Congress should pass the Credit Card Competition Act

October 1, 2023 9:39 pm
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William Kitsilis is the owner of Angelo’s Palace Pizza in Cumberland and chairman of the board of the Rhode Island Hospitality Association.

Pizza is the ultimate utility food. It’s a full meal but you don’t need utensils to eat it. You don’t even really need a plate. It can be a simple pie or a fancy dish. My family’s restaurant, Angelo’s Palace Pizza, fits the bill exactly – it’s good takeout and a true culinary experience.

Angelo’s Palace Pizza is my parents’ American dream. When they came over from Greece and opened the restaurant in 1978, it was the realization of a wish they’d envisioned for years. Back then, not that many bills were paid with credit cards. Today, a majority are. Which wouldn’t be a problem if not for credit cards’ enormous swipe fees.

Swipe fees are the fees the card-issuing bank and card network charge for processing payments. Because two companies control about 80% of the credit card market, they can charge pretty much whatever they want. Last year, U.S. vendors paid over $160 billion in processing fees, an increase of almost 20% compared to the year before. This costs American families about $1,000 a year, a number that continues to rise due to inflation. To make matters worse, Visa and Mastercard recently announced that they would be increasing swipe fees by another $502 million over the next eight months.

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Today, the fees are about 3% of the total bill. That’s the total bill, not necessarily the amount charged by the restaurant. There are even higher swipe fees for online orders because the card isn’t physically run. In some cases, I’m paying a fee based on nearly 150% of what I actually charged for the meal. Online and over-the-phone orders account for over half of our business, so this really adds up.

When we survived the COVID-19 pandemic I thought I’d never run into another obstacle that even came close to it. But restaurants are still shutting their doors and swipe fees are one of the reasons why. It’s not just these fees, of course. But when they’re added to supply chain issues, increased costs across the board, and difficulty recruiting employees that restaurants have been experiencing for the past few years, it takes a major toll. We’ve had to slowly raise our prices over the years and have even added a $1 online order charge to offset some of these costs. It’s death by a thousand cuts and swipe fees are salt in the wound.

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It’s difficult for our 45-year-old five-restaurant establishment. I can’t imagine how some of the smaller operations keep up. If I was a betting man, I’d predict that a lot of bars and restaurants will go out of business in the next two to three years and swipe fees will be among the top reasons.

But it doesn’t have to happen that way. There’s a bill in Congress called the Credit Card Competition Act that would bring competition into the credit processing network and would save businesses and consumers an estimated $15 billion a year. It’s time for the duopoly to end. I’m calling on Sen. Jack Reed, who sits on the Senate Banking Committee, and his colleague Sen. Sheldon Whitehouse to support this bill and help get it to the Senate floor.

Rhode Island’s restaurants need fairness in the marketplace in order to stay afloat. The Credit Card Competition Act is a step in the right direction.

This article originally appeared on The Providence Journal: Last year, U.S. vendors paid over $160 billion in processing fees, an increase of almost 20% compared to the year before.

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