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July 18, 2023 Editor, The News-Gazette: Every owner of a business in Rockbridge County sees the impact, every day, of the “swipe” fees banks charge merchants to process credit card transactions. Taking anywhere from $2 to $4 out of every $100 spent on credit cards, these non-negotiable fees are one of our highest costs, forcing prices to increase. Our customers also pay substantial fees for the privilege of using a credit card.
Swipe fees do nothing to benefit the local economy. Instead, they take money from Main Streets across America and send it to the approximately 30 largest financial institutions, and credit card networks like Visa and Mastercard. Since the fees are largely percentage based, each sale makes them even more money as inflation drives our costs higher. This results in mega-profits for them, which is of course why they are spending millions to defeat the Credit Card Competition Act.
U.S. swipe fees are the highest in the industrialized world due simply to lack of competition. Visa and Mastercard control 80 percent of the market and set/ fix the swipe fees charged by all banks that issue credit cards, whilst restricting processing to their own networks. Swipe fees have doubled over the past decade to a record $160 billion a year as a result, and now cost the average American family over $1,000 a year.
The Credit Card Competition Act has been introduced in Congress and is enjoying increasing bi-partisan support. This bill requires the largest financial institutions allow credit cards to be processed over at least one other network in addition to Visa and Mastercard. This would create competition that will save merchants up to $15 billion a year – savings that can be used to hold down prices for consumers, hire more workers or otherwise contribute to our local community. There is no impact on credit card rewards or security unless the largest banks allow it.
It's time for the credit card industry to compete the same way small business owners like me compete every day. We should all respectfully ask Senators Mark Warner, Tim Kaine, and Rep. Ben Cline to stand up for our Main Street merchants and our customers by supporting the Credit Card Competition Act. JOHN MORMAN Lexington
