Kansas Sen. Roger Marshall: Fight Wall Street banks with credit card fee competition
Teddy Roosevelt was praised for his leadership as a trust buster and is credited for breaking up railroads, meat packers, Standard Oil, American tobacco, and U. S. Steel. Many of us can still recall “Ma Bell” being broken up, and the fearmongering surrounding that event. The competition that’s prevailed since ending these monopolies has led to lower costs and increased innovation.
Similarly to the era of Teddy Roosevelt, today two credit card companies and four woke Wall Street banks dominate and control the nearly $5 trillion annual credit card business. With Kansans suffering from President Joe Biden’s gas, grocery and rent hikes, the last thing we needed was another credit card fee hike this past spring.
Most people don’t think about what happens when they swipe their credit card at the grocery store — but they should. Because every swipe comes with it a fee, an ever increasing fee, invisible to most, but increasingly crushing our merchants and rising costs for consumers across the board. Just like a sales tax, Wall Street banks levy a 2-4% fee on every purchase you make with your credit card, and the retailer has to absorb or pass on this cost to consumers.
I hope no one feels sorry for Wall Street, because I’m fighting for more competition. As the fee is a percentage of the total purchase, the credit card industry benefits probably more than any other industry from inflation. Indeed, Visa’s profits are up 32% from last year, showing a profit of $3.4 billion in the most recent quarter, while MasterCard showed a profit of $2.3 billion for the most recent quarter. What’s more, is these two behemoths dominate 84% of the market — a clear duopoly.
For many of the Kansas merchants I have spoken with, their monthly swipe fees are their second-highest business expense after labor, and of course those costs trickle down to the consumer in the form of higher prices. It’s these same local merchants, who are being squeezed by more than 11% wholesale inflation, who have asked our office to fight for Main Street against Wall Street — to fight for the hardworking Kansans who are most impacted by inflation.
This is why many local Kansas retailers asked me to join forces with Democratic Sen. Dick Durbin of Illinois to introduce the bipartisan Credit Card Competition Act to help fix a clearly broken system. This legislation would make cards issued by the biggest banks have more than one processing network on them, allowing the merchant to choose which of those networks to use at the point of sale.
In doing so, our bill would create a normal, healthy competitive market where both sides have the ability to compete. Kansas community banks, the financial backbone of every local economy, would not be impacted. This bill as written would not affect any bank with assets under $100 billion. As no Kansas bank comes close to this threshold, no Kansas bank would be bound by this legislation. Our hope is that this will enable community banks to get in the credit card game at a more significant level.
Additionally, continuing to be tough on China, our bill explicitly prohibits China’s UnionPay, or any other network sponsored by a foreign government, from being on American cards so they cannot encroach on the American financial system.
Our bill is a good compromise, and since the Wall Street big banks are more used to getting their own way than they are to compromise, they of course hate it. Over the next few weeks and months — maybe even for years to come — you will see the woke Wall Street banks continue to attack me. They will do what they always do when someone threatens their position at the top of the financial world: Toss around their endless wealth, litter the airwaves with their myths and come after me personally.
And that’s why I’m asking you to join me in this fight. I hope you will support local retailers and local community banks, which keep money in our home communities rather than sending it to Wall Street