Multiple hospitality and tourism organizations in Oklahoma have thrown their support behind Senate Bill 1095, authored by Senator Kristen Thompson (R – Dist 22). The bill would end the practice of banks and credit card companies charging credit card network fees and interchange fees on three components of a guest transaction: taxes, tips, and charitable contributions. The coalition is composed of organizations like the Oklahoma Restaurant Association, Oklahoma Hospitality Foundation, Oklahoma Hotel and Lodging Foundation, and Oklahoma Travel Industry Association, as well as affected corporations, like Walmart and Target.

ORA President and CEO James Leewright, who was himself a state senator, said, “I worked in the Oklahoma Senate for six years and the House for two, and this is one of the toughest pieces of legislation I’ve worked on. I saw a video recently in which a credit card company exec boasted that his company was operating on a 50-percent profit margin, so contrast that with restaurants that are operating on a three to five-percent profit margin, and it’s clear we need to do something to help struggling restaurants.

Sen. Kristen Thompson

”The restaurant industry in the United States is a one-trillion-dollar enterprise annually, so the amount of money involved in transaction fees of between 1.5 and 3.5 percent is substantial, and while it’s clear that many restaurants don’t have tipped employees, all pay taxes, and many either contribute to charities directly or function as a flow through for charity fundraisers. Under the current legislation, all those components are subject to the fees, and in some cases, restaurants charge back the fee to servers for the tipped portion, taking it from their checks, so the burden falls on employees as well as restaurants. (Yes, it’s legal to charge it back to the server.)

Evan Weinberger, reporting for Bloomberg Law, writing about Illinois’ Interchange Fee Prohibition Act, the first such bill to pass anywhere in the U.S., wrote: 

“The law comes amid a decades-long fight pitting retailers like Walmart Inc., Target Corp., and Amazon.com Inc. against banks over interchange fees that credit card issuers charge to process transactions. Credit card swipe fees imposed by Visa and Mastercard alone topped $100 billion in 2023, according to the Merchants Payments Coalition.” 

Leewright said national banks had received a stay on the implementation of Illinois’ law, which goes into effect in July this year, but credit card companies did not receive a stay. States are beginning to look at the issue, given that proposed legislation in the U.S. Congress stalled. Per Weinberger, Georgia and Pennsylvania are also looking to add the protections. 

“The impact on restaurants is huge,” Leewright said. “Talk to restaurateurs, and they’ll tell you this is their third or fourth most costly expense: labor, food, and either rent or transaction fees, depending on the restaurant. Given that they’re paying a fee on taxes, it also amounts to double taxation at some level. I want to be clear that this isn’t about debit cards from community banks; we don’t want legislation that would hurt community banks. The fees on debit cards are typically 25 cents per transaction.”

James Leewright

Thompson’s bill is similar to the language of the Illinois bill, but according to Leewright, Oklahoma is the only state to add a clause for charitable contributions. The language in Thompson’s bill is straightforward:

B. No interchange transaction fee or network fee shall be charged to a merchant for the following credit card transactions or portion of transactions: 

1. The transaction or portion of the transaction that pays sales tax, excise tax, and customer tips; and 
2. The transaction or portion of the transaction that pays a donation to any nonprofit organization exempt from taxation pursuant to the provisions of 26 U.S.C., Section 501(c)(3). 

SECTION 2. This act shall become effective November 1, 2025.

The main sticking point operationally is on implementation of the law – how exactly to get the restaurant’s point-of-sale technology (POS) to distinguish tip from tax from the cost of the meal. Realistically, though, that’s a programming issue, and shouldn’t be a huge hurdle for POS providers. Leewright said the Illinois law contained verbiage that said the charges needed to be declared at the beginning of the transaction, and any missed transactions needed to be rectified within 90 days. The other legal issue to be considered is playing out in Illinois courts, with a recent ruling from Northern District of Illinois Federal Judge Virginia Kendall that declined to extend an injunction to credit card companies in which she acknowledged “that out-of-state banks now subject to the injunction are governed by federal law that can’t be superseded by state action.”

The bill is currently in the Economic Development, Workforce and Tourism Committee, which Thompson chairs. Senator Thompson did not respond to multiple requests for a comment. In the interest of full disclosure, Thompson and her husband Bryce Thomspon of Community Through Beer have a financial interest in restaurants in Oklahoma City and Edmond, but this is still good legislation for Oklahoma’s struggling restaurants, as well as hotels, resorts, and retailers.