In an era of partisanship, swipe fees are bringing Congress together
With election season fast approaching, the window for across-the-aisle collaboration is rapidly closing as members from each party seek to prevent their political opponents from scoring wins. One issue, however, is picking up bipartisan steam as Americans suffer record inflation: credit card swipe fees.
In a letter to the CEOs of Visa and Mastercard, Kansas Sen. Roger Marshall (R) joined a bipartisan and bicameral group of lawmakers to urge the credit card companies not to move forward with plans to raise their swipe fees. Citing the highest rate of inflation in decades, Marshall noted that any further fee increase "is simply taking advantage of vulnerable Americans."
These fees, charged to merchants every time a customer swipes a credit card, are based off of a percentage of transaction totals, meaning Americans are paying more than ever as the cost of goods continues to rise. While Visa and Mastercard claimed to delay their initial $1.2 billion hike last year due to public and congressional pressure amid the pandemic, they quietly increased swipe fees anyway and recently instituted another round of increases.
What the two companies also fail to publicize is that total processing fees for Visa and Mastercard credit cards have increased significantly year-after-year over the last decade, totaling U.S. merchants $77.48 billion in 2021 and $61.63 billion in 2020, more than double the amount in 2011, according to USA Today.
Unlike other industries, where competition drives prices down, Visa and Mastercard make up more than 70 percent of the market share, giving the duopoly dominance of the card market. This means merchants have little choice but to accept Visa and Mastercard plastic and the two companies essentially have free rein over swipe fee increases. Many small business owners are forced to pass these transaction fees onto consumers, which makes it more difficult for everyday Americans to be able to afford necessities like food and fuel.
Since the pandemic accelerated the trend of Americans shifting away from cash toward plastic, this means more swipe fees for businesses. Local businesses hit hard by coronavirus are now struggling to recover from lost sales and are turning to customers to fill revenue gaps where they can.
These fees are hardly a drop in the bucket, either. According to the National Retail Federation, the average family spends about $700 a year on swipe fees per year and this number will only continue to grow with inflation given the fees are a percentage of consumers’ total spending bill.
Here in the Midwest, prices are about 8.6 percent higher than they were last year and inflation is the highest the region has faced in more than three decades. Kansans are facing sticker shock as they purchase everyday necessities, including groceries, gas, and diapers, wrecking already-pinched family budgets.
Thankfully, Sen. Marshall recognizes the financial strain we’re facing here in the Sunflower state. As he notes in his letter to the Visa and Mastercard CEOs, raising swipe fees even further will “undoubtedly increase the already high costs consumers are facing…which is the last thing American families deserve right now.” I am optimistic the senator will continue to shine a light on this issue while working with his colleagues to help bring financial reprieve to all Americans.
Chad Kramer is president of Marysville-based Kramer Oil and C-J Express, and president of Fuel True's board of directors.
This article originally appeared on Topeka Capital-Journal: In an era of partisanship, swipe fees are bringing Congress together
