Some North Carolina lawmakers are eyeing a shiny new idea — straight from the land of broken budgets and busted promises: Illinois.
Yes, Illinois, the state famous for fiscal faceplants and legislative landmines.
At issue? A proposal to regulate and cap credit card “swipe fees.” Sounds consumer-friendly, right? Until you dig into what happened in Illinois and how it’s backfiring on the folks lawmakers said they were trying to help.
When you cap swipe fees, it doesn’t mean the costs disappear — they just get moved around. And, spoiler alert: they usually land squarely in the laps of small businesses and consumers.
That’s what’s happening in Illinois right now. Merchants didn’t magically eat those higher processing costs — they’re passing them right along. The end result? Higher prices at the register and fewer rewards from the credit card in your wallet. Those airline miles and cashback perks sure were nice while they lasted.
Swipe fees help fund essential parts of the payment system: fraud protection, technology upgrades and security. Limiting them might sound like a win, until you realize you’re kneecapping the innovation that makes digital payments safe and seamless.
If North Carolina chooses this path, don’t be surprised when card security weakens, customer perks dry up, bank fees increase, and the start-up capital that small businesses rely on dwindles.
Want to bring back checkbooks, dial-up internet, and Blockbuster too? Because capping swipe fees is basically asking for a financial time machine — and not the fun kind.
Big retailers love these kinds of regulations. They have armies of lawyers and custom point-of-sale systems. But mom-and-pop shops across North Carolina? They’re the ones who really suffer.
From the pulled pork pits of Lexington to the indie cafés tucked between Blue Ridge boutiques, North Carolina’s backbone is built on small business hustle — not corporate handouts and Chicago-style schemes. Some rely on swipe rewards to manage purchases. And many will have to overhaul their payment systems just to stay compliant. That’s money out the door, and time they don’t have.
Worse, these businesses won’t get the sweetheart deals big box stores can negotiate. They’ll get squeezed, and some may not survive the pinch.
Banks won’t take this lying down. When swipe fees get capped, they’ll make up the difference elsewhere. That “free checking account”? Say goodbye. That nice mobile banking service? Expect fees.
This means higher costs and fewer options for everyday North Carolinians — all so a handful of national retailers can boost their bottom lines.
Here’s the kicker: Illinois lawmakers are already scrambling to undo the very policy North Carolina legislators are considering to copy. One of the original backers of the swipe fee ban has introduced legislation to repeal it. Apparently, the economic hangover kicked in faster than expected.
When a state with a history of budget blunders realizes it’s made another mistake, maybe — just maybe — it’s not a blueprint worth following.
North Carolina prides itself on pragmatic policy and sound fiscal management. Following Illinois down a regulatory rabbit hole doesn’t match that tradition. This swipe fee scheme might sound sweet, but it’s likely to end in regret for North Carolina consumers and small businesses.
Lawmakers should think twice before importing Illinois’ mistakes and selling them as solutions. Bless their well-intentioned hearts, but North Carolina taxpayers deserve better.
Jessica Ward is senior director of State Affairs and Mattias Gugel is director of State External Affairs for the National Taxpayers Union.
