Is Big Banking Crushing Consumers? The Fight for Fairness in the Digital Economy

By: Joe Kefauver, Senior Advisor to Americans for a Modern Economy

April 22, 2025

There are probably few policymaking challenges for our elected officials more difficult than balancing the interplay between progress and policy. Innovation is the life blood of any capitalist economy and new ideas, new products and new services keep economies healthy and growing. And if innovation is the lifeblood, consumerism is the engine. There must be people to buy the products the economy creates to keep the circle going. But both innovators and consumers must be protected in their own ways and that becomes a critical dilemma for our policymakers. How do you foster innovation and new technologies while still championing public health and safety? How do you protect consumers while not stifling needed advancement? How do you not pick winners and losers? Makes me glad I’m not in public office.

The digital economy continues to offer up major challenges to our lawmakers. Issues like tax and regulatory parity for both traditional and e-commerce retailers, balancing the interests of both transportation network companies like Uber & Lyft along with those of legacy taxi companies and protecting consumers and neighborhoods whether one chooses a hotel or Airbnb. The list goes on and on.

No where is this playing out more vividly than in the financial payments area. As we move from a cash-based society of yesterday to a credit and debit-based society of today and toward cryptocurrency of tomorrow, the dilemma for policymakers is on full display. But there is a major difference in this transition. The previous examples noted prior have resulted in the creation of more choices for consumers as older technologies compete with start-ups and innovation continues to flood the marketplace. The American consumer now has exponentially more buying power than ever before – that same isolated American farmer that long ago was completely reliant on the Sears catalog now can shop the world for the best products and prices – right at their fingertips. But when it comes to the financial payments marketplace, we find ourselves going in the absolute opposite direction. 

Instead of increasing competition to date this latest transition has significantly decreased it. In fact, Visa and Mastercard alone control about 80% of the market – a de facto duopoly – that results in small business owners having little to no leverage to negotiate better rates as they would with any other business expense. So the banks and credit card companies can continue to chisel away at the hard-won revenue of a small family business unfettered. Consumers as well have less financial freedom today than they did yesterday and will have even less when they wake up tomorrow. The endless myriad of charges, fees and other phantom costs makes them more and more indebted to the big banks every day.

Our transition from a cash-based to a nearly cashless economy has not created more buying power for consumers and small business owners, it has diminished it.  Conversely, the big banks and credit card companies are squeezing individuals, households and entrepreneurs and their financial leverage grows by the day. A cursory glance at their ever-increasing quarterly earnings will more than demonstrate that.

Policymakers by and large have done an effective job guiding the broad transition to a modern, digital economy – protecting innovation while protecting consumers and not picking winners and losers by letting the marketplace decide. The financial payments world is a glaring exception but there is a path for constructive engagement in this space by elected officials of all stripes to get us back in the right direction.

Americans for a Modern Economy is 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. We work with consumer advocates, businesses, think tanks, economic experts and others to raise awareness and inform discussions about the current and future policy challenges of new technology. We serve as a resource for lawmakers to help them develop modern policy solutions that benefit all Americans by expanding consumer freedom, allowing businesses to best serve their customers and preserving free market competition.