Credit card convenience comes at a price. This Olympia bill aims to change that

Paying by credit card is more common these days. But for each swipe, or tap, the credit card company charges businesses what’s called an interchange fee.

And those fees add up.

Washington state Senate Bill 5070, sponsored by Sen. Rebecca Saldana (D-Seattle), would bar fees on sales taxes and gratuities.

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At a recent hearing by the Senate Committee on Labor and Commerce, many small businesses applauded the proposal. Owners said these fees are the second highest operating expense for businesses, after labor.

“This is the only business relationship where the service provider takes a non-negotiable cut of their profit,” said Julia Gorton with the Washington Hospitality Association.

Some business owners deduct a portion of those fees from workers’ tips. Saldana's bill would prohibit that practice.

“As we’re seeing, employers are now beginning to even move fully to cashless business models,” said Evan Gallo, who’s worked in the restaurant industry for the past three years. “Which means that I’m going to see a 3% tax on my income, even in spite of the higher minimum wage here.”

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But Glen Simecek of the Washington Bankers Association told the Senate Committee the fees help pay for credit card-related conveniences that consumers expect.

“The biggest advantages are the fraud protection and the credit card rewards, both of which are paid for by these interchange fees,” Simecek said.

The state of Illinois recently passed a similar ban on interchange fees. But a federal judge temporarily halted its enforcement as the banking industry challenges the law.