South Dakota’s Tribal communities need the Credit Card Competition Act to lower swipe fees, decrease business costs
While the cost of living in the Black Hills of South Dakota is lower than the national average, inflation continues to hammer tribal communities like mine. Reservation residents experience much higher rates of poverty compared to the average American household, and nationwide, 69 percent of Native Americans report significant financial problems as a result of inflation.
That’s why it’s critical for Congress to take action on credit card swipe fees that are quietly multiplying the impact of inflation with every purchase. It should pass the Credit Card Competition Act (CCCA).
Swipe fees are charged to merchants every time someone pays with a credit card, amounting to many businesses second highest operating expense after labor. When merchants can’t absorb these rising fees, they’re forced to pass them onto the consumer by raising prices. And because swipe fees are charged as a percentage of the total transaction amount, higher prices mean higher fees, adding to a vicious cycle of increasing costs.
Unfortunately, credit cards are unavoidable as they have become a preferred payment method for many Americans. And swipe fees are unlikely to plateau, let alone drop, thanks to Visa and Mastercard, who control more than 80 percent of the industry’s market share. Visa and Mastercard’s grip on the payments sector has allowed them to box out potential competitors and continue increasing fees. South Dakota businesses alone pay more than $268 million a year in swipe fees, and swipe fees paid by merchants across the country have more than tripled over the last decade.
I’ve faced many challenges in recent years to keep my business afloat. We survived through COVID, supply-chain issues and, more recently, exorbitant inflation. But, through it all, credit card swipe fees have tagged along, allowing massive corporations like Visa and Mastercard to keep taking a cut of my revenue while we do everything we can to keep our doors open and serve our customers. Given so many tribal members are on tight budgets, we walk a very fine line between covering our costs and remaining affordable.
Fortunately, the CCCA would put a stop to this kind of exploitation by putting serious competition back into the credit card industry.
The CCCA would allow merchants to choose between a minimum of two different networks when processing transactions. Increased competition would drive down swipe fees, as well as motivate networks to improve security and other services. Reduced swipe fees would be immensely beneficial for both consumers and businesses in South Dakota; our state is estimated to save more than $40 million a year thanks to the CCCA.
The benefits of the CCCA for South Dakota and its tribal communities are just too good to pass up, and the majority of Americans agree. Recent polling shows only seven percent of likely voters oppose the bill, while support for the CCCA is more than 50 percent. It also has bipartisan support in Congress, and I hope Sens. John Thune (R-SD) and Mike Rounds (R-SD) will join the effort and help pass this important legislation.
Rarely can we get the public — or Congress — to agree on anything, but they are in agreement that the CCCA is right for American businesses. It’s sensible legislation that will reduce costs for tribal communities and allow businesses like mine to thrive.
Former state Rep. Joe Donnell is a member of the Sisseton Wahpeton Oyate Tribe and is the founder and director of Warriors Circle, a nonprofit that works with Native Americans to develop leadership skills.
Photo: public domain, wikimedia commons
