Broadcast Retirement Network’s Jeffrey Snyder discusses the impact of credit card ‘swipe’ fees on both restaurants (small businesses) and consumers with the National Restaurant Association’s Brennan Duckett.
Jeffrey Snyder, Broadcast Retirement Network
Brennan Duckett joins me this morning from the National Restaurant Association. Brennan, so good to see you. Thanks for joining us this morning.
Brennan Duckett, National Restaurant Association
Yeah, you as well, Jeffrey. I really appreciate y’all having me on today.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, and I should say happy Valentine’s Day to you.
Brennan Duckett, National Restaurant Association
Absolutely, you as well.
Jeffrey Snyder, Broadcast Retirement Network
And, oh, thank you. And I have to say, you know, this is one of the most romantic days of the year. I love research, and I love the research that you guys are releasing around credit card sway fees, but I have to say I’m a little bummed.
I’m bummed for consumers, but I’m also bummed for restaurateurs. I want to get your reaction to that, Brennan.
Brennan Duckett, National Restaurant Association
Yeah, thanks, Jeffrey. It’s not quite a love story, you know, I think would be to, you know, use a Valentine’s Day pun. You know, sway fees are sort of a hidden cost that a lot of, you know, all merchants that accept credit cards, you know, is a cost that they bear.
For most restaurants, it’s actually sort of a top, I think a top expense, you know, behind food and workforce costs, often in that top three, sometimes behind rent, but it is a constantly growing cost for restaurant operators of all shapes and sizes.
Jeffrey Snyder, Broadcast Retirement Network
And my understanding, and you have the data, I don’t, it’s somewhere around 3%. I mean, it may vary by credit card company, but generally speaking, it’s a 3% surcharge on top of what you’re already paying. So if, you know, if I take my wife out tonight, and I pay 50 bucks, and I’m probably going to use a credit card, by the way, I’m going to pay above that.
And, you know, it’s going to cost me a little bit more, it’s going to cost me, you know, four or five extra dollars.
Brennan Duckett, National Restaurant Association
That’s right. I believe the average swipe fee is about 2.35%. But as you pointed out, Jeffrey, it really does depend on what card is used, those sort of higher rewards cards often can exceed 3% and even get into that 4% range. So again, it’s a huge cost for businesses, for consumers.
You know, in the last year, I believe it was 2024, you know, businesses and consumers across the country paid $187 billion in these swipe fees in one year alone. And we expect that cost to increase even more in 2025. We don’t have those numbers quite yet.
But it is, again, a constantly sort of growing cost, especially as consumers tend to move towards their credit cards more. Restaurants kind of still see about one in four purchases are made with cash. But again, that volume of credit is growing every single day.
And it’s a huge cost to our restaurant operators.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, I mean, I have their restaurants here in Charlotte, North Carolina, where they do not even accept cash. I guess they don’t want to handle cash. So more and more, we’re transacting electronically, digitally.
You know, I’m all about, I think organizations like banking institutions, they need to make money. I mean, they have shareholders and employees. Is there a way to bring these costs down?
You would think technology creates scale. We have a lot of technological infrastructure. Is there a way to bring these costs down for both consumers and restaurateurs longer term?
Brennan Duckett, National Restaurant Association
Yeah, it’s a great question, Jeffrey. So there are solutions being presented at both, you know, both in Congress and before state legislatures as well. Those solutions kind of look different.
At the federal level, there’s the Credit Card Competition Act that would do exactly as it sounds and bring competition and force some of the larger players in the payment ecosystem to actually compete with each other, which, as we all know, will bring costs down and increase technological capacities and basically improve service as well. And then just yesterday, actually, the restaurant and merchant communities secured a huge legal win in Illinois, where a judge upheld a new law that would prohibit these swipe fees from being charged on the sales tax and the tip portion of every transaction conducted, you know, electronic payment transaction conducted in Illinois. So that would be a huge saver for businesses and consumers alike in Illinois.
So, you know, we hope to see in the states more, you know, once as the lawsuit, you know, was was wrapped up. We hope that more state legislatures will feel comfortable moving forward with their own types of solutions in addition to continuing to push Congress to do so as well.
Jeffrey Snyder, Broadcast Retirement Network
You know, I kind of lump restaurants, most restaurants into the small business category. They may be different in a lot of different ways, but I’m a layperson and we want to have more small businesses. We want to have more restaurants.
We want people to, you know, say you retire at age fifty five. Maybe you want to create your own restaurant. Well, it’s a big barrier to entry if you know that on top of everything and you said this, this is one of the bigger line items is that percentage.
I think I think this really stands in the way of some really good food opportunities in neighborhoods around the country. I mean, it really does.
Brennan Duckett, National Restaurant Association
Yeah. To your point, Jeffrey, you know, I think about 90 percent of restaurants in America are small business operators. They run on razor thin margins, you know, roughly three to five percent, you know, tax pre-tax margins.
And it is it’s a very you know, it’s a very competitive business as well. And you’re exactly right that these white fees are a cost that I you know, I don’t think that everyone probably thinks about as a first, you know, sort of expense, you know, again, food and labor kind of come to mind first. But this certainly is a barrier to entry for folks as they look to open businesses.
Jeffrey Snyder, Broadcast Retirement Network
You know, I’ve seen I’ve signed many a credit card slip and I don’t seem to recall the surcharge on there, but I’m going to have to look again tonight when I take my wife Brennan. Excellent research. Keep up the great work.
We look we thank you so much for joining us and we look forward to having you back on the program again very soon.
Brennan Duckett, National Restaurant Association
Awesome, Jeffrey. Thank you so much again for the time today and hope everyone listening has a happy Valentine’s Day.