Editor's Note:Jessica Ward runs three beauty salons in Madison, Wisconsin, and serves as Senior Director of State Affairs at the National Taxpayers Union.

Regulating credit card processing fees is just the latest move that politicians think is "helpful." This trend is not limited to one state but is spreading across the nation.

Some states are already discussing banning swipe fees, and now Congress is getting involved. Senators Dick Durbin and Roger Marshall are pushing the so-called Credit Card Competition Act. The bill sounds noble, but on closer inspection, it is just Washington's version of the same flawed idea.

A new wave is sweeping the nation: capping or outright banning interchange fees on specific parts of a transaction, such as sales tax and tips. This idea is packaged as "supporting small businesses," aiming to stick it to big banks and save consumers a bit of money. I know this firsthand—I run a small business in the real world, not at a think tank. The truth is, this is not the victory they claim.

Jess Ward
Jessica Ward
Image courtesy of Jessica Ward
 

First, let's talk about the basic mechanics: when a customer pays by card, two key players are involved. Payment processors—like Square, Stripe, and Clover—handle the technology and customer-facing tools. Payment networks—like Visa, Mastercard, and Discover—charge interchange fees, which ultimately go to the issuing bank. This fee is not a corporate scam; it funds fraud protection, ensures fast settlement, and reduces the risk of accepting card payments.

If lawmakers force certain parts of a purchase—like taxes or tips—to be excluded from this fee, they are not eliminating the cost; they are just reshuffling it and shifting the new burden onto us. Guess who ultimately pays for it? You, me, our customers—everyone except the mega-corporations lobbying for this policy.

Every time I run payroll, I not only pay my employees but also pay for the act of "paying" itself—paying the employer side of payroll taxes on their wages, which most employees don't even know exists. It's like paying the government a tip for allowing me to hire people. Whenever a new fee or mandate drives up costs, I face the same choice: absorb it myself or raise prices.

Spoiler alert: I usually raise prices because I have no choice, and I hate it.

Here's the thing: swipe fee caps not only hurt us as business owners but also hurt us as consumers. When credit card rewards disappear, checkout slows down, and small businesses start adding confusing surcharges to survive—guess who's standing in line complaining? It's us.

So why are we hurting each other like this? Why are we asking lawmakers to weaken a system that lets us get paid securely and provides the convenience our customers expect?

This isn't about sticking it to Wall Street; it's about handing a regulatory gift to large national retailers that have already negotiated rates we could never reach. The cost will be borne by small businesses like mine, and by the community banks and credit unions we rely on.

Will big global financial institutions or mega-retailers lose sleep over this? No—neither Visa nor Amazon. But your local bank—the one that knew your name when you started your business or helped you get a loan to keep the lights on during COVID-19—they will feel it deeply.

Interchange fees fund small business lending and keep the economies of towns across America running. Whether you run a coffee shop in Arizona or a salon in Texas, the impact of these policies is the same: more compliance burdens, less clarity, and thinner profit margins. This is not a red state or blue state issue; it's a Main Street issue driven by both state legislatures and Capitol Hill.

Small business owners don't need more mandates; we need better margins, less government interference, and fewer red-tape hurdles. We need room to breathe.

So, from a fellow entrepreneur who wrestles with spreadsheets, pays taxes on time, stays up late reconciling accounts, and skips vacations to make payroll, I say: don't buy the spin. Push back, ask questions, and remind your lawmakers—"supporting small business" should mean helping us thrive, not burying us under yet another short-sighted fix.