Taking a closer look at veteran swipe fees

It is upsetting to see that the same megabanks and credit card goliaths that continue to push their own social agenda in the name of the common good are, in the meantime, profiting off of our nation’s heroes every day via credit card swipe fees.

As home to over 252,000 veterans, Arkansas is no stranger to these exuberant fees. Every time a veteran purchases a product with a credit card at one of the state’s military commissaries, or any other state’s commissary for that matter, they are charged what is often an undisclosed fee. This means that, in addition to American consumers, our Purple Heart awardees, Medal of Honor recipients, former POWs, veterans with service-connected disabilities, and veteran family caregivers are being gouged with fees that average more than 2% of their total transaction amount.

Unfortunately, these fees are continuing to increase at unprecedented rates, having more than doubled over the past decade. The numbers speak for themselves; since 2001, the amount charged in swipe fees has gone from $20 billion a year to $137.8 billion in 2021. And despite pushback and record-high inflation, Visa and Mastercard – who control over 80% of the credit card market – still imposed a $1.2 billion increase in swipe fees in April.

To make matters worse, commissaries aren’t given a choice regarding which payment network to process credit card transactions, meaning they can’t go with another option with lower fees. Little to no information is being made available to consumers regarding how much businesses are being charged, and how much prices are rising as a result. This isn’t right. Our country should be honoring those who have served, not allowing them to be taken advantage of.

Luckily, Senators Roger Marshall, R-Kansas, and Dick Durbin, D-Illinois, recently introduced the Credit Card Competition Act to address this unchecked burden on veterans, businesses and customers alike. If passed, this bill would require that the largest banks in the nation permit Visa and Mastercard’s competitors the chance to process transactions on their credit cards. Currently, the Visa-Mastercard duopoly accounts for nearly 576 million cards and sets the swipe fee rate for our American heroes. By requiring that giant credit card-issuing banks offer a choice of at least two networks, this legislation would create a more competitive marketplace that ultimately encourages lower credit fees.

Unlike what many of the big Wall Street banks fighting against this bill will say, the Credit Card Competition Act would only apply to financial institutions with at least $100 billion in assets, which accounts for only 30 of our nation’s banks; meaning the community banks and small credit unions that our neighborhoods count on will not be impacted.

Swipe fees are inflating the price of everyday essentials for our veterans. Amid sky-high inflation and a looming recession, they just can’t afford the additional expense. With the passage of the Credit Card Competition Act, we can bring true, free market competition to credit card networks and shed some light on the surcharge fees that Wall Street unrelentingly imposes. Our Arkansas Senate delegation, Senators John Boozman and Tom Cotton, has long stood up for our veterans, and I hope they’ll join their colleagues passing the Credit Card Competition Act to help them once again.

Editor’s note: Rep. Marcus Richmond, R-Harvey, represents District 21 which includes portions of Scott, Perry, Garland, Yell, Crawford, Sebastian, and Polk counties. He served in the U.S. Marine Corps for more than 20 years, achieving the rank of lieutenant colonel. The opinions expressed are those of the author.