Virginia Election Showed Republicans Must Keep Eyes on Pocketbook Issues to Win Big in 2022
The recent Virginia gubernatorial race sent shock waves across the country after former Democratic Governor Terry McAuliffe was bested by Republican Glenn Youngkin. Those across the political spectrum have and will continue to debate numerous explanations for this stunning upset.
One clear takeaway is voters want elected officials to focus on pocketbook issues, with Virginians ranking the economy as the state’s top concern. While this election demonstrated Republicans are well positioned headed into the 2022 midterms, they need to shore up their focus on economic issues that help Americans who are struggling financially. One way to do this is by addressing high swipe fees, which hurt small businesses and working-class American families on tight budgets.
Credit card companies charge swipe fees on merchants when a consumer uses their credit card to purchase a product or service. The original intent of these charges was to cover the cost of processing a transaction; however, as technology has progressed, these costs have fallen. Yet, rather than reducing swipe fees, Visa and Mastercard have used their monopoly control over payment methods to skyrocket fees and make billions of dollars off of small businesses who must accept credit card payments to stay afloat.
As a result, merchants are forced to either cover the cost of these high swipe fees or pass them on to their consumers through higher prices. Unfortunately, both options hurt small businesses, either by cutting into their profits to cover these fees, or by chasing away customers due to increased prices.
Thus, swipe fees disproportionately hurt small businesses where profit margins and total transaction values are often low. For example, a local coffee shop or a rural fuel stop can go through several small dollar transactions over the course of a day, and they rely on every penny of profit to ensure they can remain open and pay their employees. But when swipe fees range anywhere from 1.3% to 3.5%, often with an additional five to ten cent flat fee, it’s clear to see this places an unfair burden on small businesses.
High swipe fees also result in American families paying higher prices for everyday goods. As the economy struggles to bounce back after a global pandemic, working-class Americans are already struggling to balance their budget because of rising inflation and cannot afford an even greater increase in prices caused by higher swipe fees.
Unfortunately, Visa and Mastercard dominate the credit card industry, and the lack of competition has allowed them to dictate ever-higher fees. As people grow more attached to paying with credit cards, these two businesses will continue to have the power to raise swipe fees indiscriminately to pad their own profits, unless Congress takes action to promote fair competition in the payments marketplace.
Whether amid a pandemic or a roaring economy, swipe fees have continued to increase because of the lack of competition, to the detriment of small businesses and American consumers. If Republicans want to keep their edge through the next election cycle, they need to create solutions to problems that affect their constituents daily. It is time for Republicans in Congress to work with their colleagues to promote fair competition in the payments marketplace and show their support for small businesses and working-class American families. Otherwise, the stunning GOP victory in Virginia may prove to be an anomaly.
Pat Brady is the former chair of the Illinois Republican Party and a former federal and state prosecutor.
