Don’t regulate modern small business tools out of reach

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OPINION – Small businesses are the backbone of California’s economy and the lifeblood of our communities—especially during the winter holidays. Across the state, these enterprises drive local economies and keep communities connected during the most important sales season of the year. From coastal towns to the Central Valley and the foothills, small businesses fuel jobs, support local supply chains, and keep communities thriving.

At the California Local Business Connection (CLBC), we work every day to ensure small businesses in every region of the state have the tools they need to grow and succeed—particularly during the winter holidays, when a strong few weeks can determine whether a business finishes the year in the black. That’s why we are concerned about state and federal proposals to impose burdensome regulations on peer-to-peer (P2P) payment platforms—rules that would raise costs and limit access to essential tools for entrepreneurship.

Peer-to-peer payment systems have become the new cash: convenient, fast, and often free. During the holiday rush—when lines are long, customers are shopping on the go, and small businesses are managing higher volumes—owners rely on these tools to receive payments instantly and keep transactions moving without expensive point-of-sale equipment. In a state where the cost of doing business is already high, these platforms are critical lifelines during a make-or-break season.

Small businesses use P2P payments because they work. The ability to send and receive funds in near real time keeps businesses moving—whether it’s a San Diego retailer filling last-minute holiday orders, a Fresno food vendor serving crowds at seasonal events, a Los Gatos fitness instructor selling New Year wellness packages, or a Folsom artisan shipping handcrafted gifts statewide. These tools allow entrepreneurs to focus on serving customers rather than managing costly infrastructure.

Nationally, small businesses utilizing P2P platforms received an average of $465 per transaction in 2024, and most paid nothing in fees. Those savings aren’t a perk—they’re often the difference between making it through the slower winter months or shutting down entirely, especially for small businesses operating on thin margins in high-cost regions of California.

Some policymakers argue that new regulations on P2P platforms are needed to combat scams and fraud. This approach gets it backward. Technology is not the problem—scammers are. Overregulating trusted platforms during the peak holiday shopping season will only increase costs for small businesses across California, create friction for consumers, and do little to stop bad actors.

We do not need to penalize the tools that empower entrepreneurs in order to protect consumers. That is a false choice. Effective solutions should focus on targeting criminals—by increasing resources for law enforcement, improving coordination across local, state, and federal agencies, and strengthening efforts to dismantle organized fraud networks.

California’s small businesses are resilient, innovative, and deeply invested in their communities—whether they operate in major metropolitan areas, agricultural regions, or small towns. During the winter holidays and into the new year, they depend on modern, affordable tools to stay competitive and serve customers.

Unnecessary regulations threaten the very systems that help small businesses weather seasonal economic swings. State leaders must work with small businesses and protect access to low-cost financial tools that fuel local economies statewide. At CLBC, we will continue advocating for policies that empower entrepreneurs, strengthen communities, and keep California’s economy strong this winter and beyond.

Cari Alspaugh is Secretary of the California Local Business Connection.