Swipe fee reform will barely dent American banks' record profits

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America's biggest banks had quite a year in 2024. JPMorgan Chase reported a record-smashing $54 billion in annual profit, with net income surging 50% in the final quarter of 2024 alone. Wells Fargo posted a 47% rise in quarterly profit, bringing in $5.1 billion. Goldman Sachs doubled its quarterly profits to $4.1 billion, marking its best performance in over three years.

At a time when many working-class Americans and small businesses are continuing to struggle financially, big banks are rolling in cash. So, what's helping fuel this big bank profit surge? Swipe fees — those sneaky 2% to 4% charges banks collect every time you swipe your credit card, raising costs for small businesses and consumers at a time when they can least afford it.

But while JPMorgan Chase, Wells Fargo and Goldman Sachs rake in massive profits fueled by these hidden fees, they simultaneously portray themselves as victims of legislation designed to protect consumers and retailers. These numbers don't just reflect a thriving financial sector — they underscore the absurdity of banks pleading poverty in response to proposed swipe fee reforms, like the bipartisan Credit Card Competition Act, or CCCA, which aims to curb swipe fees on businesses and consumers by promoting more competition in the credit card payment marketplace.

What kind of damage can swipe fees do to American consumers and business owners? Retailers across the country paid over $224 billion in swipe fees in 2023, making it their second-highest operating cost, right after labor. And businesses can't just absorb these fees: Many have no choice but to pass these fees onto consumers in the form of higher costs. The result? A $1,100 annual swipe fee bill many consumers don't even realize they pay.

If passed, the CCCA would help reduce swipe fees, providing much-needed relief for businesses and consumers alike. Predictably, the big banks are crying foul and lobbying hard against any effort to limit their swipe fee cash cow and protect their executives' paydays. They claim the legislation would reduce their revenue streams so drastically that consumers could see loyalty programs cut and benefits slashed.

But let's be honest: Does anyone really believe banks that are reporting record profits can't afford to make small adjustments? Even if swipe fee reform trims their earnings slightly, these banks would remain wildly profitable. And unlike small businesses, which have razor-thin margins, banks have plenty of room to absorb the impact.

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To put it into perspective, JPMorgan makes more than $600,000 in profit per employee, far outpacing what the average small business generates. Meanwhile, Visa and Mastercard, which dominate the payment processing market, have essentially set themselves up as toll collectors on every retail transaction in the U.S., controlling 80% of the market. Small businesses, on the other hand, don't have the luxury of negotiating these fees and are forced to either pay up, hike prices or simply close their doors.

At its core, the debate over swipe fee reform boils down to a simple choice: Protect the profits of megabanks or support small businesses and working families. And let's be clear — the CCCA doesn't dismantle the banking system or implement any kind of arbitrary swipe fee caps. It merely introduces competition and transparency to an industry that has long been dominated by a few powerful players.

Banks have weathered tighter regulations before, and they'll do it again. The question isn't whether they can adapt — it's whether lawmakers will side with financial titans who are thriving or with the small businesses struggling to survive and consumers struggling to pay their grocery costs.

At a time when Americans are increasingly frustrated by rising costs and growing frustration over corporate greed, supporting swipe fee reform is a commonsense move that both sides of the aisle can agree on. Lawmakers must take a stand for fairness, competition and the local businesses that keep our communities strong.

The banks' record-breaking profits tell us everything we need to know: They'll be just fine. It's time to stop letting their scare tactics dictate the conversation and start prioritizing the people who drive our economy. Because when a system is this broken, staying on the sidelines is not an option.