The National Federation of Independent Business (NFIB) is urging its members to support the Card Competition Act, which has been re-introduced in the US Congress.

NFIB, the largest business organization in the nation, explained in a recent report, small business owners have been concerned about excessive credit card processing fees for years but have had no recourse.

Credit card costs have more than doubled since 2012. More transactions than ever before use credit cards, which adds a 2-3% fee per swipe. This amounts to tens of thousands of dollars per year that small business owners are forced to pay credit card processing companies to operate their business. 

Congress is considering legislation to address the rapidly increasing “swipe fee” issue, which would inject competition into the credit card market and bring down swipe fees. One proposal would require most credit cards to have two network options, giving small merchants an option to choose whichever one has lower “swipe fees.”

The Credit Card Competition Act encourages competition between processing networks, which will help drive down swipe fee costs for small businesses.

While the recent anti-trust settlement with Visa and Mastercard offers temporary relief to small businesses, the current system, where Visa and Mastercard set the interchange fee that every small business pays to every bank, amounts to price fixing, claims NFIB. Congress must reform the system to allow the free market and real competition to set the interchange rates, states the organization in a report to its members.

It is not unusual for a small business to pay $15,000 per year in swipe fees, which prevents them from hiring another employee.

After labor and health insurance, credit card swipe fees are my most expensive line item for many small businesses. If those fees decrease, they report that they would be able to spend more money in marketing and growing my business.

Senators Dick Durbin (D-Illinois) and Roger Marshall, M.D. (R-Kansas) reintroduced the bipartisan Credit Card Competition Act. Additionally, the administration endorsed the legislation on Jan. 13. Senator Durbin spoke on the Senate floor about the impact of high swipe fees on America’s small businesses. In his speech, Senator Durbin provided examples from two Illinois small business owners and NFIB members on how high swipe fees prevent hiring, hurt business growth, and why it’s time for Congress to take action. 

Passing this bill will help small businesses  nationwide reduce overhead costs and allow them to invest in their employees, products, and communities.

In his floor speech, Senator Durbin provided examples from two Illinois small business owners and NFIB members on how high swipe fees prevent hiring, hurt business growth, and why it’s time for Congress to take action.

He said, “I’ll give you examples of some other businesses who wrote to me in relation to this issue. Credit processing fees are crushing businesses, taking up to 4 percent of credit card sales. Currently this individual who wrote to me said, ’88 percent of my sales are by credit card. It has literally become the coin of the realm.’ This individual, Laura, says she owns a coffee shop. ‘My per-ticket amounts are low, roughly five bucks, yet each transaction can take up to 25% in swipe fees to the credit cards. We need competition in the credit card marketplace and options to choose from. Just like small businesses have to compete for customers, credit card companies should have to compete for our business.’ Laura has a coffee and tea business in Elmhurst, Illinois.”

He further said, “Greg Kelly writes me, with ‘combined with basic processing fees and set monthly access fees, credit card fees can add up to nearly 5 percent of total transactions.’ Greg writes, ‘this is insane, this prevents hiring and hinders business growth as well as being able to compete. Credit card reform is needed now.’”

NFIB urges Congress to pass the Credit Card Competition Act, which would allow small business owners to choose between multiple credit card network options. Ninety-two percent of NFIB members believe that small business owners should have the right to pick among multiple credit card processing networks.