Del. lawmakers weigh banning fees on credit card tips at stores, restaurants

Lawmakers in Delaware are trying to do something that only one other state in America has come close to doing: No fees on tips for credit card transactions.

A bipartisan group wants to ban credit card transaction swipe fees on tips at shops and restaurants.

Katie Kutler is the owner of the fast casual Kaffe Karma in Greenville, Delaware, and she said she is thankful she can accept credit cards because that’s just how her customers like to pay.

“92% of our revenue is generated by credit cards,” Kutler said. “We do a pooled tip system here. Everyone works the team together and we divide and conquer the tips as one.”

She told NBC10 that she is on board with the bill in front of the Delaware House of Representatives that could make transaction fees on credit card tips illegal.

If passed, the bill would penalize credit card companies $1,000 for each transaction.

Kutler said her team works hard for their tips and last year she had to pay $15,000 in transaction fees for her employees to get them.

Meanwhile, the head of the Delaware Restaurant Association, Carrie Leishman, is pushing hard for the bill.

Leishman explained that a transaction fee on the bill is one thing, but the tip should be off limits. By law, the employer has to pay that fee and cannot take it out of the tip itself.

“We understand credit card fees happen on sales transactions but sales transactions aren’t tips. Tips belong to workers,” Leishman told NBC10. “It really is a decision this legislature needs to make between Main Street businesses and Wall Street. No bank, big or small, should assess a fee on someone’s income.”

Illinois passed a bill like this but it is still being challenged in the courts.

Lobbyists for banking and credit card companies have successfully fought them off in other states.

The Delaware Bankers Association said this law would not put more money into the worker’s pockets.

The association warns that customers could tip less if they’re encouraged to use cash, which many people no longer carry.

They explained that the transaction fees pay for rewards programs as well as fraud and cybersecurity projects that benefit customers and merchants.

But, the restaurant association in Delaware said it feels like the banks are taking too much money from businesses and Delaware lawmakers will have to decide which side they’re on when it comes time to vote.