Congress can deliver lifeline to NC small businesses in the new year

The political food fight has come to an end, with Donald Trump set to take office in January. Those in Washington should continue to advocate for bipartisan policy reforms that help small businesses. Addressing a scheme cooked-up by corporate giants Visa and Mastercard is a good place to start.

What’s happening?

Small businesses pay what is akin to a hidden tax to credit card companies and big banks every time a customer swipes, inserts, or taps a credit card. For independent restaurants, dry cleaners, convenience stores or bookshops like mine, these “swipe fees” amount to the second highest operating expense behind labor costs.

Why? Visa and Mastercard control 80 percent of the credit card market, which gives the two corporate giants license to jack-up “swipe fees” without fear of backlash. It’s akin to a cartel-like pricing scheme. And because these networks are currently the only game in town, small businesses have no other option but to fork over the high fees.

In short, Main Street is being held hostage.

In 2023, the credit card tag team collected more than $100 billion through this scheme—and that’s $7.5 billion more than the year before. My bookshop has certainly felt the “swipe fee” economic pain. It’s a runaway train that is showing no signs of slowing down.

North Carolinians — especially fellow members of the Lumbee Tribe — also feel the financial punch.

A big portion of our community faces economic hardship, making us particularly vulnerable to even modest increases to the cost of living. And unfortunately, when businesses are being raked over the “swipe fee” coals, owners have no other choice but to pass along some of the financial burden to their customers.

To help bring Visa and Mastercard to heel, federal legislation has been introduced that will inject competition into the credit card arena. Called the Credit Card Competition Act, the bill will provide small businesses with more processing options when completing a customer transaction.

In practice, that means credit card networks will be going head-to-head to compete for the business of bookshops like mine. There are plenty of other payment options—including NYCE, Star, or Shazam—that could throw their hat in the ring to compete against the Visa-Mastercard duopoly. That, in turn, will put small businesses into the driver’s seat, lowering “swipe fees” in the process.

If passed, it’s estimated that the policy would save businesses and consumers $16 billion annually. For some businesses and North Carolina families, these savings could be the key to staying afloat.

Unsurprisingly, the proposal is extremely popular among Main Street. National polling finds more than three-quarters of small businesses across the political spectrum support the legislation.

The period in between the election and the inauguration of the next president shouldn’t be wasted. North Carolina’s elected officials in Washington need to help lead the charge to get policy reforms that enjoy bipartisan support through Congress.

Small businesses and members of the Lumbee Tribe in the state need the help.

Editor’s Note: The views expressed in this column do not necessarily reflect the views of The Laurinburg Exchange.