Oregon small businesses deserve a break from steep credit card fees

A recent survey from Gov. Tina Kotek’s Prosperity Council found that most Oregonians believe high costs, taxes and regulations are making it harder for businesses to grow. The governor acknowledged the challenge plainly: “We have to be intentional here, to be competitive.”

One place to start is with the steep credit card processing fees Oregon businesses pay on nearly every transaction.

Credit card interchange fees, commonly known as “swipe fees,” typically take 2 to 4 percent of every credit card purchase. For a small business like ours, that means paying a fee each time a customer buys a cup of coffee, a box of pastries or even leaves a non-cash tip for an employee.

Those percentages add up quickly. Businesses across the U.S. paid a record $157 billion in credit card “swipe fees” last year, $9 billion more than in 2024. For small businesses already facing rising costs for food, labor, insurance and utilities, processing fees have become another significant expense with little ability to negotiate them.

That’s largely because Visa and Mastercard dominate the credit card payments market, leaving merchants with few alternatives.

Oregon lawmakers have an opportunity to provide some relief. One commonsense reform would be to prohibit credit card companies from charging “swipe fees” on gratuities. While Oregon businesses don’t face the additional challenge of paying processing fees on sales taxes, we still pay them on tips intended for our employees. Businesses shouldn’t have to pay a fee on money they don’t actually keep.

The credit card industry argues that separating portions of transactions would be difficult. But the payments system already identifies different components of transactions for accounting purposes. This small tweak would require an operational adjustment, not rebuilding the entire payments ecosystem.

Congress can also address the lack of competition in the credit card market. The bipartisan Credit Card Competition Act would require large card-issuing banks to provide a second processing network beyond Visa or Mastercard. Giving merchants a choice could create natural competition over “swipe fees,” contributing to savings as high as $17 billion annually for consumers and businesses alike.

Oregon Sens. Ron Wyden and Jeff Merkley could support that effort federally, while state lawmakers pursue reforms that can provide relief here at home.

If Oregon is serious about becoming more competitive and helping small businesses succeed, reducing excessive credit card “swipe fees” is a practical place to start. Even modest reforms would allow more of every dollar spent at a local business to stay in that business, as well as in the community it serves.