During her State of the State address in January, Arizona Gov. Katie Hobbs urged lawmakers to prioritize legislation that makes life more affordable for everyday consumers. The focus is welcome. Now more than ever, Arizonans — including the state’s 1.2 million small business employees — are stretching every dollar to get by.

One proposal before the legislature — HB 2768 — offers a meaningful step toward relief. The bill would pare back bloated credit card interchange fees, a hidden tax on businesses that drives up prices across the board. Passing the measure would deliver the kind of financial breathing room Arizona’s communities urgently need.

Every time a customer buys a book at my store and pays with a credit card, a slice of that sale — typically 2-4% — goes straight to the credit card company and issuing bank. 

Called a “swipe fee,” they might not look like much on paper. But on top of other hurdles like rising labor costs, seasonal demand and consumer chargebacks, “swipe fees” are adding to the weight that’s crushing Main Street businesses. 

What makes “swipe fees” particularly burdensome is that they’re applied to the entire transaction total — which more broadly includes taxes, or dollars that pass straight through a business to the government. In 2023, Arizona merchants paid $217 million in “swipe fees” on sales tax alone. When calculated across total transaction amounts, those fees add up to nearly $150 billion siphoned from merchants nationwide. 

Those staggering sums aren’t just abstract figures on a balance sheet — they translate directly into lost revenue for local businesses. Because of “swipe fees,” credit card companies can take in more profit from a small business’s sales than the business earns. That’s not the result of innovation or competition — it’s the product of extreme consolidation in the payments market. 

So, who’s behind this scheme? Visa and Mastercard control over 80% of the credit cards in circulation. This gives them near-total authority to raise “swipe fees” with little fear of losing business. While merchants could resort to cash payments, nearly three in four Americans own a credit card. This means businesses have no choice but to accept Visa and Mastercard’s terms.

Small businesses aren’t the only ones paying the price, either. Studies show credit card “swipe fees” contribute to higher prices across the board, costing the average family roughly $1,200 a year. While recent legal settlements have suggested change, Visa and Mastercard continue to jack up “swipe fees” while Arizona businesses and consumers foot the bill. 

Fortunately, practical solutions are within reach. HB 2768 would prohibit major credit card networks from charging “swipe fees” on the tax portion of a transaction — money that never belongs to merchants in the first place. While it wouldn’t eliminate “swipe fees” altogether, the measure would return meaningful dollars to Arizona’s entrepreneurs, allowing us to reinvest in our operations, support our employees, or strengthen the communities we serve.

Congress also has a role to play. The bipartisan Credit Card Competition Act — which recently earned an endorsement from President Trump — would require the largest banks to offer at least one processing network besides Visa or Mastercard on the credit cards they issue. That single change would inject real competition into the payments system, giving merchants the option to choose the processing network with the lowest “swipe fee.”

Credit card companies claim that more competition would mean fewer points and rewards for consumers. But that argument is nothing more than smoke and mirrors. With Visa and Mastercard posting profit margins north of 50%, there’s ample room to provide merchants some financial breathing room.

As lawmakers in Phoenix laser their focus on the state’s affordability push, leaders should also take a hard look at excessive credit card “swipe fees.” Reining them in would deliver immediate relief to Main Street, reduce hidden costs for consumers and help ensure Arizona remains a state where independent businesses can thrive.

Cindy Dach is the President and CEO of Changing Hands Bookstores with locations in Tempe and Phoenix.