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Oregon's U.S. senators should support the bipartisan Credit Card Competition Act of 2022.

The current economic climate isn't optimal for the small business community that drives the Oregon economy. As most Oregonians feel at the check-out counter, inflation is raging at the quickest pace in 40 years. Supply chain hiccups are limiting what can be stocked on store shelves. And consumer demand is chilling as the odds of entering a recession grow by the day.

But one additional threat to small businesses that remains hidden from the public view are the rising costs associated with using credit cards. Every time a consumer swipes, inserts or taps a credit card at the checkout counter, the merchant is charged a fee. These "swipe fees" — which amount to a percentage of the total bill — go to the big banks and credit card companies responsible for managing the transaction.

I've experienced the financial headache firsthand. Until recently, my wife and I owned a convenience store in Southeast Portland for roughly 40 years. Even though the store only provided basic groceries, hot food items, snacks and drinks, we paid almost $20,000 last year in credit card swipe fees. When compared to the other budget line items of our modest operation, it amounted to our second biggest business expense.

And here's the silly part. For some of our low-cost items — like fountain drinks, candy bars, newspapers, and lottery tickets — the swipe fee amount actually surpassed the small profit margin. Translation: the store lost money every time a consumer purchased one of these items with a credit card.

Charging a reasonable amount of money to manage credit card transactions is warranted. But swipe fees are getting ridiculous and need to be reined in. Since 2012, as technological innovations have driven the costs of managing transactions down, swipe fee levels have nearly tripled with no signs of slowing down.

Currently, in total, businesses pay $140 billion annually to cover this "transaction tax" — a cost that partially rolls downhill to consumers. It's estimated that the average family pays an additional $900 per year in higher prices because of swipe fees.

Why are swipe fees rising unchecked? Because of a lack of competition.

You see, unlike most other areas of the U.S. economy, the credit card industry is dominated by two key players that effectively form a duopoly: Visa and Mastercard. Because the tag-team controls roughly 80% of the market, the pressure of competition that typically keeps prices under control everywhere else is severely suppressed. As a result, swipe fees are left to increase without guardrails. And merchants have no other option but to enter the raw deal and swallow the costs.

Enter the Credit Card Competition Act of 2022. This recently introduced federal legislation that will reset the credit card market to benefit merchants and consumers by fostering transparency and competition. More specifically, the bill will require big banks that surpass $100 billion in assets to give merchants more options on how to process the cards issued to their card users. There are alternatives to Visa and Mastercard that offer the same service minus the highway robbery.

In practice, the bill will stimulate competition among credit card companies, which will in turn lower swipe fee levels.

Small businesses across Oregon are struggling to stay afloat amid current rocky economic waters. Passing the bipartisan Credit Card Competition Act will bring much needed financial relief to merchants and ease cost pressures. Oregon Sens. Ron Wyden and Jeff Merkley should give their support.

Larry Stewart is a Gresham resident.


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