Restaurants now have to pay credit-card tip fees

BY PHILLIP LUCAS, lucasp@phillynews.com 215-854-5914
Posted: December 20, 2011

THE COST OF doing business in Philadelphia crept a little higher for restaurant owners yesterday, when a law went into effect barring restaurateurs from using a portion of credit-card tips to pay for transaction fees.

Credit-card companies charge businesses a convenience fee ranging from 2 and 4 percent on all credit-card transactions.

The companies also charge the fee when patrons use a credit card to leave a tip for their server.

A portion of that money is typically used to pay the transaction fee, and Councilman Jim Kenney said a few bucks here and there could add up over the course of a year and make a difference for a server who is struggling to make ends meet.

Since Kenney introduced the bill, it has drawn criticism from some in the industry, who say the practice is commonplace among restaurant owners and won't make much of a difference in most servers' net pay.

"I don't know anyone who doesn't do this. It is pretty standard and very reasonable," restaurateur Marc Vetri said last month when Council began considering the bill.

Vetri, a fixture of Philadelphia's fine-dining scene, said the new law is unlikely to lead to price hikes at most restaurants.

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