Should Congress step in as restaurants push for reduced credit card fees?

Last week the National Restaurant Association asked congressional leaders to cut “swipe fees” every time a customer pays with a credit card.    There may have never been a more pressing time for restaurants to push for reduced credit card fees.

Similar measures were approved for debit card use during the economic struggles of 2008.

Restaurants and small businesses of all kinds are fighting for survival. Now may be time for more congressional action to at least delay planned increases if not to take more aggressive steps.  The last time Congress took major action on card fees was in 2010 when the Dodd-Frank Act capped how much big lenders can charge for debit transactions. The law didn’t touch credit cards, which the restaurant association now argues should face similar limits.

For a credit-card transaction, merchants typically pay about 2% of a total purchase (restaurants often pay even more) and the fee is divvied up by the bank that issued the credit card, the merchant’s payments processor and the card networks. Though the payment may amount to pennies per transaction, the money adds up, providing a major source of revenue to financial firms.   Businesses spend over $100 billion every year to accept electronic payments according to the Nilson Report, an industry publication.

Addressing that expense now would be a big help in reducing one of the more expensive and frustrating monthly costs for business owners.  “The restaurant industry is one of low margins, tight cash flow and a workforce that depends on us for their livelihood,” Sean Kennedy, the group’s executive vice president of public affairs, wrote in the letter. “Without aggressive and immediate action from the federal government, many restaurants that are a staple of local communities will simply never resume service.”

Read a Bloomberg News article on Payment Source discussing the recent developments HERE. 

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