Swipe fee hikes: a threat to Wyoming’s business-friendly environment

In Wyoming, we are proud to foster a pro-business environment and be a place for entrepreneurs to thrive. In fact, Forbes announced a new ranking from Venture Smarter that lists Wyoming as one of the top states in the country to start a business. The Secretary of State’s Office recently reported it has processed around 590,000 business filings, a remarkable 27% increase from last year.

To keep up this momentum, lawmakers must protect businesses’ ability to create jobs and serve customers. Unfortunately, they face a challenge that threatens to undermine the success of Wyoming businesses and hinder our state’s economic growth: Visa and Mastercard’s already bloated swipe fees and their plans for another increase in October.

Swipe fees are charged to merchants when customers make purchases using credit cards. While these fees are hidden from consumers when they check out, it doesn’t erase their impact on inflating the price of goods and services. These fees divert funds from neighborhood cafes and restaurants — and consumers’ pockets — channeling them directly to the major Wall Street financial institutions that collect them. Even though swipe fees rank as one of the highest expenses for retail businesses, merchants lack the bargaining power needed to secure more favorable rates through negotiation.

Major banks all agree to charge the same fees and, rather than competing, have the credit card companies set fee amounts for them. According to the Nilson Report, this anti-competitive system has resulted in total card fees ballooning to $160.7 billion in 2022. The fees generated from Visa and Mastercard credit cards alone amounted to $93.2 billion, a 20.7% increase from 2021. 

While Wyoming’s restaurants, hotels and attractions continue to deal with the rising cost of operating, spiking interest rates and a gradual recovery from the pandemic, these hiked fees force businesses to absorb higher transaction costs, eroding their already slim profit margins and inevitably leading to even higher prices. Swipe fees are especially challenging for new businesses to shoulder, given that they often struggle with limited financial resources due to lower cash flow and the high cost of initial operating expenses. In the end, all of us pay these fees to the tune of more than $1,000 per year for the average family.

Despite the clear negative implications this would have on small businesses and consumers, the big credit card companies on Wall Street are ready to raise swipe fees again. 

Fortunately, a solution is currently working its way through Congress. The Credit Card Competition Act aims to inject competition into the payments industry.

Under the CCCA, big banks would have to allow merchants to use a minimum of two credit card networks to process transactions on, ensuring that at least one of them operates independently of the dominant Visa/Mastercard duopoly. Consequently, this initiative gives merchants a market choice of which network to use for processing transactions, thereby fostering a more competitive and dynamic landscape within the credit card market. Fair competition in the payments marketplace would drive

down costs for both business owners and consumers. 

Importantly, the CCCA also protects smaller businesses in the financial sector by ensuring its provisions only apply to those financial institutions with more than $100 billion in assets. This ensures the bill targets major institutions while protecting the community credit unions and banks our local businesses rely on for essential financial services like loans.

Hospitality and tourism is Wyoming’s second largest industry, and it is comprised primarily of small businesses. The Wyoming Hospitality and Travel Coalition respectfully urges U.S. Sens. John Barrasso (R-

WY) and Cynthia Lummis (R-WY) to fight for Wyoming’s Main Street restaurants, rodeos, museums and lodging properties. If we want to keep our track record as a pro-business state and hold our position as a place for entrepreneurial opportunities, we must make it easier, not harder to operate.