FOR IMMEDIATE RELEASE

ALBANY, NY (Feb. 26, 2025) – A statewide coalition of New York’s leading business trade associations, led by the National Federation of Independent Business (NFIB), the Food Industry Alliance of New York, and the New York State Restaurant Association released a letter today supporting A.4017 (McDonald)/S.5587 (Skoufis), which would exclude sales tax and gratuities from credit card swipe fees. The legislation would put an end to this pernicious practice by credit card companies and debit card bank networks, providing significant savings to consumers, employees, and merchants, amounting to $930 million annually. Last year, Illinois was the first state in the nation to pass similar legislation into law.

According to Capital One Shopping Research, cash is now used in only 12 percent of in-store transactions, with Americans spending nearly $11 trillion in purchases using credit, debit, and prepaid cards in 2023. In the first six months of 2024, Americans’ spending on American Express, Discover, Mastercard, and Visa cards reached a staggering $5.25 trillion, according to data from the Nilson Report. For the year 2023, this resulted in total swipe fees reaching $172 billion in the United States, with Visa and Mastercard pulling in $100 billion from swipe fees alone.

Small businesses operate on thin profit margins, which have been cut further in recent years as credit card networks’ swipe fees have increased. In fact, credit card swipe fees have more than doubled since 2012 for small business owners. This problem has been exacerbated by pervasively high inflation in recent years, which acts as a multiplier as swipe fees are a percentage of each sale.

Assemblymember John T. McDonald III, RPh said, “I sponsor this bill because I know how important it is to support our tipped workers and small businesses who would benefit by excluding sales tax and gratuities from credit card swipe fees and that every little bit helps as costs rise and affordability remains a concern. This is a commonsense measure that would lower the cost of goods and services for our consumers as well. Small businesses should not have to pay a fee for collecting required taxes. Thank you to the NFIB coalition for partnering with Senator Skoufis and I on this legislation as we work to advance this bill into law.”

Senator James Skoufis said, “Everyone knows credit card companies engage in predatory practices. One egregious practice that hits our small businesses unnecessarily hard is charging swipe fees on the sales tax and gratuities associated with a customer’s purchase. Add it all up and this scheme amounts to nearly $1 billion annually that credit card companies are essentially stealing from our state’s businesses. At a time when so many Main Street shops are struggling to stay open – and, last time I checked, none of the credit card companies are struggling – this common-sense legislation will provide a meaningful boost to our neighbors who desperately need some financial relief.”

“NFIB strongly supports reigning in out-of-control credit card swipe fees,” said NFIB New York State Director Ashley Ranslow. “These disproportionate credit card fees cost businesses millions each year and penalize small businesses punitively, damaging startups, job creation, and the survival of Main Street shops. NFIB’s more than 11,000 members and all small businesses across New York are being charged steep fees by credit card companies on the state and local taxes generated by the transactions for their products and services. This unfair and costly practice must end, and NFIB looks forward to working with Senator Skoufis and Assemblyman McDonald to pass this legislation providing significant savings to Main Street businesses and consumers.”

“The Food Industry Alliance of New York strongly supports this legislation and applauds Senator Skoufis and Assemblyman McDonald for leading the critical effort to reign in these exorbitant, monopolistic fees,” said FIA President Mike Durant. “This legislation, by simply removing the state’s sales tax from the interchange fee and from any gratuities provided to employees, will help retailers, employees and consumers throughout New York save more than $900 million per year.”

“Many restaurants across the State of New York are barely hanging on. With high labor costs and nearly unprecedented inflation, this industry is walking an economic line that is finer than ever before,” said New York State Restaurant Association President & CEO Melissa Fleischut. Every dollar a restaurant earns right now is of paramount importance and interchange fees are extracting valuable resources from our businesses. These fees are forcing our members to raise costs while also forcing them to try to get by with less. Why should a restaurant have to pay higher fees because we have to pay sales tax? Why should a restaurant be forced to pay higher fees because one of our employees has done a great job and earned a larger tip? It simply doesn’t make sense, and as more and more customers use credit cards as their primary form of payment, this is yet another cost that is higher than ever. This legislation will put real money back into these local economic cornerstones and allow for our favorite local restaurants to keep their doors open.”

The NFIB-led coalition includes:

Food Industry Alliance of New York
National Federation of Independent Business (NFIB)
New York Association of Convenience Stores
New York Farm Bureau
New York State Hospitality and Tourism Association
New York State Liquor Store Association
New York State Restaurant Association
Northeastern Retail Lumber Association (NRLA)
Ski New York

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For more than 80 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is nonprofit, nonpartisan, and member-driven. Since our founding in 1943, NFIB has been exclusively dedicated to small and independent businesses, and remains so today. For more information, please visit nfib.com.