Customers are noticing some small businesses are now charging a processing fee to use a credit or debit card.
Lottie Watts, Senior Manager of Media Relations for the National Retail Federation wrote to News 3, “The issue of excessive credit card “swipe fees” is a top concern for retailers and consumers.”
“I would suspect for small businesses, we’re going to see more and more of those passing fees onto customers,” said Dr. Bob McNab, Professor of Economics for Old Dominion University. “As credit cards increase the charges levied on small and large businesses to process transactions, it’s normal to see businesses try to shift those costs to consumers. We already see that in Europe and in Asia where it is commonplace.”
Banks charge retailers "swipe" fees to process transactions when consumers use credit cards to pay; however, some small restaurants and other retail shops have decided they need to pass that onto the customer.
McNab added, “Some businesses have reached the point where they’re saying ‘We can’t shoulder this cost anymore.’”
Chris Savvides, Owner of Black Angus restaurant on Great Neck Road in Virginia Beach said they do not charge customers extra to use a card; however, they’re strongly considering it. He says it’s a tough decision.
“As a restauranteur, you kind of want to not be perceived as nickel and diming people,” said Savvides, adding “The margins on everything are dwindling, and the ability for a merchant to absorb any cost outside of the core costs, is greatly diminished.
He went into further detail on the struggle.
“For every dollar that a restaurant receives, after it pays rent, taxes, insurance, payroll, payroll taxes, credit card fees, all that kind of stuff, there are 3 to 5 cents left over after each dollar.”
85% - 95% of Black Angus customers pay for their meals with a credit card, Savvides explained.
Some businesses have chosen to implement a surcharge – a percentage of the bill. Others, from beauty salons to gas stations advertise a discount to customers using cash.
It can be confusing, especially after the COVID-19 pandemic where some retailers went cashless.
Martha Jones, of Virginia Beach, said she noticed this at her favorite Italian restaurant.
“I think people would be a little less upset about it if there was just some more transparency around why we’re being charged this. There’s a lot of confusion. I feel like it varies restaurant to restaurant,” Jones explained.
The National Retail Federation says there is a bill in Congress that would address this. It’s called The Credit Card Competition Act. N.R.F. says the bill would eventually allow merchants to be able to choose which network to use, prompting networks to compete over fees, security, and service.
For more information from the National Retail Federation, click here.
Meanwhile, Professor McNab says, “This is not a discussion that’s going away, especially as we move into an increasingly cashless economy.”
