Stock up on cash!: Restaurants in New York are charging extra fees for those who pay by card

For Mary Diedrich, a recent leisurely brunch on the Lower East Side turned into a frantic attempt to find cash when a bill arrived with a 3% card fee. New York Post.

“Please note,” read a sign in bold red letters in front of the Poco tapas restaurant, “All prices have a 3% cash adjustment built in. Any purchases made with a credit or debit card will be adjusted non-cash and will be reflected in your invoice.”

Diedrich, 34, launched her Chase app to find an ATM and withdraw a couple of hundred dollars to pay for food. “I thought, ‘Why do we need to spend this extra money? she told The Post. “Taxi prices have gone up, and if you can save a couple of bucks, you decide to save.”

Restaurants offer discounts up to 10% for cash

Cheap nail salons, bodegas and pizzerias have long offered hidden cash discounts. But now upscale restaurants are also offering discounts of up to 10% for those willing to carry hundreds of dollars around to pay for a ceviche and a bottle of Sancerre. With ever-lower margins, general inflation, and rising credit card fees in 2021, merchants in the US paid $137,83 billion to process payments. 24,3% more than a year earlier. It's another way for restaurants to try to stay afloat during difficult times.

“For these companies, everything depends on profit. And credit card fees are one of the biggest and most annoying costs they face,” said Matt Schultz, principal credit analyst at Lending Tree.

“Credit card exchange fees are often the third largest operating cost for restaurants, after food and wages,” added Brennan Duckett, director of technology and innovation policy for the National Restaurant Association. “So the prices on the menu are slowly rising. And increasingly, consumers are seeing credit card fees as part of their bills.”

At Upper East Side Peruvian restaurant Mission Ceviche, which has a $46 branzino and a $165 tomahawk steak on its menu, final invoices note that diners get a 3,50% discount if they pay with cash.

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Customers don't seem to care

“Actually, they don't care too much. We receive a maximum of one complaint per week,” said Carlo Silva, head waiter at Mission Ceviche. He said that 95% of people still pay with credit cards, despite signs hanging around the restaurant that say, "If you pay in cash, you won't be charged extra."

Saving money on credit card fees could drive up food prices, according to Mission Ceviche CEO and partner Miguel Yarrow.

“Everything is more expensive now – seafood, lamb, eggs, milk, all the ingredients we use,” Yarrow said, adding: “We have CVS next door – it’s very convenient for customers who want to pay in cash.”

The law also has no problems with practice. In 2019, New York merchants were granted the right to charge extra for credit card purchases until clear prices are set, after a lengthy legal battle. However, businesses are not allowed not to accept cash. After a number of eateries, including Union Square Hospitality Group and Sweetgreen, switched to cashless models, the City Council passed a ban on the practice in January 2020.

At Lamia's Fish Market on the Lower East Side, diners receive a 10% discount when paying in cash.

“I try not to raise our prices,” says owner Lamia Funti. “We remain the same, our profit margin is much lower, either that or you have fewer customers. It was hard for everyone.”

However, Funti said that only about 2% of customers pay in cash.

Diedrich never found an ATM and ended up paying with her card for her brunch, swallowing a 3% fee. She said she wasn't likely to carry around a wad of bills all the time in an increasingly dangerous city.

“I prefer not to drive around the city with large sums of cash, especially if I use public transport,” Diedrich said. “There is a price for everything these days.”