Nick Fede, Jr., Director, Rhode Island Liquor Operators Collaborative.
By Nick Fede, Jr., Director, Rhode Island Liquor Operators Collaborative
As this edition of the Beverage Journal rolls out, we are within one week of Election Day. Regardless of your political affiliation, Nov. 5 will be must-see TV, with a historic showdown at the top of the ticket between former President Donald Trump and Vice President Kamala Harris. The 2020 election saw the highest voter turnout by percentage since 1900, with 66.6% of eligible voters casting a ballot. I expect the same this time around.
Here in Rhode Island, there are a few General Assembly races we are keeping an eye on, but, for the most part, we expect to see a very similar makeup on Smith Hill in January. Some of the biggest, most exciting races have already happened at the local level. We saw many primaries, mostly among Democrats, with some being decided by less than 50 votes. The tight outcomes of these local primary races stress the importance of voting, especially when there’s nothing terribly exciting happening higher up the ticket. Of the 113 General Assembly seats between the House and the Senate, there are only 44 opposed candidates on Election Day.
On the national stage, three members of our congressional delegation—Sen. Sheldon Whitehouse, Rep. Seth Magaziner and Rep. Gabe Amo—have opponents. Every two years, the entire House of Representatives is up for election, as well as one-third of the Senate. Inevitably, some people stay in their seats, others decide to not run again and, lastly, some members are voted out. What occurs at that point, in the time between Election Day and Inauguration Day, is called the Lame Duck Session. During this time, members who are outgoing for various reasons may change how they would normally vote. Why? Because they no longer have a job to keep!
Enter the bipartisan Credit Card Competition Act (CCCA), one of the more contentious pieces of legislation in this Congress. But it really shouldn’t be. Co-sponsored by RI Sen. Jack Reed, the CCCA is a bill that introduces rate competition into the credit card processing space. Currently, when a consumer swipes, dips or taps their card, Visa and Mastercard dictate the processing rates to the big banks. Multiple times per year, these rates have been creeping up and are now at record levels. In fact, swipe fees on credit cards have more than doubled over the past decade. Retailers of all shapes and sizes compete with one another in many areas, especially when it comes to price.
As it stands currently, credit card companies have no competition in their space, which allows them to continually squeeze retailers across all industries. Since the Durbin Amendment became law in 2010, rate competition has been the standard practice in the debit processing space. We are simply asking for the same to happen for credit cards.
Despite what the big banks are saying in their counter-lobbying efforts, this piece of legislation will only apply to financial institutions with $100 billion in assets or more—30 of the nation’s largest banks and just one credit union. These institutions account for 90% of Visa and Mastercard’s credit card volume. Make no mistake about it, the CCCA would have ZERO impact on community banks or small credit unions. The legislation will not affect credit card rewards programs, which are determined by banks and are used as a marketing tool to convince consumers to choose a Visa or Mastercard from one bank rather than another. If the CCCA passes, banks will still have to attract consumers to these products (e.g., rewards cards).
Requiring multiple networks for each credit card is also good for consumers; they will see results at the cash register in the form of savings passed on from retailers. And if one network goes down, having an additional network available for processing safeguards commerce and allows it to continue.
If the Credit Card Competition Act becomes law, it is projected that retailers would experience a reduction of nearly 20% in their total swipe fees. These funds being available to retailers would make it easier for us to increase wages for staff, offer more robust benefits, invest in capital improvements in our stores, lower our prices and, most importantly, offer consumers a higher-quality retail experience.
I’ve been proud to travel to Washington, D.C., six times in the past year to advocate for this legislation and have been joined by retail groups across the country as part of the Merchants Payments Coalition. I urge our Rhode Island on-premise partners, as well as other retail groups within our state, to join the movement and encourage our members of Congress to enact real change and support all of us on Main Street.
Contact riliquoroperatorscollaborative@gmail.com to get involved.
Nick Fede Jr. serves as Executive Director of the Rhode Island Liquor Operators Collaborative and is a third-generation liquor retailer.
