Processing credit card transactions is one of the largest operating expenses for restaurants, behind food and labor, according to the National Restaurant Association.
These “swipe fees” have more than doubled over the past decade, costing U.S. businesses more than $160 billion in 2022. “A lack of competition between the major credit card processing networks is why swipe fees continue to skyrocket,” the Association said.
Supporting the bipartisan, bicameral Credit Card Competition Act, the Association said CCCA would require at least two competing processing networks to be enabled on every credit card. “By enhancing competition in the market, this legislation would drive down swipe fees, improve security and service, and save businesses – including restaurants – and consumers an estimated $11 billion a year,” it said.
Currently, restaurants “do not have the ability to negotiate the swipe fees imposed by the two dominant card companies, which control 80 percent of the credit card network sector,” the NRA continued. “In the past decade the cost of swipe fees has more than doubled – unchecked by market competition.”
CCCA would require the “largest banks in the nation (those with over $100 billion in assets) to issue credit cards with at least two unaffiliated networks enabled on them. This would empower restaurant operators to choose the most cost effective and secure network to process their credit card transactions. Lowering swipe fees through enhanced market competition would allow restaurant operators to invest in their workforce and pass savings on to their customers.”
The Association said that restaurants “already operate on thin margins. In fact, a typical restaurant has a profit margin of 3-5 percent before tax. In addition to costly swipe fees, restaurants are also juggling a roughly 25 percent increase in food costs and an over 18 percent increase in payroll expenses.”
The “duopoly created by the dominant card companies is causing significant harm to restaurants – 9 in 10 of which are small businesses – and consumer,” it said, adding that Congress “can strengthen competition between credit card processing networks and reduce excessive credit card swipe fees by passing the CCCA.