- Consumers continue to feel the burden as small businesses are forced to raise the prices of their goods and services just to keep pace with rising expenses like swipe fees.
Today’s issue of affordability is no stranger to the people of Mississippi. With gas in the state nearing $4 per gallon and Mississippi households spending the largest share of their budgets on groceries in the country, citizens are feeling the financial strain closing in from all directions. One contributing factor that has largely flown beneath the radar, is credit card swipe fees. These fees not only impact the livelihood of the small businesses that our state depends upon, but they steadily siphon hard-earned money from our wallets.
That’s a big part of why President Trump endorsed the Credit Card Competition Act (CCCA) to help reduce the cost of swipe fees, make life more affordable, and save our local economy millions. While there’s no silver bullet for rising prices, Senators Wicker and Hyde-Smith should be helping the President do what he can to help lower prices by sending the CCCA to his desk to be signed.
Credit card swipe fees charge business owners like me roughly 2.35% of every credit card transaction, and when many people are increasingly opting to pay with their card instead of cash, these costs accumulate quickly. Credit card swipe fees have become the second-largest operating expense for so many businesses, with our state’s economy losing nearly $600 million in swipe fees annually.
Unfortunately, every dollar allocated to covering swipe fees is a dollar that could have improved equipment, recruited staff, and lowered prices for customers. Instead, consumers continue to feel the burden as small businesses are forced to raise the prices of their goods and services just to keep pace with rising expenses like swipe fees. It’s a pricey cycle perpetuated by Visa and Mastercard, whose control of more than 80% of the payments market grants them virtually unchallenged reign over swipe fee rates. As these two companies raise rates, major banks who issue the cards are more than happy to line their pockets while your favorite local shops find themselves with no room to negotiate for lower costs.
The CCCA represents the key to unlocking competition and new opportunities in the market. By enabling businesses to choose from more than two networks when processing card transactions, the CCCA would finally push Visa and Mastercard to offer more reasonable swipe fee rates as other networks enter the market. Through this bill, Mississippi would be poised to save $112 million per year from credit card swipe fees, and small businesses could get back to investing in the local communities that invest in them. The CCCA would also foster innovation in the industry, spurring companies to continue developing new security solutions and advancements in payments technology as merchants opt for preferred networks with the best services at the most reasonable price point.
Small businesses are the lifeline of our communities. From major cities to rural towns, Mississippians rely on family-owned stores like mine. We deserve better than being pinched by the credit card giants who dominate the market. As lawmakers continue working to bring down costs and fight the affordability crisis, I hope they’ll shine some light on credit card swipe fees and take action by passing the CCCA.
Merle Flowers
