John Horne: Florida businesses and consumers need credit card swipe fee reform | Column

As published in the Tampa Bay Times:

John Horne: Florida businesses and consumers need credit card swipe fee reform | Column

A Bradenton restaurateur points out that credit card transactions are among his top costs today.

John Horne

When I was a busboy some 40 years ago, I never would’ve dreamed that one day I would be the owner of seven restaurants. And yet, that is the dream I am living today, and I wouldn’t trade it for the world. I run six casual oyster bars and a white-tablecloth restaurant in the Tampa Bay area and employ 420 dedicated, hard-working people.

Running a restaurant is a high-pressure venture that comes with major expenses and overhead, and therefore we operate on very slim, single-digit profit margins. It’s a tightwire to walk, and every fluctuation in expenses can make or break me.

We always adapt to deal with the uncertainties of the economy and other unexpected factors, but what is most frustrating these days are the unnecessary headaches that we are facing from exorbitant, ever-increasing credit card swipe fees.

Credit card transactions are among my top costs today. Twenty years ago, credit card transactions were 20% of my payments. Five years ago they completely flipped to 80%, and last month they reached 109% of our sales This is because my average swipe fees can vary from 2.99 to 3.5% and I pay that fee on every transaction, which includes the sales tax we collect and remit to the Department of Revenue and tips we disperse to our tipped employees, all while incurring the swipe fees for running these processes through credit cards. These swipe fees are always increasing, too, because there is no competition for lower rates in the market. Visa and MasterCard control 80% of the credit card transaction sector. It’s a duopoly that is holding small businesses hostage on every transaction with no room for competition and lower rates. The costs are staggering — last year, U.S. merchants paid $160 billion in credit card and debit transactions, a 16% increase compared to 2021.

As the costs of food, equipment and labor rise, the incremental uptick in swipe fees is a real kick in the teeth. We need more competition in the marketplace. Fortunately, Congress has been paying attention; a broad, bipartisan group of lawmakers has introduced the Credit Card Competition Act, which would introduce more choice and competition into the payment system that is dominated by the Visa and Mastercard giants. It builds off the successful debit card competition reforms enacted by Congress in 2010 and would require large credit card-issuing banks with over $100 billion in assets to offer a choice of at least two networks over which an electronic credit transaction may be processed.

This is a commonsense solution. Market competition is part of the American fabric. I must keep my prices competitive with the other area restaurants in my neighborhood, so why should it not be the same with credit card transactions? If competition is not introduced, the big banks will continue to roll us, and many restaurants won’t survive. A new fee was just introduced last week.

That would be tragic, not only for my employees but our local community as well. Good restaurants always give back to the neighborhoods that support them. During the pandemic and after hurricanes in Florida, I refer to our restaurant community as “second responders,” because we provide a place of normalcy and social gatherings for our customers that were coping with the mental stresses of COVID lockdowns and other life interruptions.

My greatest sense of pride comes from a local reading program I’ve started for my community. I’ve worked with local school districts to bring in rising first, second and third graders to feed them breakfast while my employees and our community volunteers read with them. It’s an amazing program that has served 2,500 young readers to date. If exorbitant, unfair costs end up closing my doors, all the success that I’ve built also goes away. When restaurants lose, employees lose, and the local community loses.

I urge U.S. Sens. Marco Rubio and Rick Scott to continue their strong support of Florida small businesses and support the Credit Card Competition Act.

John Horne is chief executive oyster of Oysters Rock Hospitality in Bradenton.