represent grocery stores, convenience stores, and Target and Walmart, because they're part of this whole thing. And I don't think that they represent the average small business in the United States. And now let's talk about competition. Okay, so competition does exist. You don't have to process on the Visa MasterCard network. You are— you do, but you don't have to do it like with a regular merchant account. You can use these companies that have been around for years: PayPal, Square, Stripe, Toast, which does, you know, it's mostly for restaurants, Shopify for e-commerce. And there's a whole bunch of these companies. These companies are all called PayPax because they basically offer, you know, set pricing. So you pay a set price and you're not really dealing with interchange, but you pay set price. There's no monthly fees, you're not dealing with interchange dues, assessments, and all that like you are if you have a regular everyday merchant account, right? So you just pay a flat fee. But let's talk about how many these companies— the people— I don't see the companies using these services complaining. So let's talk about how many people are using these services. PayPal, that was just— these numbers came from, you know, just going on Google and say how many people. But I'm actually working with somebody to get like real, like the actual, you know, actual numbers. Now I think the number for PayPal is probably a little low. 500,000 websites are processing with PayPal.

Yeah, you say that's low.

Yeah, it's probably in the millions. Right? Okay, Stripe deals with 3.1 million businesses.

I believe that.

Okay, that's a lot of businesses. 3.1, that's a lot more than 1,600, right? And they're paying way more money for credit card processing than what these guys are complaining about. Yeah, Stripe's getting—

you're getting pillaged.

Yeah, Stripe is way more expensive than a regular merchant account. Okay, but it's— you're playing— you're paying for the simplicity of what they provide. The same with all of these. Yes, they all provide some level of simplicity, and that's why people use those— you use these services. Square, 64 million businesses. Okay, they're not complaining, right? Shopify, over 4 million websites. Have been built on Shopify, and Shopify charges an arm and a leg for credit card processing. Okay, and then one of the newer players into this market is Toast, which supplies point-of-sale systems to restaurants. So you pay them a monthly fee plus 2.79%, I think it is, for credit card processing, which is way higher than what they're— Durbin is complaining about this, like 2%. He's complaining about 2% too high. All these businesses— a million plus PayPal users, 3.1 million Stripe users, 64 million Square users, 4 million Shopify users, 62,000 Toast customers— they're not complaining, right? Because they're, they're using tech. It's— those companies are more about the technology, right? And the credit card processing is the, you know, is just part of the whole thing. So this whole thing doesn't make sense. So then let's dive into a couple of articles before I get into the rest of the— into the rest of the whiteboard.

I told you he's passionate.

Yeah, but I wrote here, 1,600 companies versus millions of small businesses, small to medium business owners. There's more small to medium businesses than there are Target and Walmart and convenience stores. Okay, now convenience stores, they should have a beef with Durbin because Durbin screwed them over with Durbin 1.0. But let's just talk about—

here, I, I, out of these 1,600 companies, right, I'm curious as to how many of those fall under the umbrella of the corporation that Target and Walmart owns.

Yeah, let's— yeah, who knows, maybe they're connected.

800 each, like 800 of the companies that Target is a part that owns or is affiliated with they had to sign this dispute paper. And just like Walmart, I'm—

I, yeah, it would be interesting to see the actual list because, yeah, I've had it.

I showed a list.

I have Googled it. We couldn't find it, the list. So here I was telling Justin, I find this article that came out August 2nd, which was—

it's just a couple months ago.

A couple months ago.

And, uh, 2 months ago, baby.

Almost 2 months ago, right? And this is exactly the same thing that I've been talking about. From, uh, Mercator, right? And the article was written by Brian Riley. I don't know Brian. One of my friends used to work at Mercator, Don Apgar. Shout out to Don Apgar. And, um, so he wrote in his article that basically, you know, Durbin did this and it played out for his reelection campaign. So, you know, this is his, his way, you know, going after. So He said, so Durbin Amendment mandated regulation aimed at reducing debit card interchange and fees and increasing competition. It didn't increase competition because it created a whole nother thing. So what it created— what did it create? So create two— a few things happened. Number one, it wiped out small ticket interchange.

What is small ticket interchange?

So small ticket interchange was for merchants who processed under $13 average transaction, meaning an item in your store. No, no, not an item. That when you come up to the register, you're a total—

I mean, you're total out of all the stuff that you bought is $13 or less, right?

So in a convenience store, I mean, besides the gas, right? So you go in, you grab a soda, a bag of chips, maybe a sandwich.

I mean, if you need a thing of motor oil, I guess that's why your price would be over than $13. But I mean, yeah.

Majority of these convenience stores, their average ticket's like $8.

Okay, because down in Florida is probably $20 because they sell beer.

Well, depend— no, but I'm talking about overall, because you have some stuff that's going to be a little higher, right? Someone comes and grabs two cases.

No, I get it. Yeah, yeah.

But then you're gonna have people that buy a soda and a pack of Jumps and a pack of cigarettes, right? And their bill is going to be $6, $7, and that's it, and then they're out the door. So That's where you get the average ticket of like $7 or $8.

Yeah, I go to the gas station. If I get with my kids, I got a lot of kids. So my average transaction at a gas station was like $25 when I took my kids.

That's dangerous.

Yeah. So we went to the bodegas. The bodegas always show love.

But the whole thing is, is I wrote an article in the Green Sheet kind of explaining this. So the that at the, the, the small ticket merchants, they saw their credit card fees go through the roof to 6-7%, you know, 6-7% when you add it to small businesses. Yeah, small businesses with the smaller tickets like coffee shops, they saw their credit card processing fees go up 400%. Meanwhile, places like Walmart and Target saw their credit card processing fees go down.

Why would their go down though?

Because at a higher ticket, let's say like $100, So like on a $100 ticket, they were paying 0.05 and the 22 cents of interchange. So let's just say they were paying like 24 cents on a, on a $100 ticket. Meanwhile, your bodega is paying 24 cents on a bus on— yeah, plus on an $8 ticket, right? So they're losing— they're, they're paying an insane— ridiculous, right? Insane fee. Like Why they took that small ticket away is beyond me. I've argued that for years, uh, Visa and MasterCard should put the small ticket back, right? So, and also all these businesses— there was a website, it's not up anymore because I went and looked, it was called, uh, I Didn't Get My Debit Discount, because all these businesses promised that, oh, if Durbin puts this thing in, we're going to lower prices. 7-Eleven, Walmart, a whole bunch of them said, oh, we're going to lower prices because now we're going to pay less money, right? But that was all a lie. So the hogwash— so it didn't happen. And it says objective of the legislation was to lower merchant costs and pass along savings to consumers, and then basically reduced consumer costs did not materialize.. And they have a report from the University of Chicago, you know, that just talks about how when the government tries to put price controls in, the price controls in, it doesn't work. And they, and they talk about Australia, how the regulation of interchange fees in Australia went awry. And it went awry because it noted that consumer prices did not reflect the benefits of the decreased interchange in Australia. So it didn't work what they did in Australia, and they did in other countries— Europe— didn't work. Even though they lowered the interchange, it didn't work. And then the other result of, of Durbin, the 1.0, first Durbin, was debit cards used to have rewards, which we talked about, right? Used to get cash back on your debit card and all that. All gone. So Durbin 2.0 is going to do exactly the same thing. You're not going to see any savings. Merchants aren't going to pass it on. Costs aren't going to really go down except for the big boys, right? The rest of us.

Yeah, but what's— what cost? Not the consumer cost.

No, not the consumer cost. I'm saying their, their overhead is going to be less. Yeah, their overhead is going to be less. And also, most merchants, all these merchants, all the SMB merchants, they're all going to be big losers. Because they're going to not be able to save that kind of money. And I'm going to explain this when I go over the chart over here. And also, the banks are going to take a huge hit because—

I was asking just about that earlier.

Yeah, the banks are going to take a huge hit because they're going to lose money.

Here in an article, why would they lose money?

Because they would collect less interchange. Here's a, here's a quote here in another article: JP Morgan, the plan to kill credit cards split the bank. And Jamie Dimon, the head of the Chase— JP Morgan Chase, right? And this is from September 23rd, just a few days ago. And so they talk about pay— to launch this pay-by-bank product, right? And they're like, oh, everybody wants this pay-by-bank product, you know. But you have Zelle, you have Cash App, you have all kinds of little, uh, apps out there that can do— like, even PayPal, you can sort of just pay with PayPal, you know.

It used to be able to do it, right?

You can't, right? But it's—

I'm saying there's PayPal made it so that you can't send— it's really difficult to send friends and family money without them accruing a fee or you paying a fee, right? So, so Zelle is like peer-to-peer, there's no fee. Uh, what is another one?

Venmo, but they added a thing where you get a fee. Yeah, you get a fee on Venmo.

You don't get your money right away with Venmo, right? You gotta wait 2 to 3 days, right? I don't like— I've never used Venmo. I've never liked that.

No, I don't like Venmo. So the whole thing is, is that you have, you know, they, they, uh, they, they got, you know, Chase was like, why were we gonna do this? We're gonna lose $15 billion, $5 billion in card revenue.

A year.

They would lose that if that switch—

so everybody's like, how would Chase even allow— I mean, you gotta— if, if I was the, like, oh no, they don't agree with Chase, I'd be dumping tons of money in the, the campaign that's like trying to end this, you know what I mean?

Right. Well, they're not happy with the whole thing, you know. They're, they're not happy. They even talk about the, the spent— the bank spent a great deal of time working on this pay-by-bank thing Um, you know, then they talk about consumer credit card fees.

So it's pay by bank, meaning that you walk into a store, you say, hey, I got Chase, I want to use—

yeah, you want to pay by bank, like just transfer the money from your bank account. Uh, and you can sort of do that with a debit card, and the interchange is very low.

To ask what's the difference between—

I mean, they want to cut out Visa and MasterCard. That's the whole thing.

But it's a Visa card that you get, right?

But I'm talking about, that's what this is all about.

It doesn't make any sense how to cut, how to cut them out, right? It doesn't make any sense.

And And they talk about, like, I read another article and they said, oh, well, the alternate network could be Discover or American Express. Well, they got rid of their networks a few years ago because Discover wasn't getting any market penetration, right? Meaning, like, they weren't getting a lot of, you know, because you had it when you process Discover at your business years ago, not in the recent time, but years ago, 10 years ago. You would get a separate deposit from Discover because the transaction would go to Discover and then Discover would send the merchant the money. They would get a separate deposit. Same thing with American Express. But both of them wanted to get more business, right? So Discover partnered with MasterCard, and then now they ride on the MasterCard network. So they don't have a network.

And American Express did the same thing.

Yep, American Express did the same thing.

I was reading about American Express, the, uh, uh, one of the only, um, accounts for like, uh, overseas.

Yeah, they have—

oh, they're in the UK, in the UK specifically. Like, yeah, I was just reading about American Express. If you have a— if you're like going to— if you're an expat going to, you know, retire somewhere in the UK, they say to apply for American Express credit card because the fees are so much better than getting a credit card from a, you know, from the UK.

Okay, well, you know, a lot of cards like that, like Carte Blanche, Diners Club, that are used in other countries, and all those cards UnionPay from China partnered with, um, partnered with, um, Discover. So Discover has hundreds of cards underneath its network and all rides into MasterCard. Card, you know, and then all the money comes from the one place. So merchants just get one deposit for Visa, MasterCard, debit, Discover, and everything.

Has there been any statements from any of the credit card companies?

Not really. I haven't seen anything like Visa say anything. I mean, I'm sure I'm going to explain why Visa is not doing anything. So this is why.

So in 2006, real quick, right before you get into that, okay, We want to say thank you to all of the sponsors, Nationwide Payment Systems, MPS Printer. Thank you. If you need some printing, hit up MPSPrinter.com, they'll take care of you. Check out B2B Vault on YouTube, follow and subscribe to the channel, please. We need more subscribers. Head over to B2BVault.info if you're looking to get in touch with Allen or myself. There's a form towards the bottom of the page for you to fill out if you have any questions, concerns, comments, anything, you know, let us know how you're feeling. Let us know how you're doing.

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So if you're listening to the podcast on the pod, like Spotify or something, you know, and you want to see like the whiteboard, just go over to YouTube or LinkedIn and catch the whiteboard presentation. So 2000— this is where Durbin is going to get himself in trouble. Okay, and I'm sure Visa is just waiting for Durbin to try to get this passed, because in 2006 Visa had a lawsuit with First Data, which was antitrust, and the court ruled in the favor of Visa.

That was Visa versus First Data, which is now Fiserv, which is now Fiserv.

And in the result of that, the court ruled there was an antitrust violation within because First Data wanted to bypass the Visa network, and they said, well, you can't process a Visa card and bypass their network because otherwise you wouldn't have a card to begin with. Exactly.

That has been what I've been saying since this— since this all came out.

But I'm just trying— this is what I— this is what I don't think Dick Durbin understands, because if he saw this lawsuit, he would say, oh, what I'm trying to do is not really working. It's not going to work.

I just want to get this a little closer for this, right?

He's going to say it's not work. So what First Data wanted to do was, let's just say this was the credit card machine and you put— you would process the credit card. They wanted to have this First Data on-us process where the card would get authorized. Now this on-us was all the, the banks First Data has an enormous amount of banks in their partnership. Hundreds and hundreds of banks partner with First Data for card issuing. Okay, so let's just say you were us, uh, I could come into your business and I could say, Justin, hey, I'm with First Data. So, and, uh, you know, listen, every time you take a card that's from one of the banks that we, that we're partnered with, you're going to get a special lower interchange fee because it's going to be on us and we cut out Visa and MasterCard. But if you take one of the— a bank like is not on the list, then it would go through the regular processor. You save a bunch of money, Justin. You're going to want to do that.

I'm going to sign up, right?

But that's antitrust because that's going to create unfair competition in the market, right? It's going to create unfair competition. Now I still go back to competition. There is a ton of competition out there for for Visa and MasterCard choices for merchants. There is a ton, okay? Millions of businesses are using this. Why are we kowtowing to these 1,600 companies over here, right, who are basically trying— you know, they're— you know, when you look at this, Congress is anti-small and medium-sized businesses. Small and medium-sized businesses— a small to medium-sized business is up to $5 million a month. Okay, even maybe even bigger than that, right? Yeah, because, you know, it's— they're not like— even like a company that does like $20 million a month, they're not the size of even one Target store, right? So they're a small business, and these people, the Congress is trying to screw small businesses. What would be better, right? So what would be better is innovation. Promote innovation. They have that Innovation Council, but they always say that innovation is outpacing, outpacing, you know, innovation, innovation is outpacing regulation. Innovation will take care of this. There's a ton of alternative payment companies. We saw stuff. We saw stuff at the ATM show where you could get an app and move money around. It's going to come. There's going to be— there's going to become other payment methods. Right? It's gonna happen. It's gonna happen. But they— but Durbin doesn't need to make— he does— he's going to try to make it happen. But this, his whole thing, I'm sure Visa's waiting, and then they're just going to go, hey, you're trying to do the same thing as what was doing— going out, going on over here, right? So then let's explain a little better. So that you go to the store and you put in your credit card to the machine, it calls the processor. You know, there's a bunch of them— T-Systems, Fiserv, which used to be First Data, Elavon— there's a bunch. They connect, they connect out to your bank where the card was issued, and it sends back a message to the machine. And then, you know, Visa, MasterCard, Discover, Amex, or the debit network, you know, sees what cards were processed so they can charge the correct amount of energy.

If you had money a comment up there.

I don't know who's commenting. Yeah, they see how much money was processed so they can get their fees, right? And Visa and MasterCard created, right, they created the card network. They created the network for the— that so the banks could issue a credit card, right? Issue the credit card, and then the network exists, and then all the people out there selling got all these machines down on the, on the shelves at all the merchants, right? This didn't— the government didn't put it out there. The government didn't create this. Visa and MasterCard created the network, and their part, they created the ecosystem that exists. So, you know, Justin was like, well, why would they want to bypass it? Well, they want to bypass it because they want to stop paying Visa and MasterCard their fees. So I was saying, like, here, Target, some store like Target or Walmart, right? They don't process like this. The way they process is their equipment that's sitting on the counters hooked up to a computer, which is run by a point-of-sale, um, system. So they send it to the server, and they could have the server route to whatever— I call this one the Durbin Fantasy Network because he never talks about what that is. He's just saying like, oh, well, somebody else could put up another network that would be lower cost. Why do we need to do that? Why not just promote alternative payment methods to come out and let the alternative payment methods grow through natural growth of things? The same thing with like electric car. They should just— like electric cars, they should just say, hey, everybody start making electric cars. Eventually someone's going to put out electric car gas stations., right? Or some electric car company is going to figure out some faster way to charge these batteries, or some other type of alternative energy like hydrogen, and let the market, right, the market take its, take its turn. Credit card processing— so I'm going to go back a long ways when I talk about credit card processing. So I remember I was a little boy, I would go to my dad's store, and he would, uh, you would come in with your credit card, and there was a book and my dad would get out the book, and if the card wasn't in the book, it was good. Then he would make an imprint, he would call the phone number, they would give 6-digit code, he'd write it down, and then when he went to the bank with his cash, he took it in there, and then they gave my dad the money. And it was really expensive. But I remember in 1998 getting started in this business. I started this company 2001, and I would say probably up until like 2005 There was a lot of businesses I would walk into that had no credit card, right? None didn't have a credit card machine. They took cash and checks. So credit card— if credit cards weren't so good, people wouldn't use them. The American consumer loves credit cards. They love credit cards. Why? Because of the rewards. They're getting cash back. So when Durbin did Durbin 1.0, the article says he destroyed the debit rewards. So debit rewards went poof, bye-bye. You know, the healthy market— Dale is making a comment. She's saying, you know, a democracy is supposed to work by fostering healthy market competition. There is competition. I'm explaining it to you. Millions of businesses are not complaining. Got 1,600 companies. What is 1,600 companies compared to the whole United States of America businesses? Nothing. These 1,600 companies, what about the 3.1 million people that process with Stripe? They're not complaining about this, right? Because of a good product. This is all—

but Stripe is on what network though?

Their own network. You want to process with Stripe, go. If Target doesn't like their credit card processing, let them go to Stripe. Right. Let them go to PayPal. Let them go to wherever they want. They have a choice. They can process with Bank of America, Chase. They can process with Elavon. They can— they can call Nationwide Payment Systems. We'll get you a good deal, we promise. Yeah, you know, but I'm just saying, you know, that's the way it works. But who's going to benefit from this lower interchange thing? Not the small, medium-sized businesses. They're not going to benefit. Only the big companies are going to benefit because they have this sophisticated enough system to go whatever this— and I don't know what this Durbin Fantasy Network is, right? And who knows, are the banks going to even join that network? And are they going to be allowed? Or is Visa, MasterCard, American Express going to say, no, no, no, you can't go join some other network because that you're, you're violating your agreement with us, hence antitrust? I don't understand. Like, Dick Durbin, come on the show. Let's talk about it. You explain to me how what you want to do is not— I even looked at the— on the— on that merchant whatever it was advisory board thing that they— they had a diagram of what the new thing would look like. They're like, oh, the other network could be American Express or Discover, one of the debit networks. How are the banks gonna— the banks are not gonna go join a network and make less interchange. You think Chase wants to lose What are we talking about? 5 billion— over $5 billion in card revenue. They're not crazy. They're not going to do that. Now, they are worried that there could be some competition coming into the market, right? But that's going to take time, right? Over time, competition will develop.

Maybe competition is good, right?

And then maybe Chase will figure out over time what's a good product. Yeah, you know what, what's going to work. You know what? What's going to work? Or maybe they'll buy one of those companies. Okay, but who's going to lose? Everyone's going to lose. Business owners are going to lose. Small, medium-sized companies, big companies, all going to lose. Consumers, consumers are going to lose the most because then what's going to happen? So with debit— okay, let's talk about this. So with debit—

hold on, let's fix it.

Okay, fix the camera. Okay. So when they took away— when they did all this stuff with the Durbin 1.0, right, and they changed the debit, right, the banks lost a ton of money. So who was the loser? The consumer lost their debit rewards. So what did they do? Switched credit cards. Durbin, what you wanted to do didn't work because you forced it, right? So now people went to a more expensive option to the— for the merchant. No, no, they went to the— I'm saying they just started using a credit card. Oh, that would cost more interchange than the debit card. So what you want— what— when— whenever the government says, oh, we're here to help, they're not helping. Because when they try to force something, right, they try to force something, the, the market reacts. So what happened? Banks reacted. There was no more free checking accounts anymore. Remember checking accounts free, free checking. Yeah, because you were using your debit card and they were making money from it, right? So they didn't need to charge for check. Now you go to the bank, you pay for checking, you pay for checks, right? So what he did created more expense for the consumer. The same thing's going to happen. You take away all the rewards, what's going to happen? There's gonna— the merchants are going to suffer because less people are going to have less money to spend. Interest rates are going to go up.

We're already dealing with inflation at over 8%, and it kept going in August, and they said it was going to stop, and it went—

no, it's keep going. I mean, unemployment is going up. I mean, we talk about all the time, like, innovation, you know, innovation, how important innovation is. Yeah, innovation will take care of interchange, okay? Because eventually someone's going to come out with a product And people's, people's habits will change over time. Right. So cash is cash still in the economy? Yes. Is there less cash than there was 5 years ago, 10 years ago? Yeah, there's less cash.

Why?

Because the people who are using cash, you know, got older. Right. And then the young people want to use other things to pay with credit cards, you know, Apple Pay, Google Pay, convenience. Right. So they're going to use those things, right? They're going to use those kind of products, right? These type of products. And then over time, if there's a good product, then people will use it. But like in other countries, they don't have this unsecured credit that we have here. So their credit is different.

That's something that's for a whole nother podcast.

Yeah, we can do a whole podcast about credit.

But because when they say that, you know, the fees are higher than any other place in the world, I mean, it's because exactly what he said is secured versus unsecured credit. And it's a long— I just learned about it. Very interesting stuff if you're a nerd.

I'm kind of the payments nerd.

Yeah, I mean, it's— I mean, it's just good information to know too, right? Like, I mean, just conversation starter, I guess.

Yeah, it's a conversation starter.

Yeah, you could talk about payment processing in different parts of the world and how much it costs, right?

And then, and a lot of countries, they use— like, we're starting to see it in the U.S., people are trying to develop wallets, right? So in, in, in South American countries, the Asian countries, the— they all have these wallets, right?

Right.

But the wallet's connected to your bank account. Sometimes it's connected to a credit card too, but it's more like it's because it's sort of like you're putting— it's cash in the wallet. So you spend that money, and when you spend— and when you spend that money, guess what? That's it. You're spending money. You're not spending credit, right? It's not a credit. You're not— you don't owe money. Some people, they have— some people are rich enough, they have revolving credit. But like the general public, and doesn't— like here, everybody— my son wanted to get a credit card. I co-signed for him for a car. He pays his car payment, you know, he got a car payment, right? You know, so then he got a credit card in the mail. Oh, which one? You know, and then he's very diligent about, you know, charging up stuff and then paying it like every week or every 2 weeks, paying for his gas and whatever, so he doesn't have to carry around cash with him. And it's good because he's building credit, so they understand like how to build credit., right? So, so that's what's important. We operate much differently here than in other parts of the world, right, with credit.

When it comes to our credit score system, is different than anywhere else in the world, right?

Well, that every— like, everywhere else in the world is based on your ability to pay, and here it's not really based on that.

That's, that's ridiculous.

Yeah. And then some people get it from how much money you owe. Right.

Like in America, literally, if you have no debt and you've never had a credit card, your credit score is going to be crap.

Exactly.

But if you go and you still— let me rephrase— if you pay all your bills on time and you've never had a credit card, blah, blah, blah, you still are going to have poor credit in America. But if you pay all your bills, go get a credit card, be in debt, you'll have a higher credit score. I, I can't tell you how that makes sense. I would love to tell you how more debt you are in— I mean, I do. So the basics of it is the more debt you're in, as long as you're making those payments on time when you're supposed to, then your credit score goes up.

Yeah, I get things all the time. Oh, get more credit cards so you have a bigger credit line and then use your credit. I don't want to use my credit. I mean, I use—

every time I use my credit card, I mean, I use it for purchases.

We use a lot. I mean, we pay— I pay a lot of bills on my credit card so that it's automated. I don't have to deal with mailing a check. And that's what people like in America. Americans love their credit card. They love the credit card system. But if Durbin passes this, you're just going to see the whole negative impact is going to be one, consumers are going to suffer. Why? You're going to pay higher interest rates on your credit cards and you're going to pay higher prices on the products that you buy. Well, that's because there's going to be less customers in the store.

That and the fees are going to— for the— they're not going to make— they're not going to be able to pass those.

I mean, I saw where Afterpay now they were charging— well, first it was for— it was, it was like, I don't remember how much their fee was. I think 3%. Now I heard their fees going up to over 6%. Buy Now Pay Later. Yeah, well, they lost 100 triple-digit—

how is ShopPay able to not charge interest? I'm— I just don't understand it.

I don't get it either. I don't know, maybe they have to have something worked out with the— the merchant's probably paying it. Yeah, well, that's what happens with those services. But I'm just saying, so the— so let's just go over this. Durban We're going to do an overview right now. So Durbin 1.0 was a big loser for everybody. Everyone lost. Businesses lost because most businesses did not get lower fees, especially the SMB market, especially the convenience stores and people with— and coffee shops. Big— they lost big time. Consumers lost because all your debit rewards went away. Right? So what is— why does Durbin think that, oh, this sounds good? His first one didn't work. How's the second one? How's the second one gonna work? It's not gonna work. It's gonna cause interest rates are gonna go up, okay? Because also with Durbin 1.0, we talked about, you know, free bank account gone. Yeah, you know, free checks gone, free stuff at the bank gone. I mean, when's the— I mean, you know, bar— forget COVID, right? But used to go into the bank, they used to give you cookies and water and coffee. That's all— that's gone, dude. That, you know, free toaster.

Unless you got a nice bank and they got one of those like machines where you just press the button. That's the only time I've seen it still there.

Yeah, in a few places, not very many. Maybe like a credit union or something.

PNC Bank.

PNC, they have some coffee in there. That's nice. That's cool. PNC, shout out for coffee.

No, don't shout out PNC, they're part of the issue too.

But the whole thing is, so Durban, we talked about it, so the big box, everything Durban is doing is only helping big box stores like Walmart and Target. I mean, I hate to say, like, even Publix, whoever, Winn-Dixie, anybody with hundreds and hundreds of stores is benefiting from that. But merchants who are—

that's the 1,600 companies. Exactly, the 1,600 companies aren't going to be a business like Allen's or my small web design shop, or yeah, your dry cleaner on the corner, or my wife's cleaning service. Like, it's just ridiculous.

Yeah, it's just not— it's, it's crazy what he wants to do. It doesn't make any sense. What would be better is let the market take care of it, let innovation happen.

Right?

Let these companies innovate.

Well, what could, um, what could MasterCard and Visa do to make Dick Durbin feel more comfortable?

I don't think they can do anything because they basically— he wants to basically circumvent their system. He wants to, he wants to tear—

he wants them down. He wants a whole nother network, a whole nother way of—

right, the Dick Durbin fantasy network, which doesn't exist. It would be better to say, hey, let's promote other types of services. I mean, they have this thing FedNow to move money.

There's one thing that I think you skipped quickly. Yeah, the reason why this is going to affect small businesses a lot, and Allen had made this clear, he had to explain this to me a couple of times. So Walmart doesn't have just the, you know, like a Clover.

Yeah, they don't have like a credit card machine like— no, they have a store.

A point of sale system, a cash register, and then a dummy box is what Allen called it, where you put your credit card in. That doesn't— at the big shop, you know, like when you're at— yeah, you're at the regular store at your, you know, your corner store, and you're like, yeah, it's $10, and you put this in here. Well, this goes, you know, you're dealing it all through this system, right? And then these big, bigger you know, these bigger companies, they have their own built-in system.

Yeah, they got their own servers. And they can program so they have other networks.

So this is why small businesses can't do this, like a small business, they can't go into this machine and create a new network so that they're going to be able to accept this new—

it would take years.

So but someone like the owners of, of Walmart or Target can hire a programmer to go into their, you know, into their system and add this network within what, I don't know, a couple days, whatever, however long it takes to implement throughout the entire system throughout the United States, whatever. I'm sure it'll take a little bit of time, not a week, you know, to push it out to all the stores. But when you, when you make it, when you think of it in that way, most small businesses, businesses, one, they don't even know how to fix this if this goes wrong or whatever. So try to tell them that they need to install a new network on their device or for, if that's even possible, right?

Right. And it's not possible for something like this, because, well, it would be possible, it would just take a really long time.

But you have this is from, this is from GoDaddy.

Well, I know, but first, this network doesn't even exist.

That's also, there's another, there's another thing, that's another kicker. But so like, just basically, like, the small businesses just can't keep up with these big businesses when it comes to these types of changes. And a small business not being able to add that network. Imagine if, you know, if the— of all, you know, in that certain community, they're like, well, I don't use MasterCard anymore, I don't have Visa, or I don't use, you know, and they want to just use this— not just, but they're just, they're really adamant about using this third network. But this business can't get it onto his device. Now his business is closed. Right.

Yeah. Well, it could cause problems because you don't know what this network is. But I'm telling you, I think that this is what he's talking about because, you know, this OnUs network, which would enable a large bank to go out and then it would create what I'm telling you, antitrust issues. Now, that's my opinion. It's the opinion. I mean, the guy Jamie Dimon actually most sort of agrees with that. Other articles kind of agree with that. I mean, the debit networks aren't going to want to— first of all, the debit networks are more expect— when on this Merchant Advisory Committee place that says that they're, you know, pushing this bill with the 1,600 merchants, right? I don't even want to say their right name, right?

Because they deserve it.

But they're on their thing. They're showing the debit networks. The debit networks don't have the capability to do all this., and you can't cut out— your card says Visa on it. Durbin wants to cut them out of the whole thing. And then I also want to mention, which I mentioned in my article that I wrote in the Green Sheet, right? Durbin acts the way he acts towards all of this, towards Visa and MasterCard. He acts like there's some guy named Bob Visa and Sally MasterCard, right? Those people don't exist. Uh, you know, you know who owns Visa and MasterCard, Justin? You and me, right? The public owns Visa and MasterCard. These are publicly traded companies. Do you have a 401k? Do you have an IRA account? Do you have mutual funds? Do you have some EFTs?

There was an interesting article I was reading about that today too, right?

I wrote an article about it, and, and I wrote in there the public owns those companies. Why does the public want this? You want to harm the businesses that are in your portfolio of your investments? I mean, we're already dealing with inflation.

This, this whole bill, what is just important for me is just like being a young— I'm, you know, a middle-aged man. I gotta stop saying younger. Yeah, middle-aged man.

Well, you're younger than me.

I'm a middle-aged man.

Okay.

It's important because I mean, like, we need to educate ourselves on this because this is killing—

have children, this is gonna kill entrepreneurship, and they're gonna have children.

And I have entrepreneurship, you know, in my blood, right?

Yeah.

They have it in their blood, spirit of a hustler. And, you know, these types of information or knowledge is not readily accessible or widespread, right, to people. So when you're thinking about, you know, voting for your senators and all that other stuff, you just see what's on the news, right? And you don't really understand, like, the type of things that they're doing in the dark room in the back of the office. And they got all these, you know, they got the CEO of Target and Walmart and they're making campaign contributions, and now Dick Durbin is pushing this type of stuff. It's just important that you pay attention and know what's going on, right?

This kind of, this kind of bill is gonna— forget what it's gonna do, forget businesses, okay? Let's just talk about consumers, right? Just for the consumer, okay? Durbin 1.0, the consumer got screwed, okay? You got screwed 9 ways from Sunday. Okay, Durbin 2.0 gonna do the exact same thing. And plus, with the, with the inflation that's going on, this is the last thing we need is some Durbin 2.0 thing because it's going to drive up interest rates. You already got 8, 8% inflation. You got, you have, uh, mortgage rates going through the roof. I see like, okay, like I'm a person, like I pay off my credit card, but I see like these credit card offers that come in the mail to me. Some come to my son. 27% interest. Like, are you— are these people like on drugs or something? Like, at the bank, 20% interest, 18% interest. Like, they're charging interest out the wazoo. That's on top of your inflation, and already the prices are higher, right? I mean, it's crazy.

It's crazy.

And then this Durbin 2.0, if this gets passed, let me tell you, uh, one, I would be shocked if Visa, MasterCard, and American Express and Discover, they don't all file lawsuits. The banks should all file lawsuits against it. I mean, first of all, it's an antitrust issue in my opinion. Okay, that's my opinion, what he wants to do. And the other thing is, you know, that he— to— it's going to destroy the— further mess up the economy that was already messed up right now. Because you don't need that. No, because what's going to happen to consumers is forget, your credit card interest rate is going to go through the roof, number one. Number two, you're, um, when they did Durbin 1.0, one of the other things that happened during that time, because that was when we also had some inflation, the banks went and started reducing everybody's credit line. Okay, so that's also another effect Okay, and, and it's going to be— and then you're going to lose all your rewards, your cash back and all that. And people use credit cards because they like the convenience of the credit card. They like the cash back, the miles and all that. Well, you're just going to destroy this whole sector of the economy. I mean, this is just crazy. To help 1,600 businesses, this is who we want to help? No, we should be helping the small business community out there. Doing something. Durbin needs to do something, right?

You should—

I'm telling you, everybody should write their senator, your person in the House of Representatives, write to the people on Durbin's committee. I mean, I don't even know why he's involved in it. He's on the Judiciary Committee, right? But he self-appointed himself the Visa MasterCard czar, right? He self-appointed himself as this czar over Visa and MasterCard. He's not on the Financial Committee. You need to write to the people. Go look up these committees. There's a guy, John Rose. I'm trying to get him on the podcast. I'll have Dick Durbin on the podcast. Any of you senators who are for this Dick Durbin thing, come on the podcast, you know, put it out there. If you know somebody that's, uh, one of these senators, get them to come on my podcast. I'd love to have them. Let them explain to me what this Durbin Fantasy Network is and why they think it's okay.

Why?

And, and, and why did— we already know what Durbin 1.0 did. What makes them think that Durbin 2.0 is not going to do the same thing? It's already proven in Australia it didn't work. They lowered the fees, prices still went up, right? Prices went up. And consumers are not getting any benefits whatsoever other than no more rewards and higher interest rates. So if you like higher interest rates and no rewards, go for Durbin 2.0. You want things to stay the same, you need to write your senator. Please write to them. Please, please, please contact your ex.

The bill.

Yeah. No, do not vote for this. We do not want it. This is no good. This is not good. They say it's good, just like you said with the first Durbin Amendment, but it's not good. The results are in. The results speak for themselves. What they tried to do in Australia didn't work. Also, what they tried to do in Europe— they tried to add this fantasy network in Europe— that didn't work. They nixed the whole thing. They, they voted for it about 8 years ago, and they never could put it together because No one can. How can somebody— if somebody could duplicate Visa and MasterCard— Visa and MasterCard's been around in the electronic state for over 20 years, right? Yeah, over 20 years. Somebody would have done it by now. Nobody's been able to do it. So if someone was able to do it, they would do it. I don't know, ask Elon Musk. He's just, you know, one of the smartest people.

This guy would keep going. So nowhere on the Dick Durbin, it's a wrap.

Come on, Dick, come on the show, let's duke it out.

Come on. All right, thanks for tuning in. Peace out, have a good weekend.

All right, enjoy, have a great weekend, have a great day.

Peace.

Peace.