Debit card limits and the death of small business

According to a report on CNN, banks are considering limiting the amount of debit card transactions to a paltry $50 or $100? Well folks, if you want to ruin independent brick and mortars, that’s an effective way to do it. 

Given the strain of finances and accumulated debt, many consumers have opted to rely heavily on debit cards while they chip away at the balance on their credit cards. Others have had to step away from credit cars all together, either by choice or due to damaged credit.

Both still need to eat. Fill up the gas tank. Buy things.

If consumers are going to limited to $50 or $100 transactions on their debit cards, their spending power will also be limited to the amount of cash they feel safe carrying. How, exactly, does that play out, especially for merchants who sell higher ticket items or provide services that cost more than that? How do they buy groceries for a family of four? Fill the gas tank? Pay for their new cell phone? Heaven forbid they travel, needing a plane ticket or hotel room.

Go back to writing checks? Unlikely. Most business stopped accepting them long ago, given the high rate of risk and steep processing fees.

This is an opportunity for independent community banks to become superheroes. If they hold to the idea that a customer should have access to all the money deposited in their account, bypassing limits on debit cards, they stand to inherit a lot of new consumers who feel rejected by the big banks. A win/win for the entire community, given how much those same banks do economically for their locales.

Independent merchants need two things: customers and their buying power. By limiting one, we kill off the other, which in turn sinks the entire boat, including our local economies.