As inflation continues to run rampant, no other racial or ethnic group has felt the financial impact more than Native Americans. In one survey, 69% of them reported experiencing “severe financial hardship” due to inflation – more than any other demographic. While American tribes have sought relief through parts of the Inflation Control Act, Congress must do more to provide financial help by reducing fees on credit card payments, which have a multiplier effect on inflation.
Every time a customer makes a purchase using their credit card, the merchant is charged a fee calculated as a percentage of the total transaction amount. When these fees increase, they have a major impact on products and services with low profit margins, often forcing business owners to raise prices to cover costs. Unfortunately, this leads to more transactions, which increases the credit card companies’ share and ultimately feeds a brutal cycle of ever-increasing fees.
In Arizona, credit card fees cost merchants – including those on our reservation – nearly $1.9 billion each year. For many businesses, credit card fees are a larger cost than healthcare or utilities, and rank just behind labor as the largest operating expense. Native American-owned businesses are also much more likely to report difficulty covering operating costs or obtaining credit. That means that those revenues leaking to Wall Street make it much harder for Native American merchants to reinvest in their business and keep prices low for consumers.
Lost revenue and higher prices are also particularly damaging to Native American consumers, whose poverty rate – nearly 27% – is almost twice the national average. Regardless of whether customers pay by credit card or not, card payment fees drive up prices and force customers to pay. For the average American household, card payment fees represent a price increase of over $1,100 per year, putting them under even more pressure in an already difficult financial environment.
Visa and Mastercard benefit most from the current fee structure. Fees have more than tripled over the past decade, and Visa and Mastercard surpassed $100 billion in revenue for the first time last year. The two card issuers have 80% of the market share, effectively forming a duopoly that locks out its competitors through cartel pricing with the big banks. To reduce fees, more players need to enter the market – a structure that currently does not exist.
Fortunately, a solution already exists in Congress. The Credit Card Competition Act (CCCA) would give merchants – not card issuers – the control to choose between at least two different routing networks when processing a transaction. This would increase competition and, in turn, force Visa and Mastercard to lower swipe fees and innovate to attract customers.
In addition, the CCCA would exclude financial institutions with less than $100 billion in assets, ensuring that local banks and credit unions that understand the financial needs of their communities and are committed to meeting them are left untouched.
I hope Senators Mark Kelly and Kyrsten Sinema will join the bipartisan group of lawmakers who introduced and co-sponsored the CCCA and support its passage. If Congress does not pass the CCCA, it will favor the big banks over tribal businesses. Financial relief from credit card fees is critical to supporting Native American businesses and communities, and Congress can accomplish that by passing the CCCA now.
Kevin Cassadore is the former CEO of Peridot District Economic Enterprises and General Manager of the San Carlos Apache Tribe.
