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RIHA Column: Credit Card Fees Crushing Small Businesses

Dale J. Venturini, President and CEO of Rhode Island Hospitality Industry Association.

Dale J. Venturini, President and CEO of Rhode Island Hospitality Industry Association.

By Dale J. Venturini, President & CEO, RI Hospitality Association

Last month, I joined Rhode Island restaurant owners and vendors on a trip to Washington, D.C., to discuss how rising credit card usage has placed an unjust financial strain on hospitality business owners and what can be done toward solving the issue.

When dining at our favorite restaurants or enjoying a quality room service meal after a night of drinks at the hotel bar, we relish the pleasure of delicious meals and impeccable service. However, behind the scenes, small-business owners face a significant financial burden every time a customer pays by credit card.

These fees range from 2% to 4% for every transaction. This cost extends beyond the food and drink purchased; it also encompasses gratuity and meal tax collections. Now is the time to address this issue and provide small businesses with the choice to be transparent about credit card fees, fostering fairness for all.

Restaurant and hotel owners dutifully collect and remit $1 billion in meal taxes each year, with approximately 80% of all payments made by credit card. Consequently, restaurants and hotels bear the responsibility of paying millions of dollars directly to the state without receiving any financial benefit in return, and businesses face transaction fees every time a credit card is swiped, adding to their financial strain.

In Rhode Island, I have heard from a number of RI Hospitality Association (RIHA) members, both in foodservice and in lodging, who paid $80,000 or more in credit card fees in 2022. Although a 2% fee may seem negligible to the customer, the cumulative effect of this expense becomes burdensome for business owners, especially when coupled with an increase in labor, goods and supply chain costs.

In our daily lives, we receive numerous offers from credit card companies and banks enticing us to use their services, often with attractive incentives like cashback rewards and travel perks. Regrettably, the costs associated with these incentives are ultimately borne by small restaurants and hotels. To compensate for the added expense, restaurants and hotels are forced to raise prices, impacting all consumers regardless of their payment method. As a result, cash-paying customers, who may lack access to credit, end up subsidizing the benefits enjoyed by credit card users and paying higher prices.

According to the National Restaurant Association, interchange fees, also known as “swipe fees,” cost businesses $77.5 billion in 2021. And although the actual cost for credit card companies to handle transactions has substantially decreased over the past two decades, a lack of competition in the credit card processing network sector has resulted in credit card processing fees more than doubling in the last decade.

Given all of this, RIHA stands in support of the Credit Card Competition Act (H.R. 3881/S. 1838) to lower excessive swipe fees, one of the highest recurring costs for restaurant operators. The bipartisan act mandates that at least two competing processing networks be enabled on every credit card, fostering competition, improving security and service, and reducing swipe fees. Should the act become law, it would benefit hospitality businesses and consumers, saving an estimated $11 billion annually.

Please join RIHA in urging Congress to support the Credit Card Competition Act by sending an email to your local elected officials on the National Restaurant Association’s website here: Together, we can “level the paying field.”

​​​​A veteran of more than 35 years in the hospitality industry, Dale Venturini is considered by many to be the voice of the industry in the state of Rhode Island. She has been instrumental in improving the industry’s educational and training programs in the state, as well as enhancing the bottom line of the business she represents. Venturini splits her time between the office and the State House, a constant presence for her membership.


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