Running a restaurant entails both risk and reward, a lesson I’ve gleaned from over three decades of experience in the industry. It all started when I began busing tables in my parents’ restaurant at just thirteen years old.
Twenty years ago, I took charge of the family business, and since then, I’ve expanded my operations to include five dining establishments in the greater Capital Region. These establishments range from fine dining to a brick-oven pizzeria.
Throughout the years, I’ve navigated numerous economic ups and downs. Just as my colleagues and I were recovering from the grueling challenges presented by the COVID-19 pandemic, another obstacle would often emerge.
Among my most burdensome expenses today are credit card swipe fees. It’s truly absurd that while I can shop around for competitive prices on condiments like ketchup, I’m stuck with exorbitant rates for card transactions. These charges suffocate our industry as a whole.
Due to the dominance of Visa and MasterCard, which control 80 percent of the credit card transaction sector, there is no room for competition and lower rates. Given that restaurants typically operate on slim single-digit profit margins, a mere percentage point or two per swipe can mean the difference between success and failure.
Last year, U.S. merchants collectively paid a staggering $160 billion in credit card transactions, marking a more than 16 percent increase compared to 2021. Processing fees can vary among restaurants, and on average, I currently pay a hefty 2.2 percent for every transaction, whether it’s a $10,000 bill for a large catered event or a $6 cup of coffee.
It’s not just restaurants and retailers that suffer. The control wielded by dominant credit card networks in the credit market is estimated to cost the average family close to $1,000 annually, a figure that will likely rise alongside inflation.
Congress has the power to assist restaurant owners like myself. The Credit Card Competition Act aims to counter the skyrocketing swipe fees by introducing more choice and competition into the payment system. Drawing upon the debit card competition reforms enacted by Congress in 2010, this bill would mandate that major credit card-issuing banks with over $100 billion in assets provide at least two networks for processing electronic credit transactions.
This measure would not only rescue businesses but also potentially save consumers an estimated $15 billion annually, according to a study. Envision the possibilities if businesses were empowered with such savings. They could reinvest in their restaurants, upgrade equipment, hire additional staff, reduce menu prices, and more.
As an advocate for New York’s restaurants, I urge U.S. Senators Chuck Schumer and Kirsten Gillibrand to support the Credit Card Competition Act.
Dominick Purnomo is the owner of the Dominick Purnomo Restaurant Group, which includes Yono’s and dp An American Brasserie in Albany, as well as Day Line Oyster Bar + Kitchen, Patrick Henry’s Waterfront Tavern, James Newbury Hotel, and The Wire in Coxsackie.
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