LI small businesses need federal action on rising credit card fees

For over 20 years, I’ve been the proud owner and operator of two 7-Eleven franchises on Long Island. I’ve watched my stores flourish and grow — even amid challenges like Superstorm Sandy, the COVID-19 pandemic, and today’s inflation crisis. Yet my small business and many others like gas stations, restaurants, delis, and hair salons are now faced with our greatest threat to date: crippling credit card swipe fees.

Credit card companies impose a processing fee, commonly known as a swipe fee, on every transaction. While a fee is fair, its exorbitant rise over the last few years is not. Swipe fees have more than doubled over the past decade, and increased by 24% in the last year alone.

For small businesses like mine, these fees have become our second-highest expense, beating out payroll. It’s a growing issue for all retailers but hits small businesses on Long Island especially hard. A 7-Eleven store like mine pays an average of $85,000 per year in these fees. For other Long Island small businesses, the cost may be even higher.

At the heart of these runaway increases is limited competition in the credit card processing market. Visa and MasterCard control roughly 80% of U.S. card volume and have a virtual monopoly on setting fee prices. And they are raising them as a growing number of Long Island families are shouldering a larger financial burden.

Times have changed since I took ownership of my West Hempstead store in 2001. Fewer customers pay with cash. The COVID-19 pandemic further increased credit card use. During that same time, Visa and MasterCard have continued to increase fees, which rose to over $130 billion in 2021.

What upsets me most is how these swipe fees have hurt my customers and the local community; I've been forced to raise prices on essential items. Additionally, I can’t afford to contribute as much as I once did to local community initiatives, since my expenses are outpacing revenue. While we may not see the impact immediately, we will in a few years when funding for community initiatives dries up.

In New York, Division of Consumer Protection complaints about credit card surcharges grew over 4,000% between 2020 and this year. Imagine what that number will be in 2023 when Visa and MasterCard attempt to raise fees again.

Swipe fees are a slap in the face for Long Island small businesses trying to stay afloat, rooted in pure greed. Even more troubling: Consider that the average franchisee or small-business owner may not even be aware of the issue. These fees are too often hidden at purchase and unrelated to the interest consumers pay attention to with their credit cards.

Washington is on the verge of taking appropriate action. A bipartisan group of lawmakers recently introduced the Credit Card Competition Act, which would bring competition to the credit card industry and prevent Visa and MasterCard from reigning supreme. While state law can certainly play a role in transparency around swipe fees, we urgently need a comprehensive federal solution. We need our federal elected officials from New York to put the needs of small businesses and consumers first by supporting this measure and bringing it to the floor for a vote.

I know firsthand that Long Island small businesses and consumers alike can’t afford to wait much longer. We need relief and we need it now given the rising cost of goods. A bipartisan solution doesn’t come along often, and we can’t afford to miss our chance.