Small businesses are the backbone of the Washington economy — employing 1.4 million workers. Unfortunately, these businesses are facing a huge financial strain because of excessive credit card “swipe fees.” Every time a customer uses a credit card, businesses must fork over what amounts to between 2 percent and 4 percent of the final purchase to credit card companies and banks.
Swipe fees add up significantly, amounting to nearly $130 billion in 2022 — a 20 percent increase compared to the previous year. Now, Visa and Mastercard are planning to increase swipe fees on merchants again this fall — a move that will cost businesses an additional $502 million annually.
The lack of competition in the credit card market has allowed Visa and Mastercard to raise fees with limited backlash. However, the Credit Card Competition Act currently being pushed in Washington could be the lifeline we desperately need.
The Credit Card Competition Act would inject much-needed competition into the credit card market. It would force credit card companies to compete for a merchant’s business and motivate them to offer more reasonable rates. Experts estimate that the Credit Card Competition Act would save businesses $15 billion per year.
I urge Washington’s elected leaders in Congress to swiftly pass this legislation.