Cambridge Day does not endorse candidates or positions. Views expressed in this column are those of the writer.
As the state legislature considers Senate Bill 688 and House Bill 1259, it’s important to understand the negative implications for consumers and small businesses here in Cambridge and throughout Massachusetts if these were to pass.
Today, consumers expect that their card or digital wallet will be accepted anywhere they shop, thanks to what’s known as the universal acceptance system. That predictability isn’t just a convenience, it has transformed how customers live, budget, and protect themselves financially. Consider the benefits that all of us enjoy as a result of cashless transactions.
Not having to stop by a bank or an ATM before going shopping gives consumers valuable time back in their day. Rewards earned on credit card transactions help families to supplement their budgets, utilizing points or cash back for groceries, essentials, or family vacations. Payment flexibility can help enable purchases that might otherwise have to wait until the next paycheck.
It’s also given shoppers an important layer of protection. Major card networks offer Zero Liability protections that shield consumers from fraudulent charges, and federal Regulation E provides additional safeguards for electronic payments.
Cash, by comparison, comes with risks and inconvenience. It can be lost or stolen without recourse. It’s unhygienic, something many consumers think about more seriously in the wake of COVID-19. And it requires planning; you have to withdraw it, store it, and hope you have enough when you need it.
If universal card acceptance is eliminated, which House Bill 1259 would promulgate, small businesses would need to negotiate with large card issuers individually to accept card payments. That means securing agreements with every one of the 280 large banks with over $85 billion in assets. Without these agreements in place, customers may find that their card is not accepted only when they try to check out.
The Cambridge community, which draws students and workers from around the globe, would be particularly susceptible to consequences like longer lines, abandoned purchases, and frustrated customers.
Banning interchange fees on taxes and tips, as proposed in House Bill 1259 and Senate Bill 688, may appear consumer-friendly on the surface. But in practice, it could create new headaches for both shoppers and businesses alike.
Because most point-of-sale systems aren’t designed to split transactions into separately processed components, many businesses would find themselves forced to either purchase new equipment or create complicated manual tracking procedures. The likely alternative? Asking customers to pay taxes and tips in cash.
That may not sound like a major change, but for consumers, it is. It means carrying cash again, something people overwhelmingly try to avoid because it’s inconvenient, unsanitary, and offers no protections. It also risks putting service workers at a disadvantage. If tips must be paid in cash, consumers may tip less often or less generously simply because they don’t have cash on hand. In restaurants, salons, bars, and delivery services, tips are essential income. Lower tips would hurt real workers, who are vital to our economy.
Massachusetts should always strive to protect consumers and support local businesses. However, policy changes must reflect the realities of how people live and pay today. Universal card acceptance and the ability to make fully electronic payments, tips and taxes included, are now core expectations of modern commerce.
As written, these bills risk undermining both consumer convenience and small business stability. Thoughtful consideration and careful refinement are essential to avoid consequences that would harm both consumers and small businesses in Massachusetts.
The writer is Cambridge Savings Bank’s Head of Consumer and Small Business.
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> Rewards earned on credit card transactions help families to supplement their budgets, utilizing points or cash back for groceries, essentials, or family vacations.
This is misleading. Credit card companies earn money from the rich and poor in different ways. For the rich it’s transaction fees and banking upsales. For the poor it’s usury.
Rewards are used to get the rich to sign up. On the balance rewards aren’t helping people struggling to make their budget work.
In the current state of our economy and the volatile nature and tendency of the Federal Government to manipulate states by filings from 3rd parties that the Authoritarian grifters in the party in control right now, any change to existing state laws and procedures with banking, payment transactions etc. needs to be held up carefully to the light and exactly who is behind the filing of the bill. Who filed it, and by who’s request and who wrote it? That is what we as citizens here need to know… and if we don’t know these things such a bill should be rejected by responsible lawmakers informed as the need for such by the voters.