The Rise of Financial Corporations: A Challenge to Government Authority?

The influence of banks and payment processors on individual businesses is growing, sparking concerns about the balance of power between these institutions and elected governments.

What Happened

Recent discussions have emerged around the notion that banks might wield greater power than governments in the U.S. This discussion is partly fueled by anecdotes of small businesses experiencing severe repercussions from their payment processors over social media comments, revealing how access to financial services can be abruptly restricted.

The Context

During the COVID-19 pandemic, numerous businesses reported issues with payment processing companies terminating accounts for comments made online. This trend continued to gain visibility in response to broader societal movements and crises, raising alarms about the control financial institutions hold over commerce and individual freedom.

The Facts

• Reports have highlighted cases where small businesses lost access to their funds due to actions taken by payment processors.
• A business owner reported that $30,000 was frozen following the termination of her payment processing account.
• The overall extent of changes in payment processing policies remains largely anecdotal and not comprehensively quantified.

Why It Matters

The trend of financial control by corporations has implications for economic freedom and resilience. It indicates a potential shift in power dynamics, where the ability to conduct economic transactions increasingly relies on the rules set by private institutions rather than elected bodies.

What Comes Next

• Next, watch for developments in regulatory practices surrounding financial processing companies.
• The biggest open question is how this trend might affect small businesses and their customers in terms of access and equity.
• Potential shifts could occur if significant legislative actions are taken to regulate or limit the power of payment processors.