09-05-2025
Exorbitant credit card swipe fees hurt Oklahoma restaurants, customers
Running a restaurant has always been a balancing act. From fluctuating food costs to rising wages, every dollar matters. We've learned to navigate the ups and downs of the economy and managed to weather many market fluctuations. But one cost that often flies under the radar — yet continues to chip away at our already razor-thin margins — is credit card swipe fees.
For restaurants like ours, these fees amount to hundreds of thousands of dollars a year, money that could otherwise go toward paying our employees, upgrading our kitchens or keeping menu prices reasonable for our guests.
Most restaurants work hard to provide great food and service while navigating the relentless cost pressures of the industry. Our industry's profit margins typically hover around 3% to 5% — for those that are lucky. Yet, credit card processing fees take a significant bite out of those earnings, often ranging from 2% to 4% of every swiped transaction. In the case of small operators, including ourselves, that adds up to over $200,000 a year — a staggering cost that continues to grow unchecked.
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For smaller, independent restaurants and mom-and-pop diners, the impact is even more severe. Unlike larger operations that can negotiate better processing rates, small businesses often pay closer to 4%, making credit card fees one of their most burdensome expenses. And unlike food or labor costs, which we can attempt to control, there's no real way to negotiate these fees down — they only seem to go up.
One of the most frustrating aspects of credit card fees is that they aren't just applied to what we earn — they're charged on pass-through costs like sales tax and tips. That means we're being forced to pay fees on money that doesn't even belong to us. Sales tax is remitted to the state and local governments. Tips go directly to our employees. Yet, every time a customer pays with a credit card, we get hit with swipe fees on those amounts, too.
It's outrageous when you think about it. We're being charged thousands of dollars a year in swipe fees on money that never goes to our bottom line. That's like paying rent on a space you don't use.
Unfortunately, this important bill currently sits in limbo after facing unprecedented fierce opposition from the financial industry, who are seeking to maintain a stranglehold on their swipe fee cash cow. Sen. Kristen Thompson, the bill's sponsor, described her efforts to work with parties on both sides of the bill but noted the 'gross business practices' used by Oklahoma's financial industry, which included 'bullying of committee members.' As a result, she decided to lay over the bill until a later date and urged opposition to the proposed bill to 'hold themselves to a higher standard.'
Thankfully, Oklahoma lawmakers recognized this injustice and introduced Senate Bill 1095, which would eliminate swipe fees on sales tax, tips and charitable donations. It's a commonsense fix that doesn't cost taxpayers a dime and would put money back in the hands of small businesses and workers instead of padding the profits of big banks and credit card companies.
The tactics by the banks and credit card companies are unfortunate but not surprising given their vested interest in keeping this system in place because it generates billions in revenue for them. Meanwhile, independent restaurants and small businesses are left to foot the bill.
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The restaurant industry is already one of the toughest to survive in. Margins are thin, and closures are common. Last year, we made the difficult decision to close one of our locations simply because we couldn't make the numbers work. The increasing burden of swipe fees only makes these hard choices more frequent for restaurant owners across the state.
Eliminating swipe fees on sales tax and tips wouldn't solve every challenge we face, but it would be a step in the right direction. It would mean more money going back into our businesses, more dollars in the pockets of our employees and lower prices for our guests. At a time when restaurants are still recovering from the financial strains of the past few years, this small change could make a big difference.
Oklahoma legislators should stand with small businesses, not big banks. SB 1095 deserves to be passed — not just for the sake of restaurant owners like me, but for the thousands of employees and customers who rely on us every day. It's time to bring fairness and transparency to the system and stop allowing financial giants to take a cut of money that was never theirs to begin with.
James Como is a partner with Urban Management Inc., which operates restaurants in the Oklahoma City area, including Interurban and HunnyBunny Biscuit Co.
This article originally appeared on Oklahoman: Oklahoma legislators should eliminate credit card swipe fees | Opinion
