Credit card debt reaches all-time high
According to a report from the Federal Reserve, credit card debt has reached an all-time high and more Americans are missing their payments every month.
Fox – Seattle
Although inflation has slowed, those most affected by its effects have still not escaped its grip.
Nearly 70% of Native Americans report significant financial hardship as a result of inflation, more than any other population group.
Prices have yet to come down, putting a strain on the budgets of American businesses and consumers alike, especially in tribal communities. That’s why it’s so important for lawmakers to pass the Credit Card Competition Act (CCCA), which would reduce the hidden fees that add to the financial burden on so many people.
Every time someone swipes, taps or inserts their credit card, merchants are charged a fee averaging 2% of the total transaction amount. While these fees seem small, they add up quickly. The fees paid by business owners last year totaled over $172 billion, illustrating how credit card payment fees have tripled over the past decade. Last year alone, credit card payment fees drained approximately $940 million from Oklahoma’s local and tribal economy – money our communities will never see again.
While other countries have taken steps to curb excessive swipe fees, the U.S. is an outlier on the international stage, suffering from the highest swipe fees in the world. Combined, Visa and Mastercard hold over 80% of the market share and have therefore been able to fend off any moves to reduce fees or break their duopolistic control, while eliminating competitors that could lower costs.
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Meanwhile, it hasn’t gotten any easier for merchants to absorb these fees, especially for businesses with low profit margins like tribal stores or hotels. In many cases, they are forced to pass these fees on to consumers in the form of higher-priced goods and services. It’s estimated that the average American family spends over $1,100 annually on price increases related to credit card fees. For many Native American families, this money can be a crucial issue, especially considering that more than one in five Native Americans in Oklahoma now live in poverty.
I hope that Senators James Lankford and Markwayne Mullin will consider joining the bipartisan group of Senators who introduced the CCCA and work to pass this legislation. Competition is a critical component of the American economy, and it is sorely lacking in the credit card industry.
The CCCA would ensure that business owners can choose between at least two routing networks when processing a transaction. This freedom of choice would give alternative networks the opportunity to offer similar or even better services at a fraction of the cost. Given competitive pressures, Visa and Mastercard would be motivated to lower their swipe fees and expand their services to win merchants’ business.
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In addition, the CCCA would help protect consumers and business owners from security threats posed by foreign networks such as China UnionPay. Although UnionPay is a government-owned financial institution, it is currently available to American banks if they choose to offer its services on their cards. This is an obvious risk to the financial privacy of American consumers and merchants. Passage of the CCCA would bar UnionPay and other networks that pose a threat to national security from operating within our borders.
From easing financial pain to protecting our payments from foreign influence, the CCCA would finally ensure that Visa and Mastercard face the same competitive pressures that companies in other industries across the country face. It is estimated that the CCCA would save over $16 billion per year, allowing merchants to reinvest in their businesses and reduce costs for customers, providing much-needed relief to Oklahoma’s tribal communities. I hope our lawmakers will act quickly to pass the CCCA later this year.
Jason Smalley is a former Oklahoma State Representative and Senator. After more than eight years in both chambers, Smalley now serves as Director of Government Affairs for Motorola Solutions. He currently lives in Stroud and is a member of the Citizen Potawatomi Nation.
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