Small business owners in places like Indianola, Pontotoc and Brookhaven are grappling with skyrocketing prices and a labor shortage. These local stores are the heart of our communities, but the big credit card companies are making it increasingly difficult for them to make a profit.
Fortunately, Congress can provide real relief to these companies by passing the Credit Card Competition Act (CCC). This bipartisan measure would lower prices for merchants and consumers by creating competition in the credit card market.
Rural communities are in dire need of relief. The small businesses that form the backbone of these communities are working hard to juggle supply chain issues and labor shortages while trying to limit the impact of rising prices on consumers. .
Senator Hyde-Smith has made concerted efforts to ensure that rural communities have the best banking options to help entrepreneurs build businesses. However, once these businesses are open, they face unexpected swipe fees that eat up a large chunk of their discretionary budgets and ultimately result in higher prices for their customers.
For business owners, sweeping fees have become the most expensive cost of doing business after labor and are forcing local merchants to raise prices to cover higher overhead.
It should be noted that Visa and Mastercard, as well as the major banks, receive a percentage of the total transaction, so higher consumer prices result in higher Wall Street swipe fees.
While the big banks have tried to scare consumers into believing that the CCC Act will hurt smaller community banks, this couldn’t be further from the truth. A small number of large banks dominate credit card issuance, with the top 10 card-issuing banks controlling approximately 80% of the market. By leveraging their control of the market, these banks are able to reduce the average costs of issuing cards and processing transactions, making the process much cheaper for them than for community banks.
We need to learn from the experience of debit card fees. The injection of competition into the debit card market has helped community banks gain market share by exempting banks with less than $10 billion in assets from debit fee regulation. In doing so, these efforts have leveled the playing field for smaller banks. If passed, the Credit Card Competition Act will do the same for all but the largest of the major banks in the country.
Small businesses and banks across rural America need competition in the payments marketplace. Visa, Mastercard and the big banks have too many advantages. Mississippi has two great US senators in Senator Cindy Hyde-Smith and Senator Roger Wicker who listen to voters, so we must urge them to join the bipartisan effort and support the CCC Act to force the banks off Wall Street to compete for our dollars.
Tom Gresham is Secretary-Treasurer of Gresham Petroleum Co. and former President and CEO of Double Quick, Inc. He lives with his wife, Louise, in Indianola.