By Anna Mineer | Point of View
Arizona small businesses are suffocating under the stranglehold of a concentrated U.S. payments marketplace, which favors corporate giants at the expense of local entrepreneurs and hardworking families.
Swipe fees imposed by Visa and Mastercard have become one of the most significant challenges facing our small business members. These fees have skyrocketed to become many retailers’ highest operating expense after payroll. This burden extends to everyday consumers, who end up paying an extra $1,000 per year for essential goods and services, according to the Consumer Financial Protection Bureau.
Let’s be clear: Visa and Mastercard have established an unprecedented duopoly, controlling 85% of credit card transactions. This tight grip on the market translates to ever-rising swipe fees, with Arizona small businesses and customers bearing the cost. The lack of competition has left local businesses with no choice but to accept the onerous fees dictated by the duopoly.
It’s time for Congress to stand up for small businesses and consumers by supporting the Credit Card Competition Act (CCCA). Introduced in Congress by a bipartisan group of U.S. senators and representatives, this legislation aims to enhance competition and choice, injecting much-needed vitality into a payments market that is plagued by exorbitant swipe fees and limited options for businesses.
One of the major concerns addressed by the bill is the inflated prices consumers pay for everyday purchases due to credit card swipe fees. These fees, set by the credit card giants and enforced by major financial institutions, contribute to higher prices on groceries, gas and other essential goods. By injecting competition among credit card companies, this legislation would reduce swipe fees. Businesses would have a second routing option to process payments on, and this choice would drive competition between payment networks, spurring innovation and cheaper services.
Arizona Senators should support the Credit Card Competition Act
By freeing merchants from the compulsion to exclusively use the networks of Visa and MasterCard, this legislation will pave the way for significant fee reductions for Arizona small businesses. Consequently, businesses can allocate resources more efficiently, invest in growth, and provide better products and services to our communities. The benefits extend to consumers, who will experience tangible relief as the lowered cost of goods and services directly impacts their wallets, providing an economic boost for Arizona families.
Furthermore, the proposed legislation seeks to prohibit networks under the influence of foreign governments, such as China’s UnionPay, from handling transactions in the U.S.
Transactions processed by networks controlled by foreign governments could pose a potential national security risk, creating vulnerabilities and opportunities for foreign interference or data breaches, which can compromise sensitive financial information. Thankfully, the CCCA would make our payments system more secure, not only by reducing the influence of UnionPay on our payments marketplace, but through increased competition leading to better security measure.
The bipartisan nature of this bill is a testament to its significance and urgency. Legislators recognize the detrimental impact of increasing hidden swipe fees on small businesses, especially during times of economic uncertainty and skyrocketing inflation, and understand that increased competition in the payments marketplace is a good thing for businesses and customers.
Senators Kyrsten Sinema (I-AZ) and Mark Kelly (D-AZ) should seize this moment and champion the CCCA on behalf of Arizona’s small businesses and consumers. By fostering healthy competition, we can unleash the full potential of our small businesses, encouraging innovation, job creation and economic prosperity across Arizona.
Editor’s note: Ms. Mineer is a local entrepreneur who serves on the Tourism Development Commission for the City of Scottsdale.