North Texas Lawmakers Submit ‘Pay Fairness’ Bills to Help Small Businesses

As the Texas Legislative Session heats up, several new bills have been filed, including some that could help small businesses.

Sen. Tan Parker (R-Flower Mound) and Representative Giovanni Capriglione (R-Keller) filed SB 1541 and HB 3395 aimed at protecting Texas merchants from costly fees when they must collect taxes on behalf of state and local governments.

According to Texas Restaurant Association — which supports the measure — the Fee-Per-Scan Fairness Act will save Texas businesses more than $587 million a year without creating any new costs for the government or Texas consumers.

“We are incredibly grateful to Senator Parker and Rep. Capriglione for filing the Texas Fair Read Fee Act,” said Emily Williams Knight, Ed. D., president and CEO of the Texas Restaurant Association. “Scan fees have become one of the highest expense items in restaurants — after food and labor — and require even small, family-run restaurants to spend thousands of dollars a year collecting taxes, which they must pass on to our government. Restaurants play a critical role in our economy and in our communities; we should not expect these top street businesses to pay expensive fees to collect our government taxes.”

Similar to legislation passed in other states, the Texas Read Fee Fairness Act prevents banks and card companies such as VISA and Mastercard from charging merchants a read fee when they collect sales taxes, alcohol, hotel stays on behalf of the government. and other taxes on consumption.

“Essentially, when businesses collect tax revenue not for themselves but for the government, they don’t have to pay a commission to a third party to do so,” said Kelsey Erickson Streufert, director of public relations for Texas. Restaurant Association. “And especially with inflation, the cost of these fees to restaurants has skyrocketed in recent years. This is usually the third largest expense that restaurants face after food and labor.”

Currently, merchants such as restaurants, hotels, and retailers pay card processors a 2% to 5% fee on every transaction, including any taxes they must collect and send to the government. TRA said businesses have very little control over these costs because they are required by law to collect taxes.

These fees have also increased since the pandemic as more people use credit cards and move away from cash. The data shows that almost 67% of payments are made using a credit or debit card.

“Our family-run stores operate on a small margin, where every penny counts,” said Annie Spielman, director of the Texas NFIB. “Unfortunately, as per-swipe fees have more than doubled since 2012, that margin has only continued to shrink. The skyrocketing inflation acts as a multiplier as the swipe fee is a percentage of each sale. Our members are grateful to Senator Parker and Rep. Capriglione for passing this legislation so that small business owners can continue to keep their doors open and meet the needs of their customers.”

A number of human rights groups support the law. If adopted, it will enter into force in September this year. The current legislative session will end on May 29.

“Retailers are proud to help power the Texas economic engine, which is heavily dependent on our state’s business-friendly environment,” added John McCord, CEO of the Texas Retailers Association. “The legislation proposed by Senator Parker and Rep. Capriglione will help fight inflation, lower consumer spending and spur economic growth.”