Confronting the suffocating grip of credit card giants on small businesses

As we observe Small Business Week, it is important to reflect on the vital contributions that small businesses make to our national economy and the fabric of our local communities. These establishments are more than just the backbone of the economy; they embody the spirit of entrepreneurship and resilience that defines our nation. Small businesses ignite innovation, create the majority of new jobs, and build up local economies. 

Yet, despite their critical importance, America’s entrepreneurs are consistently handicapped by disproportionately high operating costs that threaten their survival and growth. One of the most crippling financial burdens they face comes from an unexpected source: exorbitant credit card swipe fees levied by powerful financial conglomerates.

These swipe fees have surged by more than 50% since 2020, further squeezing the already tight margins of small businesses. The duopoly of Visa and Mastercard controls a staggering 80% of the credit card market, wielding their market dominance to dictate terms and impose these suffocating fees, which small businesses have no choice but to accept, and in turn pass along the cost to consumers.

To combat the persecution of businesses by multinational power brokers, I introduced the bipartisan Credit Card Competition Act, which would revolutionize the credit card processing market by fostering much-needed competition. This legislation would break the stranglehold that Visa and Mastercard have on the credit card market by allowing small businesses the freedom to choose between multiple credit card networks. This choice could lead to substantially lower transaction fees, providing a much-needed financial break for small-business owners.

By democratizing the process through which swipe fees are processed, the Credit Card Competition Act would save small businesses billions of dollars annually. Small-business owners have overwhelmingly voiced their support for the bill, recognizing its potential to drastically reduce one of their most burdensome expenses. 

But the issue of credit card swipe fees extends beyond the ledger. It is also a matter of economic fairness and justice. These fees often represent the second-highest operating expense after labor for many businesses, consuming profits that could otherwise be invested back into the business or used to raise employee wages. In 2022 alone, businesses paid an astonishing $130 billion in swipe fees — money that unfairly lined the pockets of big banks rather than the local banks and communities that small businesses serve. 

Congress faces a pivotal decision as it considers this transformative legislation. It is a decision that pits the interests of Wall Street’s financial giants against the needs of Main Street. We have a unique opportunity to recalibrate the balance and to ensure that small businesses are no longer unduly burdened by predatory financial practices. 

Let’s not only celebrate the spirit of our small businesses this week but actively work to secure their future.