The NLMBDA points out that big banks and card networks, like Visa and Mastercard, charge small retailers more than 2% of the customer’s total bill every time a credit card is used to make a purchase.
Credit and debit card swipe fees have more than doubled over the past decade and soared 16.7% in 2022 alone to a record $160.7 billion. They are most retailers’ highest cost after labor – far too much to simply absorb – and drive-up consumer prices by more than $1,000 a year for the average family. With few people using cash today, small business retailers have no choice but to accept cards for payment.
The Credit Card Competition Act would address the payment issue by requiring that credit cards issued by the nation’s largest banks be enabled to be processed over at least two unaffiliated networks – Visa or Mastercard plus an independent network such as NYCE, STAR, or SHAZAM.
LBM dealers would be allowed to choose which network to use, meaning payment networks would have to compete to offer the best pricing, security and service.
“When it comes to Main Street vs. Wall Street, I’ll stand with Main Street businesses, who are the backbone of our economy, every single time,” Sen. Marshall said. “At a time of economic uncertainty and skyrocketing inflation, these credit card companies are increasing their hidden swipe fees and price gouging small businesses and consumers. Our legislation would rein in the big banks and the credit card industry, drive down costs for convenience stores, gas stations, and other small businesses, and ultimately pass those savings down to consumers. This legislation is the right thing to do, and I am proud to reintroduce it with bicameral and bipartisan support.”
Swipe fees have been able to rise so much because of lack of competition with Visa and Mastercard controlling more than 80% of the credit card market. And, unlike with debit cards, they block their competitors from handling many credit transactions, the NLBMDA said. They also restrict processing to their own networks, prohibiting competition from innovative independent payment networks that offer both lower fees and better security. Small retailers have the narrowest profit margins and fewest resources and are hit hardest by continuing unjustified increases in swipe fees.