Swipe Fee Shock: Card Costs are Creeping Onto Restaurant Tabs

Card Fees on Restaurant Bills: Why Surcharges and Cash Discounts are Growing

Executive summary:

Rising card processing fees are pushing more U.S. restaurants to add surcharges or dual pricing, as operators struggle to manage one of their top three expenses without scaring away price‑sensitive diners. Trade groups report that swipe fees have risen roughly 70% since the pandemic and now total about $187 billion a year across U.S. merchants, intensifying industry pressure for legislative changes and fueling experimentation with cash discounts, debit steering, and other pricing tactics.​

Key takeaways

• Card processing fees are typically the third‑largest restaurant expense after food and labor, and for many small operators they now represent tens of thousands of dollars per year that directly reduce already thin margins.​

• To offset these costs, a growing share of restaurants are testing card surcharges and dual pricing, although only about 16% reported using explicit surcharges in a recent National Restaurant Association survey, suggesting this is still an emerging, not universal, practice.​

• Customer response is mixed: some diners accept higher card prices as “normal,” while others view added fees as “junk fees,” making clear communication on menus, websites, and receipts critical to maintaining trust and avoiding backlash.​

• Surcharging is governed by card‑network rules and state law; several states ban credit card surcharges outright, while others tightly regulate how they must be disclosed and how much can be added, so restaurants must work closely with processors and legal counsel to stay compliant.​

• The broader policy fight over the Credit Card Competition Act and recent swipe‑fee settlements could modestly reduce future card costs, but near‑term, small restaurant owners still need to weigh dual pricing, debit steering, and processor pricing models as practical tools to protect margins

The Growing Pressure on Restaurant Economics

Some have likely begun surcharging or offering discounts for cash payment, said Vanessa Sink, a National Restaurant Association spokesperson, noting the swift introduction of temporary surcharges for eggs early this year as prices surged. The association doesn’t query restaurants about payment surcharging or discounts as part of its monthly survey, she said, citing inflationary pressures.

“When everything starts to go up, you have to do something, and all of them are making different decisions about what they think their diners will accept,” Sink said, noting a wide diversity of 70 different segments within the restaurant industry.

Merchants have long battled with card networks Visa, Mastercard, and American Express over interchange fees, which are seeping into financially pinched restaurants, forcing them to impose surcharges, said Doug Kantor, general counsel of the National Association of Convenience Stores and a longtime legislative advocate against card fees imposed by card companies.

Last month, the Texas Restaurant Association began encouraging diners to pay with cash or debit cards to help reduce restaurants’ interchange expenses.

“It’s really a sign of desperation,” Kantor said Wednesday in an interview about restaurants’ dual pricing. “The fees have gone up more than 70% since COVID, which is just an unsustainable pace for restaurants and other retailers.”

Understanding the Real Cost Impact

Card fees are typically the third-highest expense for a restaurant, after food and labor, according to the National Restaurant Association. For many independent operators—single-location restaurants, casual dining establishments, and food-service venues with modest margins—this translates to $15,000 to $75,000 or more in annual card processing costs, a burden that can rival or exceed the profit margin on monthly revenue[1].

To put this in perspective, interchange fees reached a record $187.2 billion in 2024, or roughly $1,200 per family annually, according to the Merchant Payments Coalition[2]. For a typical restaurant processing $500,000 to $2 million in card payments per year, this represents a meaningful reduction in operating income that often goes unnoticed by customers but shapes hiring decisions, menu pricing, and service hours[3].

“Adding a surcharge for credit card swipe fees could be how restaurant operators are choosing to be more transparent with their customers about their rising costs of accepting credit cards, instead of just raising menu prices, which customers typically watch closely,” Sink said.

Headwinds Beyond Swipe Fees

The restaurant industry has been beset with a variety of ills in 2024 and 2025. Higher food prices and labor costs have combined with traffic declines for many restaurants as persistent U.S. inflation has curbed many Americans’ dining and entertainment budgets. Through October, restaurants reported nine consecutive months of traffic declines, according to the National Restaurant Association. When foot traffic drops and input costs rise simultaneously, swipe fee exposure becomes a critical pressure point on profitability.

How Many Restaurants Are Adopting Dual Pricing?

Adoption remains modest but growing. A 2024 survey by the National Restaurant Association found that only 16% of members had implemented surcharges at that time. The association and the Merchant Payments Coalition do not yet have 2025 data on how many restaurants use dual pricing, a practice that has become standard at gas stations and increasingly common among quick-service and casual-dining operators[4].

What Small Restaurant Owners Should Know Before Adopting Dual Pricing

For independent restaurateurs considering dual pricing or cash discounting, several factors warrant careful review:

Legal and Regulatory Considerations: Dual pricing rules vary significantly by state. Several states, including Connecticut and Massachusetts, prohibit credit card surcharges outright, while others such as Minnesota and New York have specific regulations governing how and where merchants may apply surcharges[5]. Before implementing any surcharge or discount program, restaurant owners should consult their processor, POS provider, or local business attorney to confirm compliance. Visa and Mastercard also maintain merchant surcharging guidelines; notably, surcharges may not be applied to debit cards, and disclosure requirements differ by card network[5].

Customer Communication and Transparency: Successful dual-pricing implementation depends on clear, early disclosure. Best practices include displaying pricing prominently on menus, signage at the point of sale, websites, and receipts. Research from independent operators suggests that customers who understand the rationale—and see the savings offered for cash—are more likely to accept the strategy without social media backlash or negative reviews[6]. Conversely, surprise fees or poorly explained surcharges can damage trust and trigger regulator interest.

Operational Setup: POS systems and payment processors play a critical role. Modern POS platforms (such as Toast, Square, and Shift4) can automate dual-pricing triggers, train staff on explaining the pricing in one sentence, and handle transaction reporting for accounting and tax purposes[7]. Restaurant owners should verify with their processor whether the proposed dual-pricing or cash-discount program is supported, how fees are assessed, and whether setup and monthly fees apply.

Realistic Savings Estimates: Depending on card-mix (percentage of card vs. cash transactions, consumer rewards cards vs. business cards, credit vs. debit), typical savings from a cash-discount or dual-pricing program range from 1% to 3% of card revenue[8]. For a restaurant processing $1.5 million in annual card sales, this translates to $15,000 to $45,000 in recovered margin—meaningful for independent operators, but not transformative.  See more on dual pricing here.  Get more of your dual pricing questions answered here.

Broader Industry Context: Other Cost-Management Tactics

Dual pricing is one of several tools restaurants are using to protect margins in an inflationary environment. Others include reduced operating hours, menu optimization, elimination of lower-margin items, modest price increases on specific dishes, and aggressive off-peak discounting or loyalty programs[9]. The card-fee strategy fits into this broader survival toolkit and works best as part of a coherent cost and revenue strategy, not in isolation.

The Policy Debate and What It Means for Small Operators

Beyond the immediate pricing strategies, the card-processing industry has pressed Congress for years to cap or regulate interchange fees through proposed legislation such as the Credit Card Competition Act[10]. Should such reforms pass, they could reduce effective processing costs for all merchants, potentially allowing restaurants to lower menu prices, hire additional staff, or improve food quality without changing payment policies. For now, small operators seeking margin relief must rely on tools like cash discounting, service fees where legal, and ACH steering—solutions that place the burden on customers rather than on the card networks themselves.

References

[1] National Restaurant Association. (2024). State of the Industry Report. https://www.restaurant.org

[2] Merchant Payments Coalition. (2024). Interchange fee analysis, December 2024. https://www.merchantpayments.org

[3] Payments Dive analysis based on small-business payment processing benchmarks and NRA member surveys.

[4] National Restaurant Association. (2024). Payment surcharging and dual-pricing survey findings.

[5] Visa Inc. (2025). Merchant Surcharging Q&A. https://www.visa.com/merchant-surcharging; Mastercard. (2025). Surcharging and dynamic currency conversion rules.

[6] SpotOn. (2024). Dual Pricing and Cash Discount Program Guide. https://www.spoton.com/blog/dual-pricing-aka-cash-discounting/

[7] Shift4 Technologies. (2024). POS Integration and Dual Pricing Features for Restaurant Operators.

[8] DCRS. (2024). Dual Pricing Strategy for Restaurants: A Win-Win Solution. https://dcrs.com/2024/04/03/

[9] Payments Dive. (2025). Restaurant Cost-Management Strategies in Inflationary Environment.

[10] National Association of Convenience Stores. (2024). Credit Card Competition Act legislative analysis and small-business impact.

Adapted from “Card fees creep onto restaurant tabs,” Justin Bachman, Payments Dive, December 11, 2025

IntelliPay offers various payment models, including dual pricing, convenience fee and surcharging and low traditional absorb fee services, to help merchants manage the fees discussed in this article.