Swipe fee legislation crucial lifeline for Native American communities

 

Prices have yet to come down, squeezing budgets for American businesses and consumers alike, especially among tribal communities. That’s why it’s critical for lawmakers to pass the Credit Card Competition Act (CCCA), which would drive down hidden swipe fees that are adding to the financial burden felt by so many.

 

Every time someone swipes, taps, or inserts their credit card, a swipe fee is charged to merchants, averaging around two percent of the total transaction amount. While seemingly small, these fees quickly add up. Swipe fees paid by business owners last year topped more than $172 billion, exemplifying how credit card swipe fees have tripled over the last decade. Just last year, swipe fees sucked about $940 million out of Oklahoma’s local and tribal economies — money our communities won’t see again.

 

While other countries have taken steps to reign in excessive swipe fees, the United States is an outlier on the international stage, suffering from the highest swipe fees found anywhere in the world. Together, Visa and Mastercard hold over 80 percent of the market share, and as a result, have been able to stave off any actions to reduce fees or break up their duopolistic control, while boxing out competitors who could drive down costs.

 

Meanwhile, it has not gotten easier for merchants to absorb these fees, especially for businesses with slim profit margins like tribal convenience stores or hotels. In many cases, they are forced to pass them on to consumers via higher-priced goods and services. It’s now estimated that the average American family spends over $1,100 a year in swipe fee-related price increases. For many Native American families, that money can be a make-or-break issue, especially considering more than 1 in 5 Native Americans in Oklahoma are now living in poverty.

 

I hope Sens. James Lankford and Markwayne Mullin will consider joining the bipartisan group of senators who introduced the CCCA and work to pass this legislation. Competition is a critical component of the American economy and it is sorely lacking in the credit card industry.

 

The CCCA would ensure business owners have a choice between at least two routing networks when processing a transaction. This freedom to choose would give alternative networks a chance to offer similar, or even better, services at a fraction of the cost. Feeling the competitive pressure, Visa and Mastercard would be motivated to reduce their swipe fees and build upon their services to earn the business of merchants.

 

Additionally, the CCCA would help protect consumers and business owners from security threats posed by foreign networks like China UnionPay. Despite being a state-owned financial institution, UnionPay is currently available to American banks should they choose to enable their services on their cards. This is an obvious risk to the financial privacy of American consumers and merchants. Passing the CCCA would block UnionPay and other networks that pose a national security threat from operating within our borders.

 

From easing financial struggles to protecting our payments from foreign influence, the CCCA would finally ensure Visa and Mastercard are subject to the same competitive pressures felt by companies in other industries across the country. It’s estimated the CCCA would save over $16 billion a year, which would allow merchants to reinvest in their businesses and lower costs for customers, offering much-needed relief to Oklahoma’s tribal communities. I hope our lawmakers will act swiftly to pass the CCCA this year.