Interchange Fees: A Lesser-Known Cost Impacting Restaurants & Small Businesses
Since the COVID-19 pandemic, we’ve all been impacted by rising costs. Our industry, which has been disproportionately impacted by increased food and labor costs, also faces a significant cost of business lesser known to the public: interchange fees.
Interchange fees are charged to all business owners for every transaction completed at their business, including on the collection of sales tax revenue. Legislation proposed and supported by the CRA – SB1460: An Act Concerning Interchange Fees on Electronic Payment Transactions – could change this but is facing an uphill battle against big banks.
Our industry is not arguing against interchange fees charged to businesses to process goods and services sold to customers. We are simply asking that taxes no longer be included in the calculation, a practice which unnecessarily inflates the fees – effectively creating an extra commission for credit card companies. This bill would benefit not only restaurants but all Connecticut businesses that are being charged added fees to collect sales taxes, which last year totaled nearly $80 million in Connecticut alone.
On March 14th, CRA President & CEO, Scott Dolch, testified in favor of SB1460 alongside State Senator Derek Slap and Grecia Ludena, co-owner of Coracora in West Hartford. Ludena delivered a powerful testimony to the Finance, Revenue & Bonding Committee, in which she shared information about her small, independent, family-owned business. She shared with the committee that “...in FY24, Coracora paid nearly $250,000 in sales and use tax to the state of Connecticut. So, this could have been a savings of more than $5,000 back to [her] business”. This money could be reinvested into her family’s business and be utilized for expansion, as opposed to being a handout to big banks.
Jacob Rodriguez of Puerto Vallarta Restaurant Group, a local chain with eight locations in Connecticut, also testified about the impact this legislation would have on his family business. Rodriguez testified regarding the effect of interchange fees on a larger business. He stated that it is imperative for a business to keep costs manageable, and that – even for a larger business – the inclusion of sales tax in the calculation of interchange fees significantly impacts their bottom line. Specifically, Rodriguez shared that “...with high transaction volumes, those fees add up quickly. Often in the tens of thousands of dollars per month, or hundreds of thousands of dollars per year.” Like Ludena, Rodriguez emphasized that the money could go back into supporting employee wages or be used to reinvest in the business.
The National Restaurant Association (NRA) has also taken an active stance in support of SB1460. Brennan Duckett, Director of Technology and Innovation Policy, who testified virtually on March 14th, stated that “[this] legislation would help curb some of the anticompetitive practices pervasive throughout the U.S. payments ecosystem, perpetrated by the duopoly [the two biggest credit card companies]. Most notably, the bill would provide small business owners and consumers in Connecticut with much-needed relief from exorbitant swipe fees on sales and use taxes and ultimately promote greater competition and transparency within the credit card market”.
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CRA 2025 Golf Classic & Chef Farm Dinner Returns!
The Annual CRA Golf Classic & Chef Farm Dinner is back at Lyman Orchards this June!
The highly anticipated annual event, presented by Sysco, is the largest statewide industry golf outing of the year, bringing together restaurant operators and industry vendors from across Connecticut for a fantastic day of golf and incredible food.
Join us on Monday, June 23, 2025 for an excellent opportunity to network and build valuable connections with fellow restaurateurs, vendors and partners, play the beautiful Lyman Orchards course, and enjoy great food throughout the day, concluding the day with the Chef Farm Dinner.
Secure your tickets, sponsorships and more at ctrestaurant.org/golf.