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By Ahmad Holmes | Special to The OBSERVER
The impact of Black-owned businesses on the world’s fifth-largest economy is monumental and cannot be overstated. In 2020, California was home to 197,000 Black-owned businesses, which created over 220,000 jobs and contributed nearly $3 billion in fiscal impact.
Yet, as the President & CEO of the California African American Chamber of Commerce, I am acutely aware of these businesses’ challenges. Black-owned businesses are disproportionately affected by the lack of competition in the payment network industry. Additionally, they often encounter significant barriers when accessing business credit cards or securing small business loans from traditional financial institutions.
At the California African American Chamber of Commerce, we are committed to addressing these disparities by advocating for equitable policies, fostering collaboration, and providing resources that empower Black-owned businesses to thrive and sustain their vital role in our economy.
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But there’s hope. The proposed Capital One-Discover merger presents a unique opportunity to introduce much-needed competition into the payment network industry. This merger comes with a Community Benefits Plan (CBP) that promises unprecedented investments in small businesses and the financial institutions that support them, directly addressing long-standing barriers for Black-owned businesses.
Currently, Visa and Mastercard control 80 percent of the payment network industry. This duopoly allows them to dictate terms that disproportionately impact small businesses, particularly those with tighter profit margins, like many Black-owned businesses.
The merger would change that dynamic. Enabling Capital One to issue its cards on Discover’s network would significantly strengthen Discover as a competitor. Increased competition benefits everyone—forcing all networks to vie for merchant partnerships, empowering small businesses with more choices, and providing an opportunity to negotiate better terms.
For Black-owned businesses, this means real financial relief and a chance to thrive in an equitable market. It’s a step toward leveling the playing field, fostering growth, and ensuring these businesses can continue their vital contributions to our economy.
Thanks to the Community Benefits Plan (CBP), this merger will support Black-owned businesses even more.
First, the plan dedicates $600 million to support Community Development Financial Institutions (CDFIs). These institutions play a vital role for Black-owned businesses, offering essential banking services that traditional financial institutions often fail to provide. With this significant investment, CDFIs would be empowered to expand their reach, enhance their services, and support even more small businesses in achieving sustainable growth.
Additionally, the CBP commits $5 billion to spending with diverse suppliers. This pledge is a game-changer for Black-owned businesses, which are too often overlooked for large contracts. By prioritizing supplier diversity, the merger would create a wealth of new opportunities, enabling Black-owned businesses to thrive, innovate, and contribute even more to our Economy.
These investments represent a monumental victory for California’s Black- owned businesses. They provide the resources needed to sustain job creation, bolster community vitality, and empower Black entrepreneurs to continue driving economic growth.
At its core, this merger is about opportunity. The opportunity for Black communities to build wealth, for Black-owned businesses to thrive, and for economic growth to flourish across the state and the nation. By approving this merger, regulators have the chance to foster competition, support underserved businesses, and unleash transformative investments in our communities. I strongly urge them to seize this opportunity and support the Capital One-Discover merger.
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