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Washington Watch - July 6, 2011

New Debit Card Fee Ruling To Take Effect In October

The Federal Reserve has put a cap on credit and debit card swipe fees. The level was set to 21 cents per swipe with extra padding to account for loss in cases of fraud. According to a Fed survey, the median cost of processing a credit or debit card transaction was 7 cents. Thus, the initial recommendations by the Federal Reserve were to cap these fees at 12 cents per swipe, providing relief to small businesses yet also leaving banks with a healthy profit margin.  However, due to considerable pressure from the banking industry, the Fed settled at 21 cents per swipe.

The law was originally set to go into effect this month, but the Fed delayed the onset until October, after receiving more than 11,000 comments on the issue.

While small retailers and other businesses with high utilization of credit and debit cards for payment have cause to celebrate over the new rule, it is disappointing to see the Federal Reserve buckle under pressure from the banking industry which makes approximately $16 billion on swipe fees.

For more information, visit the Federal Reserve.

NASE Blog: Debunking One Size Fits All

America's lawmakers are working frantically to craft a solution to the ballooning federal deficit and the rapidly approaching August 2 debt ceiling deadline. Tough decisions abound about whether to let the nation default on its debt, how to pay down the deficit if the debt ceiling is increased and whether certain tax cuts can be extended to help grow the economy.

Leaders from both parties are embroiled in the debt drama leaving taxpayers and the financial markets to wonder if there is any hope that Congress can balance our nation's books.

This exercise hits close to home for America's small business owners, who manage to balance their books each and every day. Their ability to invest in advertising or pay for health insurance is entirely dependent on what they have in the bank. Responsible business owners make tough decisions on a daily basis to ensure they stay in the black. So how come policymakers can't do the same and are not required to balance the federal budget?

Of course, it's easier said than done to maintain a positive cash flow during an economic downturn. An obvious way to get an infusion of cash into the federal reserve is to stimulate the economy. Unfortunately, the great recession has demonstrated an incredible resistance to a myriad of policy solutions. But the fact remains that the nation is not going to get out of its frugal bunker mentality until we all feel like we have enough cash on hand to stimulate the economy through spending.

Last year, President Obama encouraged America's workers to spend by giving them a one-year break on their payroll tax contributions in 2011. This means more money in their paychecks and more money with which to jumpstart the economic recovery. Part of the current debt limit talks includes extending the payroll tax break for employees and giving employers a similar break. While this is welcome news to many employers, it is uncertain news for the majority of our nation's smallest businesses -- the self-employed and micro-business owners -- who are, for all intents and purposes, both employer and employee.

Read the entire post here.

SBA Hosts Nationwide Women Entrepreneurship Roundtable

In recognition of the significant role that women-owned businesses play in our economy, the SBA's Office of Advocacy held a nationwide series of roundtables on women’s entrepreneurship. Roundtables were held in Portland, ME, New York City, Philadelphia, Atlanta, Madison WI, New Orleans, Des Moines, Denver, Los Angeles, and Spokane, WA.

A summary of an upcoming Advocacy study, Gender Issues: Privately Owned and Publicly Held U.S. Firms, released in conjunction with these regional roundtables, shows that nationally, the number of women-owned businesses increased by almost 44 percent, from 5.4 million in 1997 to 7.8 million in 2007. In addition, the number of women-owned businesses grew at twice the rate of male-owned businesses from 1997 to 2007: 44 and 22 percent, respectively. The study is based primarily on U.S. firm information from the 1997, 2002, and 2007 Survey of Business Owners (SBO), the latest and most comprehensive business datasets released by the U.S. Bureau of the Census.

According to the data, the number of women-owned businesses increased in every state, and their rate of ownership generally increased or remained the same over the decade. The rate, however, rose and then fell slightly in some states from a high in 2002. It also found that business ownership expanded in all 50 states and the District of Columbia in 1997-2007.

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