WASHINGTON —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Sponsored by House Judiciary Committee Chairman John Conyers Jr., D-Mich., and Rep. Chris Cannon, R-Utah, the Credit Card Fair Fee Act, or H.R. 5546, was crafted to help rein in rising interchange fees. Interchange fees are determined unilaterally by credit card companies and their banks, and operators say they are left with no choices but to accept the fees as presented or to stop accepting individual cards altogether. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
And with credit card usage escalating among consumers, the option to accept only cash is rapidly becoming less practical for operators. According to a recent survey of its members, the National Restaurant Association found that customers are using credit or debit cards to pay for 45 percent of all transactions at family-dining locations, 60 percent at casual-dining operations and 80 percent at fine-dining restaurants. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Even in the quick-service sector, which has been relatively slow to accept plastic, about 25 percent of all transactions are paid for by credit or debit cards. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
According to the NPD Group, a market research firm based in Port Washington, N.Y., credit card usage for the year ended December 2007 increased 11 percent over the same period a year earlier. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Meanwhile, those numbers continue to grow. Frank Guidara, president and chief executive of Uno Chicago Grill, the 200-plusunit casual-dining operator in West Roxbury, Mass., said credit card transactions accounted for about 30 percent of sales a few years ago. Today, that figure has risen to 60 percent. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Evidence also suggests that credit cards are helping to boost sales as well. James Greco, chief executive of Bruegger’s Enterprises Inc., the 275-unit fast-casual operator in Burlington, Vt., said that while it is difficult to pinpoint the effect credit cards have had on the bagel chain’s business since it began accepting them about four years ago, he believes they have contributed to its growth. Over that time, the chain has reported 15 consecutive quarters of same-store sales increases, he said. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
John Jelinek, a longtime McDonald’s franchisee in the Kansas City, Mo., area, speculated that customers paying with credit or debit cards also tend to run up higher check averages than those paying with cash. He said his three McDonald’s units have been accepting plastic for about a year. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
But while operators generally acknowledge the benefits of accepting credit cards, they also complain about the rising interchange fees they must pay. Interchange fees are charges used to cover the cost of processing credit card transactions and the risk taken by issuing banks. However, critics argue that the fees have been increasing steadily over the years as processing costs have been decreasing. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Currently, interchange fees average about 1.75 percent of a credit card purchase. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
“Many of our members have expressed concern about the unexplained increases in fees and inability to negotiate a fairer rate with credit card companies,” said John Gay, the NRA’s senior vice president of government affairs and public policy. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Mallory Duncan, senior vice president and general counsel of the National Retail Federation and chairman of the Merchants Payments Coalition—of which the NRA is a member—said, “We welcome this effort to stop the price-fixing practices of the credit card industry and create a transparent market-based process.” —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Conyers’ measure, if enacted, would allow restaurateurs and other businesses to form a broad coalition and negotiate with credit card companies from a position of strength. However, if an individual operator was dissatisfied with the results, he could opt out and negotiate on his own. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Under the bill, if the negotiating parties cannot reach an agreement after a designated amount of time, a three-judge panel would make a decision that best reflects market conditions. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
In the Credit Card Fair Fee Act, Conyers underscored the growing cost of credit card fees. He said interchange fees in 2006 totaled about $36 billion, an increase of 117 percent since 2001. In 2007, fees rose to $42 billion, a hike of 17 percent over the prior year. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Conyers’ bill is aimed specifically at credit card giants Visa and MasterCard, which together control more than 80 percent of the market, Duncan said. American Express and Discover control less than 20 percent each, thus are not governed under this legislation. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
“Merchants are forced to deal within this system because it is simply not an option to refuse to accept Visa or MasterCard from their customers,” Conyers told members of Congress. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
MasterCard, in a statement, said it “believes there is no need for government intervention, and that it would be inappropriate for the U.S. government to set prices and negotiate the terms of contracts for private commercial entities.” —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Peter Madigan, executive director of the Electronic Payments Coalition, which includes Visa, MasterCard, Bank of America and others, also maintained the bill would not help. He contends that while the volume of people using credit has risen, the interchange fees have not. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Mike Shutley, the NRA’s director of legislative affairs, said interchange fees indeed have risen. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
“But, really, they should be going down,” he said. “The technology [used to process the transactions] has been improved.” —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Shutley added that only 13 percent of the interchange fee goes to covering the cost of the transaction. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Greco said credit card use at Bruegger’s has been climbing for the past four or five years to a current high of 40 percent of sales. But, at the same time, so have the credit card fees, he said, noting that Bruegger’s annual credit card fees total about 1 percent of sales. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Observing that credit card fees are not particularly competitive from one company to the next, Greco said, “Whatever can be done to level the playing field in terms of negotiating is a good thing, and we would welcome it.” —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
Uno’s Guidara declined to speculate on the usefulness of the legislation, but admitted that he “would like to see credit card fees reduced. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
” Nicole Phillips, who with her husband owns and operates a fastcasual restaurant called Maniac’s in Brentwood, Tenn., said the current system “seems rather monopolistic.” —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
“Nobody minds paying for a service if it’s reasonable,” she said, “but I’m starting to look at credit card companies like insurance companies—they get to make a big profit at everyone’s expense. They raise their rates, tell you ‘these are our terms,’ and if you don’t agree, you lose the cards.” —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
She said credit card business accounts for 60 percent to 70 percent of sales, “and it’s going up.” —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
“Three years ago when we opened it was 50 percent,” she said. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
She and her husband were considering offering catering, but added credit card costs are making them think twice. —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
“If you do large orders, they have to be paid ahead of time,” she said, “and if you key a credit card number into the system, there is an extra charge, so you have to build it into the prices. I would prefer not to have to do that.” —As credit card usage within the foodservice industry climbs, operators and foodservice association officials are hopeful that a measure introduced in Congress would give them the ability to negotiate lower transaction fees with certain credit card companies.
