A small business’ sign alerts customers that cash is its preferred payment. Credit: Unsplash / Bovia & Co. Photography

Those who regularly dine out may have encountered restaurants that extend a discount for paying with cash versus credit card. In many cases, high swipe fees charged by credit-card processing companies have prompted such offers.

A duopoly in the credit-card processing system has allowed point-of-sale fees to spiral out of control in recent years, according to Texas Restaurant Association CEO Emily Williams Knight. That’s been financially devastating to small business owners, who have no choice but to pay, she added.

As a result, Williams Knight’s organization and other small-business advocates have thrown their support behind the federal Credit Card Competition Act (CCCA), S. 1838/H.R. 3881.

Introduced in June by U.S. Rep. Lance Gooden, R-Texas, the proposal would drive down swipe fees by requiring at least two competing processing networks be enabled for every credit card issued by the nation’s largest banks.

“Two credit card companies control over 80% of the market, and predictably their fees have more than doubled in the past decade,” Williams Knight said in a statement. “This is a David-versus-Goliath story local restaurants live every day. As a practical matter, they must accept credit cards, and yet they have no ability to negotiate lower fees from Visa and Mastercard.”

The CCCA requires banks with more than $100 billion in assets to facilitate a second secure network that locally owned small businesses can choose to process credit card transactions. This “dual routing” requirement already exists for debit cards.

In addition to driving down swipe fees and saving Texas restaurants millions of dollars, the change would improve credit card security and service, Williams Knight added.

The CCCA is expected to receive a vote later this year.

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This article appears in Aug 23 – Sep 5, 2023.

Nina Rangel uses nearly 20 years of experience in the foodservice industry to tell the stories of movers and shakers in the food scene in San Antonio. As the Food + Nightlife Editor for the San Antonio...