COMMENTARY: Swipe fee reform would be a potential boon to the tourism industry

With tourists flocking to Nevada’s hotels, casinos and entertainment venues, the Silver State’s economic engine is revving up post-pandemic. Yet while Nevada has the sixth-fastest-growing economy nationwide, prices remain high, and businesses across the state continue to feel inflation’s sting.

Thankfully, there is a bill before Congress that would unlock relief to businesses, allowing more room in their budgets to lower costs and hire new employees.

The bipartisan Credit Card Competition Act aims to address an underlying squeeze costing Nevada businesses $886 million a year. Swipe fees, the charges businesses pay to process credit card transactions, have more than tripled over the past decade. These fees are largely controlled by Visa and Mastercard, which dominate more than 80 percent of the market. This duopoly sets and raises fees, and business owners often have no choice but to accept them or forgo credit card transactions altogether.

The act would introduce much-needed competition into this market by allowing merchants to choose between at least two networks when routing a credit card transaction. This simple change could have profound effects, compelling Visa and Mastercard to lower their fees and improve their services to retain customers.

In a recent Review-Journal commentary, “New bill bleeds Las Vegas tourism dry,” former casino executive Colleen Birch argues the act would devastate rewards programs and hurt tourism. On the contrary.

These fees don’t go back into our communities but pad the profit margins of major banks and credit card giants. For small businesses, swipe fees are more impactful and account for the second-highest overhead cost after labor. These increased fees have a trickle-down effect, too, resulting in increased prices on goods and services for consumers. Swipe fees contribute significantly to rising costs, adding an estimated $1,100 annually to the average American household’s expenses. The resulting cost savings would enable businesses to lower prices, invest in growth and hire more employees.

Ms. Birch and others raise concerns that the legislation might curtail rewards programs. However, data suggests points would be impacted by less than 0.10 percent, and there’s no doubt credit card issuers would still maintain a more than sufficient profit margin to maintain current reward levels. Meanwhile, tourism in Nevada heavily relies on a vibrant economy where businesses and consumers thrive. These excessive swipe fees disproportionately affect small businesses, including those in the tourism sector.

Lowering these fees through increased competition would reduce costs, allowing businesses to offer lower prices, enhance the overall visitor experience and hire additional workers. For instance, if a hotel can save on transaction fees, it could lower room rates and reinvest those savings into improving services and amenities, attracting more tourists. Restaurants and venues could also reduce prices, making Nevada an even more attractive entertainment destination. Consumers would also have more money in their pockets nationwide to spend on travel.

The Credit Card Competition Act would enhance tourism instead of hindering it, making Nevada an even more attractive destination. Lower fees, better services and a fairer marketplace would benefit everyone, from the small-business owner to the global traveler. It’s time to embrace this change and support the bill for a more competitive, consumer-friendly future.

Tray Abney is state director of the National Federation of Independent Business.