Corporations and their executives will do anything to protect their profits, wealth, and power. Visa, Mastercard, and their big bank partners are working with right-wing groups using an anti-LGBTQ+, anti-wokeness campaign in a fight to protect their monopolistic price-gouging on credit card transaction (“swipe”) fees.
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Corporate executives are totally focused on the bottom line – on profits. When profits are on the line, no holds are barred. Visa, Mastercard, and their big bank partners are using an anti-LGBTQ+ campaign to fight competition that would reduce transaction fees (swipe fees) on credit card transactions. Despite websites and social media communications claiming sensitivity and a commitment to the LGBTQ+ individuals, and some token actions supporting the LGBTQ+ community, these big financial corporations are resorting to an anti-LGBTQ+, anti-wokeness campaign to fight legislation in Congress that would require competition in the processing of credit card transactions. [1] (Note: Many corporations that claim to support the LGBTQ+ community are, nonetheless, making significant political contributions to politicians promoting anti-LGBTQ+ legislation. See this previous post for details.)
To reduce monopolistic swipe fees by introducing competition, a bipartisan group in Congress is working to reduce the dominance of the credit card market by Mastercard and Visa (and their big bank partners). Mastercard and Visa currently control over 80% of the credit card market. Therefore, they effectively set the fees that retailers (and ultimately consumers) must pay them to process credit card transactions. Since 2020, these fees have increased by 40%, even though the cost of processing transactions has gone down as technology has improved and gotten cheaper.
Swipe fees on credit and debit card transactions cost retailers and consumers $161 billion in 2022. Credit card swipe fees are, on average, 2% of each transaction’s value, but can be more for on-line transactions and up to 4% on some cards. Total swipe fees in 2022 are about eight times as much as they were in 2001, when they were about $20 billion.
For most retailers, credit card swipe fees are their second biggest cost; second only to the cost of paying their workers. For small, low-margin businesses like mom-and-pop convenience stores and gas stations, swipe fees are a higher portion of their costs than they are for bigger businesses. [2]
Therefore, a bipartisan group in Congress is looking to reduce this burden on small businesses (and their customers) with the Credit Card Competition Act (CCCA). The bill would require Visa and Mastercard, and the big banks they work with, to allow competitors to process credit card transactions, introducing competition on swipe fees. If passed, it is estimated that this competition would save retailers and their customers $15 billion per year.
A similar law regulating debit cards was passed by Congress in 2010 It, and regulations from the Federal Reserve, cap debit card swipe fees at $0.21 per transaction and 0.05% of a transaction’s value. It also requires large banks’ debit cards to allow processing by two unaffiliated computer networks, eliminating monopolistic control by Visa, Mastercard, and their big bank partners. It is estimated that these regulations save retailers and their customers over $9 billion per year.
New regulations that took effect July 1, 2023, have confirmed that the fee cap and network processing rules apply to on-line and contactless debit card transactions, as well as to in-store transactions. Visa, Mastercard, and their partner banks had not been living up to these rules on transactions done in these alternative modes.
Visa, Mastercard, and their big bank partners are spending millions of dollars to fight the CCCA. For example, the Credit Union National Association spent $2 million in the last six months lobbying against swipe fee reform, Mastercard spent $200,000, and the American Bankers Association spent almost $5 million over the last year on issues including swipe fee reform.
Even though the support for the CCCA is being led by the National Association of Convenience Stores and the Merchants Payment Coalition (which spearheaded the effort to regulate debit cards through the 2010 law), the big financial corporations are claiming that the CCCA is a liberal effort to reward “woke” retailers. Their ads, mailings, and lobbying claim that the CCCA is meant to reward big “woke” retailers like Target. As you may remember, Target unveiled a Gay Pride product line for Gay Pride month in June this year with prominent displays in stores and on its website. In the face of right-wing extremists’ attacks, it pulled back on the displays in some stores and on products featured on its website.
The financial corporations are working with right-wing dark money groups (whose contributors are hidden from public disclosure) to send mailings and run advertisements claiming the CCCA is a liberal handout to “woke” retailers. They are focusing on the districts of Republican supporters of the CCCA, hoping to split the bipartisan coalition for the CCCA and to defeat it by making it a target in the Republican anti-LGBTQ+ culture war.
This tactic by the big financial corporations clashes with their efforts over the past several years to portray themselves as leaders in promoting diversity, equity, and inclusion. They routinely pledge to support LGBTQ+ inclusivity in hiring. Some held their own Pride Month celebrations this past June.
This current use of an anti-LGBTQ+ tactic underscores their hypocrisy and their willingness to use any tactic possible to protect their financial interests and profits. There’s no real commitment by corporations or their executives to moral or ethical principles. Their behaviors and rhetoric only reflect an interest in maximizing their profits, wealth, and power.
I urge you to contact President Biden and your U.S. Representative and Senators to ask them to support the Credit Card Competition Act. The monopolistic control of swipe fees by Visa, Mastercard, and their big bank partners needs to end. Doing so will save small businesses and consumers billions of dollars every year. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414. You can find contact information for your US Representative at http://www.house.gov/representatives/find/ and for your US Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.
[1] Goldstein, L., 8/4/23, “Wall Street stokes culture war to fight swipe fee reform,” The American Prospect (https://prospect.org/power/2023-08-04-wall-street-culture-war-swipe-fee-reform/)
[2] National Retail Federation, retrieved from the Internet 8/11/23, “Swipe fees,” (https://nrf.com/advocacy/policy-issues/swipe-fees)
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