DELAWARE — A new proposal in the Delaware House of Representatives could reshape how restaurants and small businesses handle credit card tips, potentially saving millions across the industry.
Proposed Law Seeks to Eliminate Fees on Gratuities
The bill aims to stop credit card companies from charging processing fees on tips left by customers. Currently, businesses pay fees on the full transaction amount – including gratuities.
Supporters argue that tips should be exempt since they are earned directly by employees, not revenue for the business.
Restaurants Say Fees Add Up Quickly
Owners and managers across the state say credit card processing fees have become a growing burden as digital payments replace cash.
At Abbott’s Grill, management noted that fees ranging from 2.5% to 4% can significantly impact profits, especially for businesses generating high annual sales.
Industry Groups Call It a Matter of Fairness
According to the Delaware Restaurant Association, the proposed change could return millions of dollars to local businesses.
Advocates say the move would:
- Allow restaurants to reinvest in staff
- Reduce pressure to increase menu prices
- Strengthen the local economy
Similar policies have already been implemented in other states, including Illinois.
Concerns Over Potential Fee Increases
Not everyone supports the bill. Dave Anderson raised concerns that financial institutions may offset losses by increasing other charges.
Critics warn this could lead to:
- Higher overall credit card fees
- Reduced tipping from customers
Bill Faces Resistance in Legislature
The proposal is currently stalled following opposition from groups like the Delaware Bankers Association, which has pledged to block the measure.
With Delaware’s legislative session set to end on June 30, the future of the bill remains uncertain.