While inflation nationally has been on a downward trend, Colorado’s rising prices continue to outpace the national average, putting immense financial strain on businesses and consumers alike. Unknown to many consumers, credit card swipe fees contribute to rising prices, averaging 1.5% to 3.5T off every credit card transaction. These fees quickly add up to the second-highest operating expense for many merchants, often forcing businesses to pass them on to consumers by raising prices on goods and services across the board.

This cycle is self-perpetuating as higher prices caused by inflation pressures yield greater swipe fees, forcing merchants to raise prices even higher, thus making credit card swipe fees an inflation multiplier. Despite the massive impact on our state’s economy, the burden of swipe fees is unlikely to go away, given the control Visa and Mastercard have over the industry.

Both credit card companies combined control more than 80% of the market, allowing them to box out competitors and consolidate more of the industry. With so much control, Visa and Mastercard dictate a set schedule of swipe fee rates that major banks then willingly implement in exchange for a cut of fees and general card services. Given the revenue they receive, banks have no incentive to negotiate lower fees, leaving business owners to accept any rate they’re dealt.

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For merchants in 2022, credit card processing fees topped $126 billion, spiking more than 20% from the year before. And just last year, Visa and Mastercard carried out swipe fee increases estimated to cost an additional half-a-billion dollars. These rates of growth year-over-year simply aren’t sustainable for Main Street businesses and those operating on slim margins who are already dealing with the pain of rampant inflation.

These higher prices, as a result of swipe fees, have contributed to the average American family paying more than $1,000 a year. What’s worse is these price hikes impact everyone, whether they pay with a credit card or not. Under- and unbanked individuals who are more likely to pay with cash and have lower incomes end up paying for a system they don’t participate in, let alone benefit from, all because the merchants have to raise prices to cover this business expense.

Unfortunately, this pattern of rising swipe fees results in higher consumer prices for everyone.

Fortunately, a bipartisan group of lawmakers (seriously, two Republican and two Democrat sponsors) have proposed a solution known as the Credit Card Competition Act (CCCA) that would use free market competition to drive down excessive swipe fees and ensure merchants have affordable means of routing transactions. By enabling businesses to choose from two different routing networks, Visa and Mastercard would have to compete with alternative networks to earn business instead of demanding it. As we’ve seen in other competitive industries, competition spurs innovation and advancements helping to improve services and lower costs.

This would allow all merchants, and especially small business owners, to reinvest more of their earnings into their workforce, expand their business and lower consumer prices.These positive benefits to both businesses and working families are why the National Restaurant Association, the National Retail Federation and others have endorsed this legislation.

Given the positive benefit this legislation would have for Colorado families and workers, I hope Sens. Michael Bennet and John Hickenlooper will strongly support the bill’s passage this legislative session.

Sean Kaiser is a longtime Colorado restauranteur. He currently owns the Legacy Point Restaurant in Westminster. Sean is the former chairman of the board for both the Arvada and Westminster chambers of commerce and the Jefferson County Business Education Alliance, as well as a past member of the board of directors for the Colorado Restaurant Association.