Measure would save money for consumers

Inflation continues to eat away at our families’ budgets here in Pennsylvania and across the nation. In many ways, our industries are on the front lines as we provide food, fuel, lodging, and community support to families who are now hard-pressed to manage their finances in these times. Because of this, we are very sensitive to costs and wish not to raise prices unless unavoidable.

Accordingly, we examine every expense that goes into the products and services we offer. Some of those costs are determined by the market in general and not easily influenced. There are however costs that can be reduced with some assistance. Credit card swipe fees are one such cost.

Pennsylvania business associations representing the energy and food and beverage service industries are joining to ask Congress to pass legislation that would reduce credit card processing 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 other credit card companies charge on average of 2% to 4% of the total transaction cost, adding to the overall cost to a consumer.

It may sound small, but it’s not. Credit card swipe fees cost the average family around $900 every year, just to use the card you may already pay an annual fee to use as well as interest on a balance owed. The reason is simple: Visa, Mastercard, and others own the payment networks that process credit card purchases. If a company wishes to accept credit cards, merchants must use these networks. 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.

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

But the big credit card companies are fighting this change in every way they can. That should be no surprise as they collected over $138 billion 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. Even if you don’t use a card on a purchase, you’re still paying a portion of your cost to cover those fees as pricing is set consistently for all.

Take for example the cost of transportation. High swipe fees are eating into tight margins for gas stations and fuel providers who then must pass on these costs to consumers.

There’s simply no reason 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.

I’m writing on behalf of main street businesses … places people visit almost every day. We’re close to the communities we serve and know what pressure family budgets are facing 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 families.

Ted Harris is executive vice president of the Pennsylvania Petroleum Association. He writes on behalf of that group and the Pennsylvania Restaurant and Lodging Association, Pennsylvania Food Merchants Association, Pennsylvania Licensed Beverage and Tavern Association and Malt Beverage Distributors Association of Pennsylvania.