North Texas Lawmakers File ‘Swipe Fee Fairness' Bills to Help Small Businesses

While the Texas legislative session is picking up steam, several new bills have been filed including some that could help small businesses.

Senator Tan Parker (R-Flower Mound) and Representative Giovanni Capriglione (R-Keller) filed SB 1541 and HB 3395, aimed at shielding Texas merchants from costly swipe fees when they are required to collect taxes on behalf of state and local governments.

According to the Texas Restaurant Association -- which is supporting the measure -- the swipe fee fairness legislation will save Texas businesses over $587 million a year without creating any new costs for the government or Texas consumers.

“We are incredibly grateful to Sen. Parker and Rep. Capriglione for filing swipe fee fairness legislation in Texas,” said Emily Williams Knight, Ed.D., President & CEO of the Texas Restaurant Association. “Swipe fees have become one of restaurants’ highest costs—behind only food and labor—requiring even small, family run restaurants to spend thousands of dollars a year to collect taxes that they must turnover to our government. Restaurants play a critical role in our economy and in our communities; we shouldn’t expect these main street businesses to pay costly fees to collect our government’s taxes.”

Like legislation filed in other states, Texas’ swipe fee fairness bill prevents banks and card companies like VISA and Mastercard from charging merchants a swipe fee when they collect sales, alcohol, hotel occupancy, and other consumption taxes on behalf of the government.

"It's essentially when businesses are collecting tax revenue, not for themselves, but for the government, they shouldn't have to pay a third party a fee in order to do that," said Kelsey Erickson Streufert, Chief Public Affairs Officer of the Texas Restaurant Association. "And especially with inflation, the cost of these swipe fees has really skyrocketed in recent years for restaurants. It's usually the third highest cost restaurants face after food and labor."

Currently, merchants like restaurants, hotels, and retailers pay card processors a fee ranging from 2-5% on every transaction, including any taxes they are required to collect and send to the government. The TRA said businesses have very little control over these costs because they are required by law to collect taxes.

Those fees have also increased since the pandemic, as more people use credit cards and move away from physical cash. Data shows nearly 67% of payments are made with a credit or debit card.

“Our mom-and-pop shops operate on thin margins where every penny counts,” said Annie Spilman, Texas State Director for NFIB. “Unfortunately, as swipe fees have more than doubled since 2012, those margins have only continued to shrink. Skyrocketing inflation acts as a multiplier, since swipe fees are a percentage of each sale. Our members are grateful to Sen. Parker and Rep. Capriglione for introducing this legislation to ensure our small business owners can continue to keep their doors open and meet their customers’ needs.”

A number of advocacy groups are supporting the legislation. It would apply to all businesses in Texas, large or small, no matter the industry.

If it passes, the bills would take effect this September. The current legislative session ends on May 29.

"Retailers are proud to help power the Texas economic engine that relies in large part on our state's business-friendly environment," added John McCord, Executive Director of the Texas Retailers Association. “The legislation proposed by Sen. Parker and Rep. Capriglione will help fight inflation, keep consumer costs down, and spur economic growth."