Pass the Credit Card Competition Act of 2022

The following is a guest editorial that has been published in newspapers across Pennsylvania and sent to Sen. Pat Toomey. This guest editorial is part of a coalition effort that includes the Pennsylvania Licensed Beverage and Tavern Association, Pennsylvania Restaurant and Lodging Association, Pennsylvania Food Merchants Association, Pennsylvania Petroleum Association, and Malt Beverage Distributors Association of Pennsylvania.

Inflation continues to eat away at the budgets of our families here in Pennsylvania and across the nation. In many ways, our industries are on the front lines – we provide food, fuel, lodging, and community to families hard pressed to manage in these times. Because of this, we’re super sensitive to costs, and to not raising prices unless and until we’re forced to.

Accordingly, we examine every cost to us, that goes into the products and services we offer. Some of those costs are not in our control and our set by the companies we buy our inventory from. But there are other costs that can be reduced. Credit card swipe fees are one such cost and we’re joining together today to ask Congress to pass legislation now before the House and Senate, that would reduce these fees by enabling competition in the credit card payment network system.

Many consumers and businesses use credit cards daily to make purchases and manage cash. What many don’t realize is that every time we use a card, Visa, Mastercard, and the other big credit card companies charge on average between 2 and 4% of the total transaction cost. That’s a direct cost to consumers and it’s as big, or bigger, than the total markup charged by most grocery stores.

It may sound small, but it’s not. In fact, credit card swipe fees cost the average family around $900 every year, or about $75 per month – just to use the card you may already pay an annual fee to use, as well as interest on any balance owed. The reason is simple: Visa, Mastercard, and others own the payment networks that process credit card purchases. And, if we want to take credit cards, merchants must use their network.

No negotiation. Just pay up.

It’s anti-competitive and should be changed now.

That’s what the Credit Card Competition Act of 2022 would do: enable competing payment networks so merchants could choose the best option for their business, and for their customers. Reducing swipe fees would help us hold the line on rising prices and pass those savings along to our customers, and there are really no downsides.

Contrary to what the big credit card lobbyists are saying, enabling competing payment networks would not impact rewards programs, acceptability of cards, or consumer choice. It will create a more secure payment processing environment where there are backup networks available in the event of a problem.

But the big credit card companies are fighting this change in every way they can. That should come as no surprise as they raked in $138 billion dollars in swipe fees in 2021 alone. That’s over and above all the other fees consumers pay to use cards.

Credit card swipe fees are added to the cost of just about everything most of us buy. Merchants really have no choice but to do this so, even if you don’t use a card on a purchase, you’re still paying a portion of your cost to cover those fees. Take for example the cost of transportation. High swipe fees are eating into tight margins for gas stations and fuel providers who then have to pass on these costs to consumers and hire less people.

There’s simply no reason that this system should be allowed to continue. Congress should be fostering competition in the marketplace, not hidden monopolies like the credit card payment system. It’s a system that’s been broken for years. Now is the time to fix it.

We’re main street businesses…places people go almost every day. We’re close to the communities we serve, and we know what pressure family budgets are facing today as prices rise relentlessly. We’re committed to holding the line as best we can, and we’re asking Congress to help us by passing the Credit Card Competition Act today. It won’t fix the inflation problem, but it will help us do our part to hold the line for our families. Consumers need a break.

Pennsylvania Licensed  Beverage and Tavern Association

Pennsylvania Restaurant and Lodging Association

Pennsylvania Food Merchants Association

Pennsylvania Petroleum Association

Malt Beverage Distributors Association of Pennsylvania