At the July 22 final hearing on credit card processing fees, Massachusetts Restaurants United emphasized the growing financial pressure that interchange and processing fees place on independent restaurants and other small businesses.
While representatives from banks and payment networks highlighted the convenience and consumer benefits of electronic payments, MRU’s testimony focused on the financial reality facing restaurant operators. Independent restaurants have little control over these fees and often have limited ability to absorb the added costs.
Jen Ziskin testified on behalf of Massachusetts Restaurants United, describing the increasingly narrow and unpredictable profit margins facing restaurant owners. MRU supports legislative action that would provide meaningful relief, greater transparency, and more control over payment-processing costs.
Why Credit Card Fees Are a Growing Concern
Restaurants and other small businesses pay processing and interchange fees on nearly every electronic transaction. These charges can create a significant financial burden, especially for businesses operating on tight margins.
One concern raised during the hearing was that merchants may be charged fees on money they do not ultimately keep, including:
- Sales taxes
- Employee tips
- Refunds
- Chargebacks
Interchange fees were also described as an “inflation multiplier.” When businesses raise prices to offset processing costs, the dollar amount of the fee may also increase because it is calculated as a percentage of the transaction.
Testimony also addressed fraud-related losses. Although payment networks promote fraud protection as a benefit, merchants continue to absorb a substantial portion of the financial risk associated with fraudulent transactions.
Policy Solutions Discussed
Several possible approaches were raised during the hearing:
- Allowing merchants greater flexibility in deciding which credit cards or payment networks they accept
- Establishing a cap on interchange fees
- Creating a commission to study rising network fees and their effect on small businesses
- Pursuing federal action to create a consistent national policy rather than different rules in each state
These proposals reflect a shared concern that small businesses need relief, even when participants disagree about the most effective way to provide it.
Concerns About State-Level Regulation
Representatives from banks and payment systems cautioned that state-level requirements could create a patchwork of inconsistent payment rules.
They argued that electronic payment systems offer benefits to consumers and merchants, including faster checkout, convenience, fraud protection, efficient payment processing, and the potential for increased sales.
Some opponents also suggested that strict fee caps or price controls may not address the underlying causes of rising payment costs. Others recommended waiting to evaluate the impact of federal settlements or national policy changes before Massachusetts adopts additional requirements.
Questions Raised by the Commission
Commissioners asked several important questions during the hearing:
- Should merchants be permitted to impose credit card surcharges?
- Would federal regulation be more effective than state-level action?
- What alternative solution could provide meaningful relief to small businesses?
- Have interchange rates increased, or has the total cost increased because consumers are using electronic payments more frequently?
These questions demonstrate the complexity of balancing consumer convenience, access to electronic payments, financial-system stability, and the survival of independent businesses.
MRU Will Continue Advocating for Independent Restaurants
Massachusetts Restaurants United will continue advocating for policies that reduce unnecessary financial burdens on independent restaurants.
Restaurants should have greater transparency regarding the fees they are charged, more control over the payment methods they accept, and meaningful protection from costs that continue to rise while operating margins remain uncertain.
Independent restaurants are vital to Massachusetts communities, local economies, and neighborhoods. Ensuring that they can compete and remain financially sustainable must remain central to the policy discussion.
Independent Restaurants. Stronger Together.
