Stamford Advocate

Legislatio­n would lower costs for small businesses

So instead of small businesses like mine paying what amounts to a roughly 3% fee that’s applied to the purchase amount plus the 6.35% Connecticu­t sales tax, the fee would only be administer­ed on the initial price tag.

As a small business owner in Connecticu­t, I’ve witnessed first-hand the ever-increasing financial burden that swipe fees have placed on businesses like mine. These fees, which merchants are charged every time a customer uses a credit card, have become a heavy load on Main Street, siphoning off more than 1 billion dollars in 2023 alone.

It’s a significan­t strain that affects our bottom line, limits our ability to grow, and hampers our capacity to improve customer experience­s.

The recent approval of House Bill 5489 by Connecticu­t’s Finance, Revenue and Bonding Committee is a good first step in addressing sky-high credit card swipe fees. The legislatio­n — which is still pending in the House — would tweak the way swipe fees are calculated by excluding sales taxes from the equation.

So instead of small businesses like mine paying what amounts to a roughly 3% fee that’s applied to the purchase amount plus the 6.35% Connecticu­t sales tax, the fee would only be administer­ed on the initial price tag. Although it may not seem like a big financial benefit for merchants, when the change is applied across countless transactio­ns that take place every day in the state, it’ll add up. Every Connecticu­t lawmaker — regardless of political affiliatio­n — should support the move.

Beyond state action, our elected leaders in Washington also have an opportunit­y to take it a step further.

Federal legislatio­n is actively being pushed in the nation’s capital to more broadly address the swipe fee scheme by injecting much-needed competitio­n into the credit card market. Visa and Mastercard control 80 % of the payments arena — and they organize banks into two massive pricing cartels to sharply raise costs on merchants and their customers.

How big is the problem? Over the past decade, swipe fee costs have more than doubled — even as the cost to manage transactio­ns has fallen.

Called the Credit Card Competitio­n Act, the bipartisan bill currently being considered in Congress would ensure banks with more than $100 billion in assets include at least two unaffiliat­ed credit card networks on the cards it issues to its customers. The move will provide businesses with more options on how to process credit card transactio­ns and, in practice, encourage credit card networks to compete against one another for a merchant’s business by offering lower swipe fees and improving security.

Experts estimate that the Credit Card Competitio­n Act could save businesses upward of $15 billion per year.

Taken together, these legislativ­e efforts can help break the death grip that Visa and Mastercard have on the market — and Main Street. For small businesses, every dollar saved on swipe fees is a dollar that can be invested back into lowering prices and improving their businesses—including by creating more jobs.

It’s time to level the playing field for small businesses and ensure that the costs associated with credit card transactio­ns reflect economic realities. Passing HB 5489 in Connecticu­t while our federal officials in Washington pursue the Credit Card Competitio­n Act is just the fix state small businesses need.