Restaurants’ Credit Card Payment Processing

1. Monitor for interchange rate increases and undisclosed surcharges.

Interchange fees are imposed by card brands such as Visa® and MasterCard® for the passing of financial transactional information between your restaurant, your payment processor, the card brands, and the banks issuing the payment.

The card brands typically adjust interchange rates and fee categories in April and October of each year. When fees increase, many processors mark them up to enhance their own revenue, often without disclosing it. Be on the lookout for these additional surcharges and deny them to your processors.

To find out what you’re really paying in card processing fees, use the National Restaurant Association’s Card Processing Fee Calculator.

2. Encrypt your customers’ cardholder data and use a segregated network for card processing.

Keep your customers’ data, and your business, risk-free. Customer payment card data should be encrypted from the time it is swiped until it is received by the card brand. Payment data should also travel on a secure network that is separate from any public wireless network you may offer in your facility. Insist on state-of-the-art security from your card processor and don’t pay unnecessary fees for it.

3. Make sure you get rate reductions

Some card brand-adjusted fees include reductions on certain categories of transactions. While many processors pass the fee reductions on to the repairmen, not all of them receive them. Know that you can negotiate terms with your card processor to make sure they do.

4. Maintain basic data security standards

Work closely with the company installing your payment terminals and software to ensure you are changing default passwords and keeping your hardware and software up to date. Also, be sure to comply with PCI data security standards and complete an appropriate self-assessment questionnaire; this will reduce the cost of PCI compliance and the risk of non-compliance.

5. Determine if intermediaries are worth the cost.

As soon as a restaurant customer swipes a payment card, up to 12 additional entities can eliminate that transaction. Just a few of these intermediaries may be an independent contractor, an accounting firm, a non-processing bank, and a network software provider. Some reinsurers do not allow these additional sources to be involved. Identify intermediaries and pay for them only if they are adding value.

6. Examine surcharges, invoice returns, and unexplained levels.

Many card processors and intermediaries include undisclosed fees that are often classified as “surcharges”. They are purely profiting with no value. They are also debited from your account long after the transaction date with little or no explanation. Known as “retroactive bills” or “enhancements,” these surcharges make rates appear lower than they are.
Some card processors also use pricing tiers to increase their profits. Stay on the lookout for this pricing and discuss it with your card processor if necessary.

7. Enforce real-time transaction and fraud monitoring.

Thieves work hard to find ways to steal from restaurants and other merchants. Credit and debit card fraud costs U.S. businesses billions of dollars a year. Real-time fraud and transaction monitoring are vital to your success.
To detect and prevent fraud, have controls in place to analyze patterns and types of transactions in real-time, identify suspicious activity and act to counter it quickly. Assess any particular risks to you and your customers. Your payment processor can help.

What are the average credit card processing fees for restaurants?

Deciding to accept debit or credit cards as a form of payment in your restaurant is a key step to growth. After all, many of our personal expenses are paid for with credit cards, so you should also let your customers do the same.

But learning to accept credit card payments on your POS system can be tricky, although it doesn’t have to be. So it’s imperative that you understand the process before you take the leap.

We understand that paying credit card processing fees is no fun for a business owner like you. But if you can choose the best restaurant credit card processing system, you will pay a very insignificant amount.

So, to help you make better financial decisions, we’ve selected this simple guide to restaurant credit card processing systems.

What is a credit card processing fee?

Simply put, you, the business owner, must pay them to accept credit cards as a form of payment at your restaurant. While this sounds easy to understand, there is a lot involved in determining how much you will pay. Having said that, the term credit card processing fees can also refer to the various fees involved in the entire procedure of accepting credit cards at your business.

There are three main types of fees involved in a credit card processing system:

1. Flat fees: this is what you pay for working with a merchant service provider or payment gateway. Typically, you pay these on a monthly basis.

2. Operational fees: These are the fees you pay for each transaction processed with a credit card at your restaurant. Transaction fees consist of the assessment fee, interchange fee, and the payment processor’s markup.

3. Incident Fees: These are the fees charged to you by the payment processor as a result of incidents such as insufficient funds or a chargeback.

The simple (but confusing) way to process credit card payments

Here’s what happens when you accept a credit card payment at your restaurant:

• The server swipes a credit card at your POS.
• Then, the restaurant’s POS takes the credit card data and sends it to another computer, which is called a payment gateway.
• This payment gateway encrypts the credit card information and makes it secure.
• The gateway then sends that information to a credit card processing company.
• The company connects with the bank in question to make sure the credit card is active and valid.
• The confirmation is then sent back through the payment gateway to the restaurant’s POS, and the terminal tells the server that the payment was accepted and approved.
• Once the payment is validated, the terminal generates a receipt for the transaction and places it in that night’s batch.
• When the system batches at the end of each night, the payment, along with all others in the batch, is sent back to the gateway. The credit card information is encrypted once again.
• Once encrypted, the payment gateway sends the information for that batch to the processing company. The company then executes each transaction and transfers the money to the restaurant’s bank account.

Here, it should be noted that the average processing fees will be different for debit or credit cards. In most cases, customers pay with credit cards for larger transactions and with debit cards for smaller transactions. Debit card interchange fees are generally lower than those for credit cards.

So, now that you know how credit card processing happens, it’s probably time to accept credit cards at your restaurant. At Soft Tech Payment, we offer the best credit card processing for restaurants. We also offer protection against unauthorized purchases, strong fraud protection, and many more services. Our easy-to-use restaurant POS system will help you meet all of your business needs without breaking the bank. Contact our team today to better understand our processes.