Small businesses are the heartbeat of the Colorado economy by employing nearly half the state’s workforce. As the president of HJB Convenience, I’ve encountered the usual struggles of running a moderately-sized business. I’m tirelessly competing with larger chains for a slice of market share while navigating the historically high inflation of the past two years. These are prime examples of the struggles.

Ballooning credit card “swipe fees” are exacerbating these challenges. As these fees bleed the Colorado small business community dry, our elected leaders in Congress have an opportunity to throw entrepreneurs and consumers a lifeline.

You may be wondering what these so-called “swipe fees” are. You see, every time a customer taps, inserts or swipes a credit card, businesses like mine incur a hidden tax – generally between 2% and 4% of the purchase amount – we’re on the hook to pay. This expense might seem modest, but it adds up. In 2022, businesses – and in turn their customers – paid nearly $130 billion in these fees to credit card companies and big banks. And that’s a 20% increase compared to the year before.

Visa and Mastercard are largely responsible for increasing these credit card costs. The corporate tag-team controls roughly 80% of the market and are able to raise “swipe fees” without fear of backlash. And this isn’t just speculation. Visa and Mastercard are beginning to jack up fees by an additional $502 million annually this fall, which will add gasoline to the already raging credit card cost dumpster fire.

Fortunately, there’s pending legislation in Washington that would pour water on the flames. The Credit Card Competition Act fosters free market competition within the credit card market by giving business owners more choices on how to process a customer transaction.

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The legislation is simple but clever. Under the bill, large banks with more than $100 billion in assets would have to include at least two unaffiliated networks on the credit cards they issue to their customers. That means smaller, lesser-known credit networks could get a foot in the door and compete for a merchant’s business by offering lower “swipe fees.”

Competition helps to keep prices under control in nearly every other area of the U.S. economy. That’s why my business, for example, doesn’t quadruple the price of a candy bar. I understand my customers have other options to choose from and can simply patron a competitor.

So why should Visa and Mastercard get away with anti-competitive activity that’s throwing a wrench into the economy?

Critics of the Credit Card Competition Act argue reining-in swipe fees would force major credit networks to eliminate consumer rewards programs. Rest assured this is a myth pushed by the credit card companies and banks to scare Americans into opposing the legislation. A recent analysis estimates increased competition will have a minimal effect on rewards per dollar spent.

Small businesses are the backbone of the Colorado economy and should be a priority for our state’s elected officials. The Credit Card Competition Act will hold Visa, Mastercard and the big banks accountable and loosen the financial pressure squeezing businesses. I urge Colorado’s elected leaders in Washington to support the free-market credit card reform.

Raymond Huff is the president of HJB Convenience and lives in Lakewood.