Tourism stands as a vital cornerstone of Nevada’s economic prosperity, fueling its growth and development. However, the very businesses that make our state a magnet for tourists find themselves grappling with an exorbitant swipe fee burden each time they process a credit card transaction. These fees are silently siphoning profits from small enterprises, channeling them into the coffers of financial behemoths such as Visa and Mastercard.
Thankfully, a bipartisan solution is awaiting approval in Congress: the Credit Card Competition Act (CCCA). At present, merchants are constrained to a single network for credit card processing. The CCCA, if passed, will break this monopolistic system, unleashing the forces of competition that promise to drive down these oppressive swipe fees.
Regrettably, those who are driven to protect Wall Street’s bottom line are peddling apocalyptic scenarios about the demise of credit card reward programs and the security vulnerabilities of other networks. It’s time to set the record straight, debunking the myths surrounding this legislation.
First and foremost, it is essential to understand that the CCCA is not out to dismantle credit card reward programs. These incentives, such as enticing travelers with airline miles, hotel perks and cash back rewards, are determined by the banks issuing the cards, not the payment processing networks. Meaning, regardless of whether a card is processed through Visa/Mastercard networks or an alternative, the rewards remain constant, a fact conveniently omitted by opponents of the bill.
A comprehensive study by the payments consulting firm CMSPI confirms that, if the CCCA is enacted, credit card rewards would be affected only minimally, to the tune of a mere 0.10 percent. The profits reaped by banks are more than enough to offset this fractional reduction in swipe fees, ensuring that the rewards will continue to be offered. Claims that the CCCA threatens to obliterate credit card rewards are nothing more than fear tactics wielded by credit card networks to safeguard their immense profits.
The fact-checking service Verify.com has scrutinized these claims and concluded that the CCCA is not related to credit card reward programs, perks, cash back or travel miles. Also, credit card companies heavily rely on these rewards as a key selling point to attract and retain customers, which is critical to their bottom line, making any threat at a reduction ring hollow.
Opponents have also tried to stoke the flames of fear regarding security concerns, but the Federal Reserve has found rates of fraud under Visa and Mastercard are higher than comparable networks in the debit payment space. With a lack of competitors, it seems the major players in the credit card industry have become largely complacent with lower-quality services.
Contrary to the claims perpetuated by the credit card industry, the CCCA’s intent is clear: It seeks to introduce competition into the credit card payments market, fostering innovation and lower fees. This legislation is not a threat to Nevada’s tourism industry or consumers. Instead, it aims to make it easier for businesses to survive and thrive in the state.
That’s why the International Brotherhood of Teamsters and the Service Employees International Union (SEIU) have endorsed the CCCA “to ease inflationary pressures on working people and establish greater accountability in the financial market.”
Excessive credit card swipe fees only add to the growing costs for merchants, cutting down on available revenue to raise wages and forcing many to shift much of the burden of these fees to everyday consumers.
The ultimate beneficiaries of the CCCA will be daily consumers and small-business owners. In these inflationary times, let’s do everything possible to help the limited dollars of American households stretch even further. Please join me in encouraging our entire Nevada congressional delegation to stand up for Nevada workers and families, and support this legislation that benefits the many, not just the few.
Ken Evans is a former small-business owner and small-business advocate.
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