HOUSTON — You might have noticed during the pandemic more fees popped up on restaurant receipts. One of those fees is a credit card service charge. That is basically a charge for the convenience of paying for your meal with a credit card. So, why are restaurants charging for such a popular form of payment? Well, because they are being charged for that popular form of payment.
According to Forbes, the average credit card processing fee for merchants ranges from 1.5% to 3.5%. That fee is charged every time a card is swiped. For restaurant owners that can add up to thousands of dollars per month. That’s in part because so many people are using credit cards now. One restaurant owner told the New York Times when he opened his place seven years ago, electronic payments were 50% of his business, now they are 90%.
So, why can’t restaurants just absorb the cost? The food business is pretty notorious for small profit margins. According to the National Restaurant Association, it hovers around 3 to 5%. According to the New York Times, now that Visa and Mastercard control close to 80% of the market, restaurants have lost the ability to negotiate rates. All this adds up to companies tacking that credit card fee onto your bill.