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Cherry Valora-Colton: Small businesses need a federal solution to address rising swipe fees

Visa and Mastercard have too much power in the marketplace and raise costs to business and consumers.

(AP Photo/Jenny Kane) This Aug. 11, 2019, photo shows Visa credit cards and debit cards in New Orleans.

Recent years have been extremely difficult for small business owners in Vernal and across the state of Utah. As the owner and operator of several 7-Eleven stores in Vernal, I have experienced firsthand the impacts of the COVID-19 pandemic, supply chain problems and rampant inflation.

As is our nature as small business owners, we continue to work through anything thrown our way. But there is one hidden issue that might tip the scales even more than the crises we’ve weathered to date – runaway credit card swipe fees.

Credit card companies levy a processing fee, or swipe fee, for every purchase made, like those at my stores or any small business. This may sound reasonable given the services provided, but there is a significant lack of competition when it comes to the credit card processing market. Just two companies, Visa and Mastercard, operate as a monopoly, controlling roughly 80% of the market. These companies have no qualms about raising their swipe fees at a time when a growing number of Utah families are struggling and pay more for necessities.

I see the very real consequences of this every day at my stores. Swipe fees are a significant financial burden for small business owners, making it more difficult to invest in my businesses or provide jobs within the local Vernal community. While some say this is just the cost of doing business, the fees are becoming exorbitant. Card processing fees totaled over $130 billion in 2021 — up 24% over the last year. As the country combats inflation, we can expect to see that total number increase.

As a member of the Vernal Chamber of Commerce, I have heard directly from members of the small business community on how harmful these swipe fees are. They not only undermine local economic development, but also prevent small business owners from giving back to local schools, sports teams, first responders and other important community initiatives. By not keeping rate hikes in check, we are robbing our community of critical resources, in favor of large credit card companies.

Of course, my business is not the only one bearing the added costs of these swipe fees. The convenience store industry at large — which is largely made of small businesses like mine — was forced to hand over $13 billion in card fees in 2021. For the average 7-Eleven store, that means roughly $85,000 a year into the pockets of Visa and Mastercard, and not into jobs or economic impact for my community. Today, these fees are now our second highest operating cost, beating out rent and utilities.

My shoppers will tell you that they are feeling the burn more than anyone else. Swipe fees are now estimated to cost the average American family more than $900 a year. No different than other franchisees trying to stay above water, I have been forced to raise prices on many of my products.

Luckily, Congress is working to reduce the burden of swipe fees by introducing competition into the marketplace. Lawmakers on both sides of the aisle have introduced the bipartisan Credit Card Competition Act, which would require credit card-issuing banks to offer other networks for processing credit transactions. Increased competition will help to reduce fees and reduce the significant grip that Visa and Mastercard have on the industry.

Our Utah politicians often talk about being pro-business, but now is an opportunity to show it, by supporting and moving on this legislation sooner than later. The election is behind us, and I would hope that Sen. Mike Lee and other elected officials will take a hard look at easing the pain small businesses across the state are feeling as one of their top priorities back in Washington.

As a proud small business owner, I remain firmly committed to doing right for my local community and for the larger business community in Utah. We could really use a hand from Congress when it comes to swipe fees — and I know that my customers and employees could as well. Bipartisan support is hard to come by so it’s important for our elected officials to take advantage of the moment and put an end to unjust swipe fees.

Cherry Valora-Colton

Cherry Valora-Colton is the owner and operator of several 7-Eleven franchises in Vernal, as well as a member of the Vernal Chamber of Commerce.