By Joe Kefauver / For The Herald

Under a new bill introduced this month, Washington state could lead a nationwide charge in addressing the ballooning “swipe fee” problem; fees that cut into small businesses’ profit margins and raise the costs of goods.

Given Washington’s status as one of the most expensive states in the country in which to live, reducing these fees would go a long way to providing cost relief for businesses and consumers.

Swipe fees are the charges that Visa, Mastercard, and the big banks impose on retailers for every credit card transaction; amounting to anywhere from 2 percent to 4 percent of the transaction total. While this amount may seem small at first glance, they add up fast. In fact, Washington retailers paid more than $384 million in swipe fees on sales taxes alone; a tax they are required by the state to collect. Overall, retailers across the country shelled out over $224 billion in swipe fees last year, making these fees their second-highest operating cost.

The damage doesn’t stop there. When swipe fees increase small businesses’ costs, these costs are often passed along to consumers in the form of higher prices. The result? A hidden $1,100 annual bill that families in Washington pay without even realizing it.

If passed, Senate Bill 5070 would strip swipe fees from the tax and gratuity portions of every receipt. It’s a straightforward reform that would give small businesses and consumers alike much-needed breathing room from these silent costs that have rapidly escalated in recent years.

Small businesses are the heart of Washington’s economy. They account for 99 percent of all businesses in the state and employ over 1.4 million residents. By passing SB 5070, Washington lawmakers will strengthen the state’s economy by saving people money and helping small businesses reinvest in their operations; instead of sending the 20 to 25 cents from every hundred dollars of taxable goods to out-of-state credit card companies. That means more jobs and opportunity for communities.

While SB 5070 won’t fix the broken credit card payments system overnight, it’s a meaningful step in the right direction. By excluding the tax portion of every purchase from these fees, the bill chips away at the unchecked power Visa and Mastercard have wielded over business for years. Sure, some might call it a drop in the bucket, but small changes can spark big movements. Illinois, for example, spearheaded the fight against swipe fees with its Interchange Fee Prohibition Act (IFPA). Nationwide, Congress is weighing the Credit Card Competition Act (CCA), which would cap swipe fee increases and introduce real competition to the payment processing market.

Washington’s lawmakers have a real opportunity to follow suit and make a difference.

This isn’t just about money; it’s about fairness. Why should a bakery in Spokane or a hardware store in Tacoma be penalized for accepting the payment method most consumers prefer? Swipe fees aren’t some luxury tax on high-end retailers; they’re a relentless drain on the mom-and-pop shops that make Washington’s communities thrive.

As lawmakers consider SB 5070, they have a chance to send a clear message: Washington stands with the people who create jobs, spark innovation, and keep our communities alive. Small businesses aren’t asking for a handout; they’re asking for a fair shake. And when small businesses thrive, we all benefit.

Let’s make 2025 the year Washington takes a stand. The hardest step has already been taken. Now it’s time to lead the way, fix the system, and show the rest of the country how it’s done. Because fairness isn’t just good politics; it’s good business.

Joe Kefauver is a senior adviser to Americans For A Modern Economy, an organization committed to ensuring that local, state and federal policies reflect changing technologies that are reshaping the way consumers, businesses and communities operate in the 21st century economy.