By George Sarantopoulos
Access One Solutions
Something is missing in current stimulus proposals: small and midsize businesses (SMBs). Funds would flow to major retailers, which are already thriving under today's conditions, while small and midsize enterprises remain closed or limited by local COVID-19 restrictions.
This spring, Jim Cramer, host of CNBC's "Mad Money" and co-anchor of "Squawk on the Street," told CNBC blogger Matt Belvedere that pending COVID-19 legislation could help destroy SMBs, leaving only the Amazon-Walmart-Costco trifecta intact. Belvedere shared Cramer's concerns in a March 25, 2020, post titled "Cramer worries that post-coronavirus US could have just three retailers: Amazon, Walmart, Costco." Two days later, the CARES Act was signed into law.
Scott Galloway, author and professor of marketing at the New York University Stern School of Business, is also concerned about stimulus funds distribution. His views are captured in a May 13, 2020, YouTube interview with Yahoo Finance's On The Move, titled, "The stimulus might as well be called the Amazon-Walmart shareholder's act." Recalling that previous stimulus packages have resulted in some form of moral hazard, Galloway observed that current proposals do nothing but "rob from future generations to flatten the curve for people who are already rich."
Also noticeably absent from stimulus discussions is the notion of faster payments. In an era that brought us the Federal Reserve's Faster Payments Task Force, why are we having such a hard time with timely distribution of funds?
Assuming Congress passes another stimulus bill, expect to see record delays in distribution. Consider the Heroes Act, passed by the House of Representatives on May 15, which calls for another set of $1,200 payments. While similar to the previous stimulus package, payments would be more generous, with up to $6,000 per family, including $2,400 per married couple and $1,200 per dependent for up to three children.
Some Republican lawmakers, like Sen. Rob Portman, R-Ohio, have focused on providing incentives to get people back to work. He proposed giving a $450 weekly bonus to Americans who return to work. Rep. Kevin Brady, R-Texas, offered a one-time $1,200 payment for those who return to work. If approved by the Senate, this legislation's relief could take weeks, if not months, to reach people, based on the current status of negotiations.
Imagine a future where all the small businesses we love are gone? Your favorite local market whose employees know you by name. Your favorite restaurant with doting staff who help you make a birthday celebration memorable. Don't think it can happen in the United States? Talking heads think differently, and the pandemic has only helped the big guys get that much more powerful in the marketplace.
Let's rethink our approach to these stimulus packages. What are we trying to accomplish? How can we promptly deliver funds to the most deserving businesses? And finally, why bring an analog mindset to a digital game? We've spent years building a digital payments ecosystem that is fully capable of handling the current crisis. This disaster zone needs the Federal Reserve's Faster Payments Task Force and the Automated Clearing House, not random distributions and helicopter money drops.
Why not create a closed-loop card that can be spent in restaurants and shops in your local ZIP code? Even if some funds flow into a local Walmart or Costco, at least the spend would help keep local people employed. In rural locales, areas could be expanded to include adjoining ZIP codes, while blocking out some high-risk categories in the payments industry to make it broadly appealing to both sides of the House.
Despite numerous proposals under consideration, from one-time payments to recurring weekly payments, the one thing missing is the small and midsize business owner, who doesn't have the luxury of time. Main Street needs our help, now more than ever. Let's leverage our collective payments industry know-how and create a 21st-century distribution plan, backed by public service announcements and heavy internet promotion. This approach, combined with celebrity endorsements from different regions, will reinforce the message to shop locally and save our communities.
George Sarantopoulos is the CEO and founder of Access One Solutions and Chair of the National ATM Council. When he's not fighting the good fight, he can be found on Twitter @GSarantopoulos or by email at georges@accessoneatm.com.
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