Thanks, Josh Hawley, for helping small Missouri business fight credit card swipe fees | Opinion

As a small business owner in Missouri, I was excited to see Sen. Josh Hawley’s recent co-sponsorship of the Credit Card Competition Act. This bipartisan bill, originally introduced by Republican Sen. Roger Marshall of Kansas and Democratic Sen. Dick Durbin of Illinois, would bring much-needed market competition to help lower credit card swipe fees for retailers.

While these fees have largely flown under the radar for many consumers, they continue to stack up for merchants, often resulting in their second-highest operating expense after labor. Despite lower processing costs, Visa and Mastercard have raised these fees regularly, making it harder for businesses like my Kansas City-area convenience stores to serve our customers and keep our doors open.

Averaging around 2.2% of a total transaction, swipe fees are charged to merchants every time someone pays with a credit card. For Missouri businesses, that equates to more than $1.4 billion a year, siphoning off an incredible amount of local revenue to pad the profit margins of Wall Street banks and credit card companies.

Because so many businesses are operating on slim profit margins, merchants are largely forced to raise prices on their products to cover these swipe fees. For example, grocery stores have especially tight profit margins, ranging from 1-3%, meaning when Visa and Mastercard increase swipe fees, that inevitably results in higher-priced groceries for families across the state.

The current system makes rising swipe fees inescapable for nearly every American. Whether you use a credit card or not, it’s estimated that an average American family pays more than $1,000 a year to make up for the added cost of goods and services as a result of these fees. And the situation is only getting worse, given that credit and debit card swipe fees have more than doubled over the past decade.

Visa and Mastercard’s market dominance, controlling more than 80% of the market share, allows them to effectively sideline competitors and dictate excessive swipe fee rates. Both companies have consistently raised their fees for years on a set schedule that the major banks accept, knowing they won’t have to compete with other banks if they agree to universal rates set by the credit card companies.

This system is unsustainable and goes against the free-market principles Missourians value most.

To correct this lack of competition, it’s time for Congress to pass the Credit Card Competition Act. If passed, Visa and Mastercard would no longer be able to strike these de facto exclusivity deals with banks, because merchants would finally be offered a choice among at least two different routing networks. This means that when processing transactions, business owners could choose an alternative network offering similar services at a lower price, motivating the major players to keep their fees reasonable to compete. Increased competition also improves the quality of services while decreasing costs, a win-win for businesses and consumers.

Thankfully, Sen. Hawley understands it is time for Congress to address the price-fixing scheme between credit card giants and big banks to help both small businesses and consumers. One estimate predicts that this legislation would save Missouri more than $235 million a year in credit card swipe fees. Such savings would enable business owners to lower costs for consumers, helping Missouri residents make their budgets stretch.

I hope the rest of Congress will stand up for Main Street businesses against the greedy interests of Visa and Mastercard, which continue to exploit their market dominance to levy excessive swipe fees on small businesses across our state. It’s time to help lower costs for American businesses and consumers and pass the Credit Card Competition Act this year.

Babir Sultan is president and CEO of Fav Trip in Kansas City.