From the pandemic to devastating wildfires, Hawaii’s business community has faced unique challenges that have been difficult to overcome. Tragically, more than 600 businesses have shuttered their doors since August, and those who have weathered the storm are calling for visitors to return to the state and for financial relief to ease the burden on their ailing businesses. Fortunately, Congress is considering legislation right now that would help reduce growing costs for merchants while lowering prices for visitors and locals alike.

Its critical for Hawaii’s U.S. Sens. Mazie Hirono and Brian Schatz to do what they can to reduce costs and support the state’s vital small business community.

The Credit Card Competition Act (CCCA) takes aim at credit card swipe fees, a major expense for small business owners that many consumers are unfamiliar with. Whenever a credit card is tapped, swiped or inserted, the business owner incurs a swipe fee, averaging anywhere from 1.5-3.5% of the transaction total.

Over the last decade, these fees have more than doubled. In recent years, credit card swipe fees spiked to over $126 billion in 2022, a more than 20% increase from the year prior. This is no surprise to Hawaii’s business owners, who now pay the most swipe fees per capita compared to any other state in the nation.

With slim profit margins, higher-than-average energy costs, and other inflationary pressures, increased swipe fees often force our merchants to raise prices across the board to accommodate the added financial strain.

Hawaii residents already shoulder the highest cost of living anywhere in the country. Not to mention money paid for swipe fees is sent to Wall Street to pad their already record-breaking profit margins instead of staying in our local communities.

While businesses and consumers are saddled with ever-growing credit card swipe fees, Visa and Mastercard continue to schedule new increases despite the technology for processing transactions becoming cheaper.

Those two companies have managed to consolidate more than 80% of the market share, allowing them to bench their competition and dictate excessive swipe fee rates. Once set by Visa and Mastercard, major banks implement them with the understanding that a universal swipe fee rate means they won’t have to compete with other banks.

By passing the CCCA, lawmakers could reverse this price-fixing practice by using market competition. The bill would allow for a second routing network to be offered to merchants, who, with a second option, would no longer be forced to accept Visa or Mastercard’s exceptionally high fees. Alternative networks could finally break into the market, many of which offer better services at a fraction of the cost.

Unfortunately, Visa and Mastercard are spending millions to disparage the CCCA, claiming it would limit credit card rewards, which is not true. The CCCA makes no mention of credit card rewards. In fact, the payment advisory firm CMSPI estimates rewards would, at most, drop less than a tenth of a percent if the CCCA was passed. Other countries have rewards programs with fees that are much lower than ours. Only card-issuing banks control rewards and they need those programs to remain competitive, so any implication that this bill would reduce rewards is simply a scare tactic to avoid fair competition and keep rising swipe fees.

With extensive experience working with over 500 small business owners in Hawaii, I bring a mission to uplift and ensure the success of Hawaii’s smaller business owners, including artisans, restaurateurs, mobile food businesses and makers.

This firsthand knowledge underscores the urgency and necessity of passing legislation like the CCCA to support Hawaii’s vital small business community during these challenging times.

Poni Askew is founder/CEO of Hawaiian Vinegar & Spice Company.