Why the Credit Card Competition Act is needed in Nevada

Nevada consumers and retailers have a great opportunity to correct a wrong when it comes to credit card merchant fees, also known as swipe fees.

Unbeknownst to many Americans, right now, when you make a purchase either at a retail store or online, the merchant pays the issuing bank and the credit card processor a fee for that transaction to be processed. The fee varies based on the type of card you have, but the merchant has no control over the fee structure.

These swipe fees levied against merchants each time a credit card is used have become excessive and are often one of the highest costs to a business, second only to labor costs. According to the National Association of Convenience Stores, Nevada c-stores alone paid more than $114 million in swipe fees in 2021.

Why should cardholders care? Because the swipe fees charged to merchants on every credit card purchase are getting passed on to consumers in the form of higher product and service prices.

Swipe fees are typically set by Visa and Mastercard, and the banks who issue these cards are complicit in applying these fees, no matter how outrageous the increase gets. In fact, Visa and Mastercard increased credit card swipe fees by $1.2 billion last April, further contributing to making the U.S. home to the highest swipe fees in the industrialized world.

That’s why legislation like the Credit Card Competition Act is so necessary. The bill would finally bring competition to the payment marketplace, which is currently dominated by Visa and Mastercard. The enhanced competition will lower swipe fees footed by merchants on every credit card purchase.

Credit card fees set by Visa and Mastercard should be subject to market forces, just like prices in virtually every other domestic market. The Credit Card Competition Act would do just that, allowing networks like Star, Shazam, Pulse and NYCE to have a chance to compete against the Visa-mastercard duopoly.

Don’t let the big banks fool you. The Credit Card Competition Act would only affect the biggest banks in the country with over $100 billion in assets, resulting in a total of only 32 banking institutions affected by this legislation. Nevada’s community banks would continue to operate as normal.

Some banks are telling Nevada Sens. Catherine Cortez Masto and Jacky Rosen that the Credit Card Competition Act would result in visitors not coming to Nevada because they would lose their rewards gained via credit cards. This is not true. The text of the bill only includes the opportunity for merchants to choose who they want as their credit card processor. It does not touch their rewards.

However, the threat to Nevada’s tourism industry if this bill doesn’t pass is very real. As swipe fees and inflation continue to climb, it might soon be outright unaffordable for tourists to patronize the hallmark restaurants, hotels and entertainment Nevada so heavily relies on.

Congress must work to address rising prices, particularly as we head into the busiest spending season of the year. Passing the Credit Card Competition Act is an essential step in the right direction. Cortez Masto and Rosen need to know that the Credit Card Competition Act is a top priority for small businesses.