The “Fair Swipe Act” could save the average DC restaurant $14,500 a year

Today, Councilmember Charles Allen joined Shawn Townsend, President and CEO of the Restaurant Association Metropolitan Washington, to announce the Fair Swipe Act – a bill that would prohibit banks and large credit card companies from including sales tax and gratuities when collecting swipe fees.

Annually, swipe fees on sales tax and tips drive up the cost for a business by thousands of dollars. RAMW estimates a full-service restaurant could save around $14,500 per year just by excluding tax and tips from the swipe fee. Currently, whenever a customer uses a credit or debit card to pay for their purchase at a retailer or restaurant, the banks or credit card companies providing the service charge the business an interchange fee (commonly a “swipe fee”) to process the charge. These fees are a percentage of the total sale, usually 2-4%, and currently include the cost of sales tax and any tip.

“There is no reason banks and large companies like Visa and Mastercard should profit from the required collection of sales tax and tips. They don’t help the business remit the sales tax or distribute the tip to the employee. They’re just a middleman driving up the cost of dinner or a coffee,” said Councilmember Allen. “This is David vs Goliath. Who would you rather see have a little more money in their bottom line? Your favorite local restaurant or one of a handful of companies like Visa or Mastercard, both of whom earned more than $25 billion last year. That’s an easy call for me. I stand with my local businesses and my residents.”

This legislation is just the latest effort from Councilmember Allen to alleviate the pressure of inflation and increasing costs on small and local DC businesses. During last year’s budget process, Councilmember Allen led the Council to double the Small Retailer Property Tax Credit, expanded DC’s highly successful security camera rebate program to cover more security devices for businesses, and supported common-sense reforms to the District’s outdated liquor liability laws and bar manager’s license to reduce business costs while maintaining high standards for safety and service.

The Fair Swipe Act is co-introduced by Councilmembers Christina Henderson, Brianne Nadeau, Brooke Pinto, and Robert White.