Local opinion: Pass the Credit Card Competition Act and lower swipe fees

I would like to encourage Sens. Gallego and Kelly to work with their colleagues to pass the Credit Card Competition Act and deliver for Arizonans, making lowering costs a major priority as they work across the aisle this Congress.

Living expenses remain a persistent problem for Arizona residents. A report from September found 40 percent of the state’s adults struggled to pay for everyday household expenses. More recently, our state’s inflation rate surpassed the national average, meaning goods and services now cost an additional $1,181 per month.

Unfortunately, on top of inflation, families in the Grand Canyon state and around the country are already being forced to pay on average nearly $1,200 annually as a result of higher prices. Why? Thanks to the egregiously high credit card swipe fees currently levied on retailers, businesses are forced to increase costs to cover expenses. Swipe fees are charged to businesses for credit card transactions, and they account for many retailers’ second-highest operating expenses. Swipe fees can cost up to four percent for a credit card transaction, and thanks to Visa and Mastercard those fees have tripled in the last decade.

Visa and Mastercard hold a duopoly over the credit card payments industry, controlling more than 80 percent of the market share, and allowing them to indiscriminately raise fees. Swipe fees from Visa and Mastercard credit cards alone totaled $111.2 billion last year, up from $100 billion in 2023. That’s a 10 percent increase in just one year. My own small business paid over $4,500 in these fees last year alone, which I unfortunately had to pass on to my clients. Other businesses are forced to do the same.

This is an especially hard burden — and an unnecessary one — for low-income Arizonans, who are more likely to pay with cash and are essentially subsidizing higher income earners who have access to premium credit cards with more extensive rewards programs. As a result, it’s estimated that swipe fees transfer over $3.5 billion a year from those making less than $75,000 a year to those who make more than $75,000. Swipe fees have grown to be both excessive and inequitable, and it will not change unless Congress acts.

By passing the Credit Card Competition Act (CCCA), a bill with bipartisan support and overwhelming support from the public, Congress can bring much needed competition to the credit card industry. The CCCA would let merchants choose between a minimum of at least two credit card networks when processing a transaction. In a market with more competition, Mastercard and Visa would be incentivized to lower their swipe fees, lowering costs for businesses, both small and large, to a reasonable level. Thanks to the CCCA, Arizona businesses would save on operating costs, in turn, allowing them to lower prices and make everyday necessities more affordable for consumers.

Arizonans need financial relief and the CCCA can help.

Senators Gallego and Kelly, your leadership and commitment to the prosperity of our state are crucial. We urge you to champion this proposal, which offers a practical solution to rising costs for everyday Arizonans and Americans.