To the editor:

Sky-high inflation remains a persistent problem for Americans, but Kansas Sen. Roger Marshall has not lost sight of his constituents and continues to fight to lower costs.

Working with both Republican and Democratic colleagues, Sen. Marshall has spearheaded the effort to take on excessive swipe fees set by credit card giants like Visa and Mastercard. These fees are well-known to small businesses, often constituting their second highest overhead expense behind labor, but are largely hidden to consumers.

Kansas is home to over a quarter of a million small businesses, yet we rank 36th in the nation for top places to start a small business. Nearly 20 percent of Kansas small businesses fail in their first year, making Sen. Marshall’s expected reintroduction of the Credit Card Competition Act (CCCA) critical to helping lower fees by injecting competition back into the credit card industry.

The Visa and Mastercard duopoly controls over 80 percent of the market, allowing them to set and raise swipe fees indiscriminately. Thanks to a market failure that has allowed a few major companies to rule the credit card industry, the U.S. is home to the highest swipe fees in the industrialized world. In 2021 alone, merchants paid $138 billion in processing fees and are on track to continue paying more unless Congress intervenes.

Merchants have one routing option by which they can process credit card transactions, forcing them to accept excessive fees or forfeit credit cards as a payment option altogether. As a result, American consumers often unknowingly pay for swipe fees when business owners are forced to bake rising fees into the cost of goods and services. Some estimates show American families spend over $1,000 a year thanks to the financial burden of swipe fees.

This financial burden is particularly damaging for Kansan families who saw the steepest decline in personal income in the Kansas City region. While unemployment for the region dropped below the federal average, personal incomes in Kansas dropped a whopping 3.3 percent even after being adjusted for inflation

Meanwhile, swipe fees are having a multiplier effect on inflation because they take an additional percentage from a total transaction amount. This means as inflation raises prices, Visa and Mastercard skim even more off the top. Swipe fees average around 1.5-3.5 percent, so when businesses raise prices to grapple with inflation they are hit with higher swipe fees, forcing them into a vicious cycle of constantly raising prices to cover higher fees.

Unfortunately, small businesses and merchants have no leverage to negotiate these fees. The CCCA would change this by making major credit card companies like Visa and Mastercard subject to the whims of the free market once again. If enacted, this bill would mandate that a second routing option is available to merchants, allowing smaller networks like Pulse and Shazam an opportunity to compete for business.

The American economy thrives under free market capitalism, and that is what the CCCA seeks to cultivate in the credit card industry. Smaller networks could offer lower fees and motivate the major players to either invest in providing better services or lower their fees to remain competitive. Either way, main street would once again have a choice in the networks they use and swipe fees would no longer be dominated by a party of two.

Senator Marshall’s CCCA would also protect small- and medium-sized community banks and credit unions by excluding financial institutions with less than $100 billion in assets. Upon reintroduction, I hope our lawmakers will work to pass the bipartisan CCCA, and bring relief to so many businesses and consumers across the country.

Zach Haney

2nd District GOP Delegate

Topeka