Florida legislation would help reduce the cost of eating out

Florida’s restaurant scene is a powerhouse of the state’s economy—employing more than a million people and creating $63 billion in economic activity every year. That’s why persistently high inflation and labor shortages in the industry are so concerning. Fortunately, state lawmakers are taking incremental actions to alleviate some of the financial pressure.

Legislation was recently introduced that would help lower a hidden tax that’s been compounding the economic pain we’ve all been experiencing. You see, restaurants—along with other retailers—are required to pay a fee every time a customer swipes, inserts, or taps a credit card to pay for a meal. It’s similar to paying cover to enter a bar or nightclub. Except in this case, businesses are paying to process credit card transactions.

These swipe fees have been left to balloon uncontrollably because of a lack of competition. Roughly 80% of the credit card market is controlled by Visa and Mastercard, giving this duopoly tremendous leverage to hold businesses, like mine, hostage. As a result, fees have skyrocketed while the cost for banks and networks to manage transactions has declined due to technological innovations.

The scale of this problem is far worse than meets the eye. In the past 10 years swipe fees have risen by a factor of three, with no end in sight. As a result, businesses shell out about $140 billion annually to cover swipe fees. To add insult to injury, the fee process itself is also incredibly complex. My own restaurant, Sergio’s, has even retained an auditing consultant to navigate the system and avoid high fees where possible.

What is Florida considering doing about it? While the state doesn’t have the authority to provide sweeping relief, policymakers can eat away at the edges.

Introduced by State Sen. Hutson, Senate Bill 569 would prohibit swipe fees from being applied to a customer’s total purchase amount—more specifically exempting the state sales tax. So instead of a restaurant like mine paying what amounts to a roughly 3% fee that’s applied to the menu price of a meal plus the 6% sales tax, the fee would only be administered on the menu price.

Although it may not seem like a big financial benefit for merchants, when the change is applied across the millions of transactions that take place every day in the state, it’ll add up. Every Florida lawmaker—regardless of political affiliation—should support the move.

Beyond state action, our elected leaders in Washington also have an opportunity to take it a step further.

Federal legislation that was introduced in 2022 and is poised to be reintroduced this year would inject competition into the credit card market to address the Visa and Mastercard duopoly. Called the Credit Card Competition Act, the bipartisan bill would force banks with more than $100 billion in assets to include at least two unaffiliated credit card networks on the cards it issues to its customers.

The move will provide restaurants and other merchants with more options on how to process credit card transactions. In practice, the change will encourage credit card networks to compete against one another for a merchant’s business—driving down swipe fees in the process. It would also open the door for lesser-known networks like Star or Shazam to enter the arena—offering more competition that will further drive down costs.

Small businesses like mine are the backbone of the Sunshine State economy. And our elected leaders in both Tallahassee and Washington should act to address the high credit card swipe fees that are plaguing us. Together, we can help build a stronger economy that benefits all Floridians.