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What the New York Times Missed on the Benefits of Credit Cards for Restaurant Owners

| Electronic Payments Coalition

WASHINGTON, DC — The New York Times recently published an article on the impact of credit card processing fees for restaurants. The article misses out on some critical points regarding the price customers pay and the benefits of credit cards to restaurants.

How Restaurants Set Prices Vary. Interchange Rates Remain Consistent.

  • Despite talk about how eating out at restaurants has gotten more expensive, the price to process digital payments has remained stable. An EPC report from May 2023 shows that the average interchange rate has remained flat for the past seven years.
  • The truth is that businesses aren’t paying more for processing payments; it’s simply that customers are using non-cash payments more than in the past.

Customers Value Credit Cards for Restaurant Purchases, and That’s Good for Everyone

  • Many people have credit cards, 183 million in the US alone, or 84% of adults.
  • They prefer using their credit cards for several reasons, ranging from fraud prevention and the safety of not carrying cash, to reward points and cashback that encourage spending.
  • But credit cards don’t just benefit consumers…

Restaurants Benefit from Credit Cards as Much as Customers

  • The truth is that consumers spend more when they use a credit card, and credit cards are cheaper for a restaurant to handle than cash.
  • According to a study by the Boston Federal Reserve, the average value of a cash transaction is $22, compared with $112 for non-cash transactions (a 409% difference).
  • And when a business does have to handle cash, research shows that the cost of processing cash is upwards of 9%!

Restaurants Have Access to a Market for Processing Fees. 

  • While the cost of processing digital payments is unavoidable, small businesses like restaurants can shop to find the price that works for their financial situation.
  • Services like CardFellow allow small businesses to shop for the best rates on processing fees, allowing them to keep the benefit of accepting credit card payments without breaking the bank.

Artificial Interchange Caps Don’t Result in Savings Getting Passed to Customers.

  • Even if the government stepped in and added artificial caps on processing fees, evidence strongly suggests customers wouldn’t notice a difference on their bills.
  • A study from the Federal Reserve Bank of Richmond examined the effects that debit card routing mandates had on prices, and stunningly they found that three-quarters of merchants didn’t change their prices at all, while a further 22% increased prices.
  • After a decade of debit interchange regulation, less than 2% of merchants lowered their prices.

Credit card purchases are vital in driving restaurant revenue and providing businesses with a safe way to accept and handle their money. As evidenced by the NYT article’s social media comments, customers agree that utilizing electronic payments is beneficial.

While more can always be done to improve the experience of small businesses, blaming credit card payments isn’t the place to start.

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