More than 20 independent business associations wrote to United States financial regulators and the Department of Justice urging them to block the proposed merger between Capital One and Discover. Small Business Rising coalition partners have identified soaring credit card swipe fees as a key pain point for small businesses, with merchant swipe fees often ranking as the highest business expense after payroll. In addition to urging the Capital One and Discover merger to be blocked, coalition partners advocated for Congress to pass the bipartisan, bicameral Credit Card Competition Act.
In the letter covered by POLITICO Influence, Small Rising Business partners argue the merger would hurt competition and increase the outsized power of the big banks and dominant credit card companies in a time when small businesses are calling on policymakers for relief and fairness. [LETTER]
“As partners in Small Business Rising—a coalition of small business associations representing more than 250,000 independent businesses—we the undersigned organizations urge you to oppose the proposed merger between Capital One and Discover announced on February 19, 2024. Capital One’s proposed $35 billion purchase of Discover Financial Services would combine two of the largest credit card companies in the United States in the already highly consolidated banking and credit card industries, posing significant risks of decreasing market competition and increasing costs for small business merchants.
“Concentrated market power is the single biggest threat facing independent businesses, and it's clear we have a financial system that benefits behemoth corporations at the expense of small businesses and consumers. Our coalition partners have identified exorbitant credit card interchange fees — also known as “swipe fees” — as a top issue undermining the ability of their small business members to serve their communities because these growing fees are eating into their margins. Swipe fees are often small businesses’ highest expense after payroll.
“As the top four and five companies in the U.S. credit card market by loans, a merger between Capital One and Discover would create a behemoth player, with an estimated “$250 billion in card balances and a market share of 22%.” The Consumer Financial Protection Bureau recently reported findings that big banks charge higher credit card interest rates than small banks and credit unions.
“Creating more concentrated power and consolidation in these markets serves company executives and shareholders, while doing further damage to an uneven playing field for small businesses, the cornerstone of our communities. In addition to navigating colossal gatekeeper platforms like Amazon which extract a monopoly tax on every sale and paying higher tax rates than large corporations, small businesses are drowning in ever-increasing swipe fees in today’s largely cashless retail world.
“As a coalition of truly small and independent businesses, we urge you to block the Capital One/Discover deal, which would hurt competition and increase the outsized power of the big banks and dominant credit card companies in a time when small businesses are calling on policymakers for relief and fairness.”
Signed,
American Booksellers Association
American Independent Business Alliance
American Specialty Toy Retailing Association
Cambridge Local First
Institute for Local Self-Reliance
Independent Restaurant Coalition
Local First Arizona
Local First La Plata
Local Return
Louisville Independent Business Alliance
Love Live Local Inc
Lowcountry Local First
Main Street Alliance
New Atlantic Independent Booksellers Association
North American Hardware and Paint Association
People First Economy
Running Industry Association
Slow Flowers Society
Spokane Independent Metro Business Alliance
StayLocal
Workplace Solutions Association