The Senate this week voted down a bill that would have created crypto regulations. | Photo: Shutterstock
Could cryptocurrency be the answer to restaurants’ high payment processing costs?
Ben Leventhal, founder and CEO of restaurant rewards company Blackbird, thinks so. But he’s asking for a little help from Congress.
Leventhal this week testified before a U.S. House subcommittee about the benefits that digital currency could have for small businesses like restaurants.
He spoke the same day the Senate voted against a landmark bill that would have created a regulatory framework for the crypto industry, which supporters said would have made it easier for crypto businesses to grow and innovate.
In his testimony, Leventhal outlined restaurants’ historically small profit margins and the impact of credit card processing fees on those margins. According to the National Restaurant Association, these so-called swipe fees are now restaurants’ third largest expense after food and labor.
Cryptocurrency and the blockchain, a digital database that powers crypto transactions, could help lower payment costs for restaurants by cutting out the middlemen that drive up those costs, Leventhal said.
Crypto payments are a core part of Blackbird’s business model. Members can earn a digital currency called Fly when they spend at participating restaurants and can then use Fly like cash to pay their bill.
According to Leventhal, this can lower restaurants’ processing costs by more than half. Under the traditional payments system, he said, a $4.20 coffee at a local cafe will cost the restaurant 6% in processing costs, assuming a standard 15 cents plus a 2.75% swipe fee. Using Blackbird, the same order would cost the restaurant 2.5% to process.
“We can do this because crypto assets, such as Blackbird’s spending points, move more efficiently on the blockchain,” Leventhal said.
Blackbird is also developing technology that it believes could bring down those costs even further. This month, Blackbird’s blockchain payments network, FlyNet, will start allowing developers and restaurants to build custom apps on the platform. In exchange for contributing these apps to FlyNet, restaurants could get lower processing fees, “perhaps as little as 1.5%,” Leventhal said.
Founded in 2022, Blackbird is Leventhal’s latest venture following his success with food news site Eater and reservations platform Resy. More than 2,500 restaurants are using Blackbird, and the company expects to process close to $100 million in payments this year. It’s now available in six markets: New York City and the Hamptons, New York; Los Angeles; San Francisco; Denver; and Charleston, South Carolina.
But Leventhal said that it will take time to reach the scale necessary for crypto to make a real impact because of the slow pace of tech adoption at small restaurants.
He said Congress can help by creating clear guidelines for cryptocurrency that give restaurants and suppliers the confidence to invest in it.
“The goal should be straightforward: protect consumers and businesses while preserving room for responsible innovation that can lower costs, expand competition, and give small businesses access to financial tools that were once available only to the largest companies,” Leventhal said.
The failed Senate bill would have created the first set of overarching rules for cryptocurrency, making it a potential game-changer for the industry. The bill was backed by President Trump and many crypto companies. But Democrats, some of whom say they are in favor of regulation, voted against it because they wanted stronger limits on government officials’ own crypto investments. Trump himself has significant cryptocurrency holdings.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.
