Alaskans are no stranger to high prices given our geography and the many logistical challenges associated with getting goods to market as compared to the rest of the U.S. However, what many consumers don’t understand is excessive credit card swipe fees are compounding rising costs, making it harder for businesses to keep prices down. That’s why efforts in Congress known as the Credit Card Competition Act (CCCA) are necessary to create a competitive credit card industry with reasonable swipe fee rates and lower prices for consumers.

Swipe fees are charged to merchants whenever a customer uses a credit card for a transaction. As major card networks continue to raise fee rates and more Americans shift to credit cards as primary payment methods, swipe fees have become a massive budgetary concern for business owners. It doesn’t help that the majority of the credit card industry is controlled by Mastercard and Visa, which comprise more than 80 percent of the market share. Together, they have leveraged that control to drastically raise swipe fees over the last several years. 

Businesses across the country are paying more and more for the sake of Wall Street executives. Look no further than Visa and Mastercard’s profits as proof; Visa reported a net profit margin of nearly 55 percent for June, 2024, while Mastercard similarly reported a net profit margin of almost 47 percent. Meanwhile, the average net profit margin for the grocery industry in 2023 was 1.6 percent and general retail hovers around 3 percent.

This means that there is little room for businesses to absorb rising fees. Alaskans already pay more than most Americans for groceries and food as a result of our state’s size, geography, and isolated communities that make the logistics of stocking shelves difficult. But swipe fees only add to growing costs, especially in Alaska where higher prices mean greater swipe fees because they’re charged as a percentage of the total transaction. Swipe fees are like a built-in pricing escalator, constantly driving up prices. Passing the CCCA would help business owners balance the budget and keep prices down for consumers.

As someone who works directly with small businesses in the tourism industry, I see firsthand how swipe fees take a toll on our business operations as well as the budgets our or travelers that are often spread thin. Tourism is a growing sector in the Alaskan economy, but it’s not the most stable or predictable due to a multitude of factors. This is all the more reason for our lawmakers to lower costs and expenses like swipe fees that would ease the burden on small shops in our state. Swipe fees take a percentage of every credit card transaction and send it straight to Wall Street instead of it being reinvested in our local economy.

The CCCA would benefit Alaskan merchants and consumers by putting some competition back into the credit card business. The bill would give merchants the choice between at least two credit card networks when processing transactions. Visa and Mastercard would no longer be the only options for business owners, as the alternative network cannot be one of the top two market shareholders. The additional competition would force them to lower their swipe fees, improve security, and provide more quality service to maintain customers. The lower swipe fees would save Alaska businesses a good deal of money, which would be a huge boost for The Last Frontier’s main street economy. 

The CCCA also has the added benefit of protecting our financial integrity from foreign adversaries. There are provisions in the bill that ban certain networks, like the Chinese state-run UnionPay, that any major bank could use should they choose to enable their services over other American-based networks. These networks have no business accessing Americans’ financial information and by passing the CCCA, Congress would block networks like UnionPay that pose a threat to national security. The CCCA is a sensible bill with too many benefits to ignore, and the public seems to agree on this. Polls indicate only seven percent of Americans oppose the bill, while the majority of Americans support its passage. 

Alaska’s leaders owe it to our small businesses to pass this bill that will not only help them thrive, but enhance their financial security. I hope Senators Lisa Murkowski (R – Alaska) and Dan Sullivan (R – Alaska) will support the CCCA and work with their colleagues to pass it by the end of the year.

Korey Ferguson is a life-long Alaskan and a longtime serial entrepreneur from Eagle River, Alaska. He is the previous owner of an auto mechanic shop and current owns Paradise Marketing, a small marketing company that specializes in helping local Alaska tourism companies.