The localist movement grew from a recognition that a globalist economy dominated by large multinational corporations does not always benefit consumers and our communities. Weak antitrust enforcement has allowed consolidation of market power in many industries, which disadvantages small businesses that create the lion’s share of new jobs in the United States.
The market dominance of Mastercard and VISA is a case in point. Together, they control 70% to 80% of credit card transaction processing in the U.S., which has led to rising credit card swipe fees. These fees are often the second biggest expense (after payroll) for businesses still struggling to recover from the aftermath of the COVID-19 pandemic.
Credit card swipe fees cost the average U.S. household $1,000 annually in the form of higher prices, according to the Consumer Financial Protection Bureau. While large corporations may negotiate discounted fees and pass them on to their customers, small businesses have no such recourse. Their profit margins – already slim – are disproportionately impacted because they lack market power to negotiate such discounts or fully incorporate these fees in their prices.
Small businesses are banding together to fight for fairness by championing federal legislation to rein in the duopoly power of Mastercard and VISA. Local First is proud to support this effort through participation in Small Business Rising – a coalition of independent business alliances like ours across the country and trade associations such as the American Booksellers Association.
The proposed Credit Card Competition Act, introduced in the U.S. Senate, would save businesses and consumers an estimated $15 billion a year by promoting greater competition among credit card processing networks. You can advocate for a level playing field for small businesses by writing to our federal representatives to share your concern about rising prices caused by excessive credit card swipe fees.
You can make a difference with the decisions you make every day. Support our local economy by choosing to buy from locally owned businesses whenever you have the opportunity. Look for the Local First logo on store windows and use our Be Local Coupon Book as a guide to local food, goods and services. Think of these coupons as your invitation to practice localism.
Be a part of the localist movement and shift market power from faraway corporations to local businesses that employ your neighbors and care as much as you do about the well-being of the community we share.
Doug McCarthy is CEO of Local First.
