Small businesses compete, why can’t credit card companies?

By Adam Temple
Real Clear Wire

Families aren’t the only ones who’ve been struggling with affordability for years. So have the small businesses that power the American economy and create the majority of new jobs. There’s no shortage of commonsense ideas to give job creators relief, but President Trump just highlighted one of the most important: Stop credit-card companies from ripping off Main Street.

This month, the president announced his support for the Credit Card Competition Act. At its core, this bipartisan bill would give small businesses the right to choose between multiple credit card processing networks. That’s a huge difference from the status quo, because right now, Main Street is stuck with networks that charge huge swipe fees. This leaves small businesses with a real dilemma: Stop accepting credit cards or pass the costs on to consumers. That’s an impossible choice in today’s economy. 

This crisis can be laid at the feet of Visa, Mastercard, and the big banks that create the unfair and uncompetitive payment systems. The two powerful credit card companies and their banking partners decide what swipe fees every small business in America pays. They charge 2%-4% on each transaction, which adds up quickly. In 2024, the swipe fees totaled a record $187.2 billion, and they were most merchants’ highest operating cost after labor. And as credit card companies have raised their swipe fees in recent years, many small business margins have come to the breaking point.

Visa and Mastercard fees disproportionately impact small businesses more than larger competitors. But there’s no good reason for small merchants to pay higher rates. The transaction process and equipment costs are the same for everyone. Visa and Mastercard’s higher prices for smaller merchants seem designed to maximize their own Wall Street profits while punishing Main Street. 

Every American suffers from this broken system. When small businesses lose money, they can’t hire more employees or invest in higher wages and better benefits. They also struggle to keep prices low, which matters at a time when consumers are cutting back and looking for deals. In the direst cases, swipe fees threaten the ability of small businesses to remain open at all. 

As long as this anti-competitive, rate-setting regime remains in place, small businesses and their communities will suffer. That’s why Main Street is counting on Congress to pass the Credit Card Competition Act.

Authored by Sens. Marshall and Durbin and Reps. Gooden and Lofgren, the bill would end the current broken system by requiring banks to let small businesses choose more than one credit card network. Instead of being forced to go with only Visa and Mastercard, small businesses could simultaneously use well-established, secure, and independent networks like Star, NYCE, Pulse, and Shazam.

Under this bill, there would be no more take-it-or-leave-it, no more one-size-fits-all fee structure. Instead, there would be real competition among credit card networks. And as every small business can attest, competition lowers costs. Credit card networks would cut their fees to keep their customers, and small businesses would pass the savings on to families. Small businesses already have to compete every day. Why shouldn’t credit card companies?

Main Street is desperate to see reform. Ninety-two percent of NFIB’s small and independent business owner members believe they should be able to pick the credit card networks that process their transactions. Now it’s time for our leaders in Washington, D.C., to pass the Credit Card Competition Act. President Trump is on board. So are lawmakers on both sides of the aisle. They need to give small business relief fast – for the sake of Main Street and all the families who depend on it.

Adam Temple is senior vice president for advocacy at the National Federation of Independent Business.