Oklahoma credit card users may soon face higher fees on purchases as the state Senate has approved a bill increasing the cap on credit card surcharges. Senate Bill 2132, sponsored by Senator Spencer Kern, a Republican from Duncan, would raise the maximum surcharge businesses can add to credit card transactions from 2% to 3%.
The move, approved by the Senate on , is intended to help businesses offset the costs of credit card transaction fees, which are increasingly burdensome, particularly for those operating on thin margins. Proponents argue that the current system forces businesses to either absorb these fees, impacting profitability, or pass them on to all customers through higher prices, even those who pay with cash or debit cards.
James Leewright, president and CEO of the Oklahoma Restaurant Association, voiced strong support for the bill. He explained that restaurants typically operate with profit margins of only 3% to 5% on each meal, yet are required to pay substantial transaction fees to credit card companies. “Credit card transaction fees are the third highest cost for restaurants behind labor and food,” Leewright stated. He further noted the increasing prevalence of cashless transactions, stating, “We all know that people are moving into a cashless society. Most want to use credit cards for transactions and the credit card companies are charging enormous fees to be able to make that transaction happen. They don’t have any competition.”
The rationale behind the bill centers on the idea of fairness. Businesses argue that credit card companies benefit from each transaction and should not expect merchants to shoulder the full cost. By allowing a higher surcharge, businesses can more accurately reflect the true cost of accepting credit card payments. Here’s particularly relevant as credit card usage continues to rise, making transaction fees a significant expense for many businesses.
However, the bill has faced opposition. Senator Shane Jett, a Republican from Shawnee, voted against the measure, expressing concern about the impact on his constituents who rely on credit cards. “The last time I checked, I represent credit card holders,” Jett said. “They are constituents.” He argued that adding an additional fee onto consumer purchases is undesirable, even if it helps businesses manage their costs.
The debate highlights a broader tension between businesses and credit card companies. Merchants have long complained about the high fees charged for processing credit card transactions, arguing that they stifle competition and reduce profitability. Credit card companies, maintain that these fees are necessary to cover the costs of fraud protection, rewards programs, and other services they provide. The lack of competition in the credit card processing market, as highlighted by Leewright, exacerbates these concerns.
The Oklahoma State Chamber, Tulsa Regional Chamber, and Oklahoma City and Greater Oklahoma City Chamber have not yet taken official positions on the bill, indicating a degree of internal debate within the business community. Their eventual stances could influence the bill’s trajectory as it moves forward in the legislative process.
If enacted, Senate Bill 2132 would bring Oklahoma in line with a growing number of states considering or implementing similar measures to address credit card transaction fees. The potential impact on consumers remains a key point of contention, with opponents warning of increased costs and proponents arguing that the surcharge will simply make the true cost of transactions more transparent. The bill now moves to the House for consideration.
The increase from a 2% to a 3% surcharge cap may seem modest, but for businesses operating on tight margins, even a 1% difference can be significant. For example, a restaurant with a $100 bill could potentially recoup an additional $1.00 in transaction fees, which could be reinvested in the business or used to offset other costs. However, the extent to which businesses actually implement the surcharge will likely depend on market conditions and consumer sensitivity to price increases.
The outcome of this legislation could set a precedent for other states grappling with the issue of credit card transaction fees. If Oklahoma’s experiment proves successful in helping businesses manage their costs without significantly impacting consumer spending, it could encourage other states to adopt similar policies. Conversely, if the surcharge leads to a noticeable decline in credit card usage or consumer backlash, it could dampen enthusiasm for such measures elsewhere.
