Guest Column

Consumers Will Continue to Bear the Burden of Swipe Fees Without the Credit Card Competition Act

Characterizing the bill as a sinister plot orchestrated by mega-retailers could not be further from the truth

By Sean M. Graves

The recent op-ed attempting to vilify the Credit Card Competition Act (CCCA) reads like a desperate attempt to preserve the status quo and protect corporate interests at the expense of small businesses and consumers. It’s time to cut through the deceptive rhetoric and expose the truth behind this thinly veiled attempt for Wall Street giants to continue exploiting their control over the credit card industry.

Characterizing the bill as a sinister plot orchestrated by mega-retailers could not be further from the truth. This bill is supported by a diverse group of organizations representing workers, small businesses, and competition and consumer advocates, who launched a new ‘Lower Credit Card Fees’ Coalition late last year to dispel myths surrounding the bipartisan CCCA and urging Congress to pass it. These everyday Americans negatively impacted by rising swipe fees are trying to push back on the spread of misinformation by Wall Street, which is spending millions of dollars to avoid increased competition.

The CCCA would rightly address longstanding issues of monopolistic practices and exorbitant fees within the credit card industry. By leveling the playing field, the CCCA seeks to empower small businesses and foster genuine competition, making it a tool to defeat corporate greed, not create it.

Swipe fees, often the second-highest overhead cost for businesses, are a hidden inflation multiplier for consumers. Despite representing a significant portion of each purchase, these fees are not disclosed, leaving consumers in the dark about the true cost of their transactions. The average American household is unwittingly shelling out over $1,000 annually in swipe fees after excessive fee rates force businesses to raise prices on all their goods and services. It’s a lose-lose for merchants and consumers that ultimately lines the pockets of big credit card companies like Visa and MasterCard.

Moreover, the astronomical rise in swipe fees over the past decade – having more than doubled while the cost of processing a transaction has decreased – is indicative of a broken system that prioritizes Wall Street profits over the well-being of everyday Americans. The fact that the U.S. pays the highest swipe fees in the industrialized world is a damning indictment of the current state of affairs.

As Montanans continue to face far too high prices for necessities, with far too many having to resort to using local food banks to feed their families, the urgency for action on swipe fee reform is undeniable. It’s time to end this blatant exploitation by the big banks and credit card industry, which rake in over $160 billion annually in swipe fees from communities across the country every year.

But there’s hope on the horizon. The CCCA would introduce competition into the credit card processing market, which promises to drive down swipe fees and empower merchants to choose more affordable alternatives to Visa and MasterCard. Lower processing costs would translate into lower prices for consumers, offering much-needed relief in an economy weighed down by inflation and rising living expenses. Montana alone pays nearly $240 million every year in swipe fees, but stands to save almost $40 million if the CCCA is passed.

Major financial institutions have also tried to mislead the public into somehow believing competition would make the market less secure when it’s more likely the opposite would occur. Visa and MasterCard currently experience rates of fraud eight times higher than similar networks currently operating in the debit space. These alternative networks are far from being untested or “new”, and allowing them to compete in the credit card space would help drive innovation and advancements in services and security protections.

It’s time to break free from the stranglehold of swipe fees and push back on the misinformation being spread to protect the big banks and credit card industry’s profit margins. By supporting the CCCA, Sens. Steve Daines and Jon Tester can stand up to Wall Street’s interests and pass legislation that puts an end to ever-rising swipe fees that increase inflation. By doing so, we can create a more competitive processing system that works for the many, not just the few. The time for action is now.

Sean M. Graves lives in Billings and is the owner of the Montana Brewing Company, Hooligan’s Sports Bar, Diamond X Beer Co., Thomas Meagher Bar and Windbag Saloon.