By Melissa Fleischut
Restaurants are a driving force in New York’s economy, with sales projected to reach $43.3 billion this year. They provide jobs and build careers for thousands of people, and play a vital role in many of our state’s local communities.
As president and CEO of the New York State Restaurant Association, I worry about the future of our vibrant restaurant industry as Congress considers repealing debit card swipe fee protections that keep transaction costs fair and reasonable.
When Congress passed these swipe fee protections in 2010, they brought relief to small business operators around the country who were paying exorbitant fees to big banks on every debit card purchase. The fees were nearly cut in half and the huge savings allowed businesses to hire more employees. More than 37,000 new jobs were created in the first year after the legislation was passed.
The protections also brought a degree of competition and fairness to the marketplace. Restaurants and other merchants had more options and customers around the country benefited, too. In fact, according to one study, consumers saved $5.8 billion in reduced fees charged to their debit cards in the first year alone.
Fast forward seven years and all of this progress could very well come crashing down – thanks to the Financial CHOICE Act.
This legislation is being pushed through the committee process in the House of Representatives all to satisfy the big banks on Wall Street. If they succeed, costs for restaurateurs will skyrocket, putting pressure on New York’s restaurants, many of which operate as small mom-and-pop establishments.
This added cost is equivalent to a huge new tax on our restaurants and would end up getting passed onto the consumer.
We cannot allow this to happen. Given all of the pressures operators already face, the reversal of these protections would significantly add to the pile of increasing costs on the restaurant industry.
The only ones to benefit would be the bankers; they’d reap a huge bailout from the increased fees. But restaurant operators, who are lucky if they can even make a profit of 5 to 7 percent a year, would suffer.
If Congress strips these protections away, everything would cost more, plain and simple. Restaurants and food service firms in our state generated sales of more than $43 billion and employed nearly 834,000 people in 2016. That’s 9 percent of New York’s total employment.
For us, the answer is clear: Congress must stand up for Main Street and not give Wall Street another bailout.
Melissa Fleischut is president and CEO of the New York State Restaurant Association.