small business

Federal Reserve Slashes Debit Card Transaction Fees in Proposal

If you are not aware, Mastercard, Visa currently charge some nasty fees to retailers every time you use your debit card. Same is true for credit cards. The Federal Reserve has proposed some new rules on debit card fees. They propose to cut transaction fees to 12¢ per transaction. Currently it costs retailers 44¢ on every single use of a debit card for purchases. The Federal Reserve also proposed to kill the debit transaction network monopoly system. A transaction network is where your data goes in order to debit your bank account after you swipe that plastic.

The Board is requesting comment on two alternative interchange fee standards that would apply to all covered issuers: one based on each issuer's costs, with a safe harbor (initially set at 7 cents per transaction) and a cap (initially set at 12 cents per transaction); and the other a stand-alone cap (initially set at 12 cents per transaction). Under both alternatives, circumvention or evasion of the interchange fee limitations would be prohibited. The Board also is requesting comment on possible frameworks for an adjustment to the interchange fees to reflect certain issuer costs associated with fraud prevention.

If the Board adopts either of these proposed standards in the final rule, the maximum allowable interchange fee received by covered issuers for debit card transactions would be more than 70 percent lower than the 2009 average, once the new rule takes effect on July 21, 2011.

The 13th Worker

Remember all of that fuss to pass a tax credit to hire workers?

A new report shows the health insurance tax credit sliding scale causes small businesses to not hire.

The Hill:

Using insurance premium cost projections supplied by the nonpartisan Congressional Budget Office (CBO), the study states that the credit reaches its optimal point at 13 workers, with relief peaking at $36,400 for qualifying business.

After the 13th worker the economics surrounding the credit change, the study says.

For employers with 15 workers, taking on an additional hire will reduce the credit by $1,400. For a company looking to expand from 20 to 21 workers, the credit will shrink by $3,733. And businesses will take a $5,600 reduction on the credit when hiring the 25th worker.

The credit phases out for companies with at least 26 employees.

Ah, the irony. Lucky 13 again. Here is the original hire tax credit:

Small Business a Bunch of Doom & Gloomers

Wow, a new survey index result by the National Federation of Independent Businesses shows small businesses in the United States are a bunch of economic pessimists.

The National Federation of Independent Business Index of Small Business Optimism lost 1.2 points in March, falling to 86.8. The persistence of index readings below 90 is unprecedented in survey history.

Unprecedented. 18 consecutive months of readings below 90.

This doesn't bode well for job creation. Small Business is the job engine of America. To find out the percentages of jobs created by small businesses, read this analysis post from October 2009.

Small Business might get a Bail out

The Washington Post is reporting the Obama administration might throw some $$$ to small businesses. These are the job engines as well as small business owners, when they go belly up, there is no social safety net at all.

The Obama administration is developing an initiative to take money from the $700 billion rescue program for the banking system and make it available to millions of small businesses, which officials say are essential to any economic recovery because they employ so many people, according to sources familiar with the plan.

So, what are any details?

ADP Employment Report - Another Yellow Weed

ADP is the largest private payroll, outsourced HR company and they have been so gracious to tabulate up employment estimates from being in this business.

Their May employment report has some not so great news.

Nonfarm private employment decreased 532,000 from April to May 2009 on a seasonally adjusted basis, according to the ADP National Employment Report®. The estimated change of
employment from March to April was revised by 54,000, from a decline of 491,000 to a decline of 545,000.

Monthly employment losses in April and May averaged 539,000. This is a notable improvement over the first three months of the year, when monthly losses averaged 691,000.

Women Small Business Can't Land Government Contracts

This is a most interesting article from the New York Times:

Last year, female small-business owners were awarded only 3.4 percent of annual federal contracts — even though the latest statistics show women own almost half, or 10.1 million, of small businesses nationwide, and generate about $2 trillion in revenue

In 2000, Congress directed that female small-business owners receive 5 percent of federal contracts each year, now estimated to total $435 billion. But putting that mandate into effect has been a continual battle between lawmakers and the Bush administration.