Sen. Marshall stands up for Main Street business, reintroduces Credit Card Competition Act
While inflationary prices stay high, U.S. Sen. Roger Marshall (R-Kan.) is working to bring down the cost of everyday goods and services by taking a swipe at credit card swipe fees. The reintroduction of the Credit Card Competition Act (CCCA) takes aim at major credit card companies like Visa and Mastercard who have monopolized the payments sector, padding their already thick profit margins with fees they hammer Main Street with.
Merchants incur swipe fees every time a credit card is used, forcing business owners to pay an average 1.5%-3.5% on every transaction total. While hidden from many consumers, these fees cost merchants over $126 billion in 2022 alone. That figure is up more than 20% from the year prior despite purchase volumes only rising about 12 percent.
At the current pace, small businesses and those with slim profit margins simply can’t keep up. Ever-rising credit card swipe fees are most merchants’ second-highest operating expense after labor, which means every increase often forces businesses to raise prices, add a surcharge, or even shut their doors for good.
Unfortunately for merchants, their options are limited. They continue to bear the brunt of the financial burden and consumer dissatisfaction for the swipe fees major financial institutions levy indiscriminately. Worse yet, Visa and Mastercard continue to grow their duopoly that currently dominates around 80% of the market share, using that control to further box out their competitors.
This lack of competition shows. In 2022, Visa’s net profit margin soared over 50% while Mastercard hovered close to 45%, compared to an average 2.5 percent profit margin for the merchants forced to pay their fees. And other countries are paying a fraction of the fees these credit card giants force Americans to pay, with the United States having the highest credit card swipe fees in the industrialized world.
Sen. Marshall’s CCCA hopes to change this by introducing free market competition into the payments sector. Currently, Visa and Mastercard’s swipe fees operate on a schedule that major banks willingly implement for their card services and a chunk of the profits. The big banks then offer merchants a single network to process their credit card transactions on, ensuring smaller networks like SHAZAM and Pulse have no way of breaking into the industry to offer similar processing services at a fraction of the cost.
To break the Visa/Mastercard stranglehold, the CCCA would mandate a second routing option be offered to merchants. This simple fix would force the major credit card companies to compete and give leverage to merchants who would finally have the option to choose other networks and fairer fees. As we’ve seen in similar industries, competition would also help spur innovation and higher security standards benefiting merchants and consumers alike.
The CCCA also takes into careful consideration small- and medium-sized banks and local credit unions that know their communities best. These financial institutions often offer loans and vital assistance that help small businesses grow and keep their doors open, so the CCCA excludes financial institutions with less than $100 billion in assets to hone in on the few bad actors.
For Kansans and Americans across the country, this legislation can’t come soon enough. Senator Marshall is determined to bring financial relief back to his constituents and correct a market failure that has burdened small businesses for years. I hope Congress will act quick to pass this legislation. As Sen. Marshall has said, “when it comes to Main Street vs Wall Street, [he’ll] choose Main Street every time,” and the CCCA is no exception.
Matt Mildenberger serves as President/CEO of Mitten Inc. in Oakley, Kansas. Mitten’s Travel Center offers both fast and casual dining, an urgent care facility, truck repair service, Blue Beacon truck wash, and more. As President/CEO, Mildenberger took Mitten Inc. from a $20 million to a $80 million operation with 140 employees.
This article originally appeared on Salina Journal: Sen. Roger Marshall reintroduces legislation to lower credit card fees
