Credit Card Competition Act would bolster tourism industry

While inflation has fallen from previous record-highs, the lingering effects continue to put a damper on the finances of everyday Nevadans. Goods and services are still more expensive and tourist hot spots like Las Vegas are still recovering from the pandemic-driven downturn. To help bolster the tourism industry in the state, it’s critical that Nevada Sens. Jacky Rosen and Catherine Cortez Masto support the Credit Card Competition Act (CCCA), a bill working its way through Congress that would promote competition in the credit card payments sector, in turn helping drive down excessive swipe fees currently burdening small businesses and consumers. 

Many Americans are unaware that every time they use a credit card, the merchant is then charged on average between 1.5% – 3.5% of the total transaction amount. Despite the decrease in costs associated with processing a transaction, credit card companies continue to raise these swipe fees on a schedule.

While many small business owners have voiced objection to excessive swipe fees, the lack of competition in the payments marketplace has left American businesses paying the highest swipe fees in the industrialized world. Visa and Mastercard hold a whopping 80 percent of the market share and have used that control to continue growing profits while preventing competitors from having a fair shake at providing the same services. 

With market dominance, Visa and Mastercard set a high and uniform swipe fee rate that major banks institute willingly for a cut of the profit and the general card services they provide. Banks then only offer a single network option to merchants when they process a credit card transaction, meaning businesses can pay the swipe fees or forfeit credit cards as a payment method – an unsustainable business model.

This leaves merchants in an impossible position where rejecting credit cards or adding a special surcharge to credit card purchases would turn off consumers, so raising prices becomes a necessity to keep the doors open. As a result, the average American family pays more than $1,000 a year in higher prices thanks to inflated swipe fees. 

Nevada relies heavily on tourism as the state’s number one employer and the source of nearly $91 billion in economic activity. However, with every credit card purchase at a hotel, restaurant, or show, a portion of these tourism dollars are shipped back out of the state to pad the profits of major financial institutions on Wall Street. 

In fact, across the country, merchants paid over $126 billion in credit card processing fees in 2022, a jump of more than 20 percent from the year prior. These fees simply add to the nearly 45 percent net profit margin of Mastercard and over 50 percent margin of Visa. While Main Street businesses lose vital funds, they could invest to hire new employees, buy new equipment, or lower prices for consumers.

Fortunately, the CCCA offers a free-market solution that seeks to bring competition to the payments sector as opposed to artificially capping these fees. By giving merchants a second routing option, the CCCA forces Visa and Mastercard to finally compete for business by leveling the playing field for additional networks to begin offering comparable services at a lower cost. As witnessed in other industries, a competitive payments market would also serve to boost innovation and enhance security measures.

Additionally, the CCCA only impacts the financial institutions that have over $100 billion in assets. This means community banks and credit unions will be left untouched and able to continue providing valuable financial services to the local businesses they know best. 

The CCCA would help keep the hard-earned money of Nevada businesses right here in the state. Lower credit card swipe fees means greater economic opportunities and a reduced burden on business owners and consumers who could use some relief from the lingering effects of sky-high inflation. I hope our senators will support the CCCA and work with their colleagues to pass this legislation as soon as possible.