Lower Swipe Fees Could Benefit Restaurants Considerably

Published

June 22, 2011

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A proposed rule from the Federal Reserve Board will limit the amount credit networks can charge for processing debit purchases to just 12 cents per transaction, and this is likely to be a boon to the restaurant industry, according to a report from The Associated Press. A new report from KeyBanc Capital Markets shows the entire industry is likely to see profits increase between 1 percent and 4.5 percent because of the large number of debit transactions they conduct.

In particular, the average restaurant conducts about 35 percent of all its transactions on debit cards, the report said. In addition, those restaurants that tend to have lower prices – national chains such as Cracker Barrel and Sonic – will benefit even more from the new, lower swipe fees.

The Federal Reserve proposed the change earlier this year, but the new rule was met with some resistance from Republican lawmakers, who were unable to garner enough votes to delay its enactment. The final rule will be put into place on July 21.