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Kai Thomas and other tourists gaze upon Kaya’s Pizza’s menu in Washington on May 27, 2024. (Photo by Phineas Hogan.)

‘Can’t survive without it’: Contactless payment inflates vender prices

Customers take on financial burden for fees associated with Apple Pay and other digital wallets.

As people from everywhere but Washington stream out of the Smithsonian metro stop during Memorial Day, one of the capital’s major institutions hooks them in.

“Fuel up before your walks!” Kaya’s Pizza employee Eric Scheed called, sitting in front of the food truck that has occupied a spot on the National Mall for over six years.

Offering a selection of gyros, quesadillas and pizza, Scheed attracted customers with promises of a convenient, delectable meal, but failed to mention the catch – hidden fees.

Kaya’s Pizza raised prices by 10% for credit and debit cards or contactless payments, like Apple Pay, to account for fees imposed by near-field communication (NFC) companies that enable tap-to-pay.

In order for a small business to accept in-person contactless payments, it must purchase or rent an NFC terminal, a small hardware device that registers such payments and stores virtually generated revenue. Companies like Square or SumUp charge businesses for the transfer of funds from the terminal to a bank account.

Square, the self-proclaimed largest business technology company, processed $209.6 billion in 4 billion individual transactions in 2023. Square’s processing fees vary by type of payment, but for most transactions it charges 2.6% of the exchanged amount plus 10 cents.

Scheed said “very few people” carry cash anymore and that Kaya’s Pizza has had to adapt to changing payment technology.

Kai Thomas, a teenage tourist traveling with a Utah-based church group, said he only uses Apple Pay and he did not bring any cash for the trip that took him from Las Vegas to New York City and eventually the U.S. capital.

“No reason to bring cash,” Thomas said, taking another bite of his cheesesteak from Kaya’s Pizza that he said was good, but had “too much lettuce.” He said his mode of payment was rejected once by a water bottle vendor operating out of a cooler, but it worked everywhere else.

Mobile businesses must acquire a 2-year vending license and site permit that has a combined cost of around $1000 to operate on the National Mall. Scheed said over a third of the revenue Kaya’s Pizza generates pays off fees, and the business is forced to raise prices due to them.

A vending cart on 14th Street NW and Constitution Avenue NW, just off the National Mall, charges $2 for a bottle of water, whereas Kaya’s Pizza charges $3 cash or $3.30 for a card. The cart, whose owner requested not to be identified for privacy concerns, does not offer tap-to-pay, but uses Square for card payments. The vendor said the cart has to reject five-to-six customers a day because they do not offer a contactless option.

Apple Pay has over 500-million active users globally and more than 85% of U.S. retailers accept it, according to Stripe. Seventy-nine percent of Gen Zers and 67% of millennial consumers are “avid digital wallet users,” according to PYMNTS. Its capabilities are expanding: a digital wallet can now serve as a public transit pass, streamline check-in processes at hotels and a ticket to entertainment venues.

“If you want to survive, you have to offer it,” Scheed said.

Phineas Hogan

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