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Controversy Emerges over Small Business Saturday

Controversy Emerges over Small Business Saturday

By | 11.29.13
Controversy Emerges over Small Business Saturday

On Tuesday, November 26, the Main Street Alliance (a small business trade association with a strong focus on local businesses) called out American Express and their Small Business Saturday campaign. The main contention of the Alliance is that American Express has policies that end up putting the squeeze on Main Street merchants every other day of the year. This call to action was directed specifically at consumers, encouraging them to continue to shop local both on Small Business Saturday and throughout the holiday season but to pay in cash.

The Main Street Alliance is taking aim at several of American Express’s policies, including the credit card company’s swipe fees, or transaction fees that are charged to the merchant every time a consumer uses one of their cards. American Express costs are higher on this front than other credit card companies, charging 2.22 percent per transaction compared to 2.05 percent for a MasterCard or Visa transaction. In addition, the company’s merchant agreement prohibits merchants from steering customers to other forms of payment and its “equal treatment” clauses make it difficult for merchants who contest the practices of MasterCard and Visa to obtain effective redress. American Express has also been criticized for sheltering $8.5 billion in profits abroad, resources that are greatly needed for investment purposes in the U.S.

In recent years, alternatives to Small Business Saturday have been launched by local merchants. In Portland, Oregon, there is a local shopping movement in place called Little Boxes, where 200 independent stores offer 10 percent discounts to shoppers, in addition to a raffle. The number of small businesses who choose to participate in this has doubled since 2011.

American Express first launched Small Business Saturday, held the first Saturday following Thanksgiving, three years ago. A recent survey sponsored by Amex revealed that 44 percent of consumers are aware of the day. A second survey done in conjunction with the National Federation of Independent Business indicates that 77 percent of those who are aware of Small Business Saturday plan to shop locally on that day.

Reference

Mandelbaum, Robb. “Small Business Saturday Is Under Attack (From Small Businesses).” New York Times. 11/27/13.

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