Five Tips on Credit Card Processing for Restaurants 

Based on our years of industry experience, we have put together these Five Tips on Credit Card Processing for Restaurants that should help guide you in making the smartest decision for your restaurant, whether it is a fine dining restaurant or quick serve café, we feel this information will allow you to make a good decision when it comes to choosing a merchant processor or switching to get a better rate and service.

Restaurant owners and managers are dealing with numerous situations and having to make numerous decisions on a daily basis, so we felt having Five Tips on Credit Card Processing for Restaurants at their fingertips would save them time and make them more prepared when it came to having to make a decision.  If you’re running any kind of business, more than likely you have to make decisions regarding how you accept and process payments both in-store and on-line.

working at a POS system in a restaurant at the counter

1.  Ask to see your processing rates in writing before you agree to anything.

Although most agents will quote you a fee verbally, make your sales agent go through the merchant processing application and specifically point out what you are paying for an authorization fee for each sale and how many basis points. One way to easily see how much you may be saving is to compare your current authorization rate and basis points to what the agent quotes as your new rate. If you are certain how to do these calculations feel free to give us a call.  

If there is also a “transaction fee” you would then have to add the authorization fee and transaction fee together to see how many cents you are paying on each sale. Some sales agents may try to hide the fact that there are those two fees, and if you see those two fees on your application before your sign, you are very likely overpaying. There is usually no reason to be paying an authorization fee and transaction fee, unless both are very low.

You should also ask the agent to show you where on the merchant application are the monthly amounts you are paying for things like a statement fee, PCI compliance fee, debit enablement fee (if you will be taking debit payments) and next day funding fee (an optional fee). Also, ask if there are any monthly fees, setup fees, monthly minimums or activation fees.

If possible ask to get the application in advance of signing so you can review the application and ask any questions after a good review, keeping in mind all Five Tips on Credit Card Processing for Restaurants.

2.  Don’t agree to a multi-year term or lock-up to get better credit card processing. 

Some independent processing agents and even merchant sales people that work for banks are trained to tell you their pricing requires a 3-year term, but that is simply NOT TRUE. We can place merchants with 3 different processors. These merchant processing companies leave it to us to decide if we want to lock-up the small business owner in a contract for 3 years. It just doesn’t make any sense to lock up a small business owner in a multi-year contract, especially when they find out there was no reason for it in the first place. They end up unhappy with their agent and resentful and leave for another processor as soon as the three years is up.  

Many small merchants are under the misconception that if they are getting the processing through their local bank, a community bank or even one of the big banks, they are getting the best deal they can, but that is simply NOT TRUE. Just shop around for rates and you will see that in most cases the rates quoted by your local banker are not the lowest rates.

Banks are simply using their name to charge higher processing rates and lock up the merchant for 3 years. Another thing to be careful about is that some credit card processing contracts automatically renew for 1 year periods and in some cases even 2 years, if the merchant does not cancel the contract at least 6o days before the end of the automatic renewal period.

3.  Don’t agree to an early termination fee.

Another thing agents will try to impose n merchants is the dreaded early termination fee.  Some small business owners cannot cancel their existing agreement and switch to lower pricing and better service since they have a $500 early termination fee. Again, it is surprising that merchant processing sales agents and banks are still getting away with this and business owners don’t understand they can JUST SAY NO.

In some cases where we can save an SMB (small and medium business) over $125 per month, we tell them not to cancel their agreement, but instead to just switch over to our processor and pay the $25 or so for their monthly miscellaneous fixed fees so they still end up saving $100 per month and they get better credit card processing. 

Again, get use to saying “no” to pushy sales agents, which is part of the key strategy behind these Five Tips on Credit Card Processing for Restaurants. The more pushy and eager the sales agent is to get you to sign, the less time you have to think clearly and understand exactly what the agent doesn’t want you to review carefully before signing.

4.  Don’t lease your credit card terminal.

Some processors and banks are still requiring merchants to sign a lease for their credit card terminals under the guise that the terminals are either too expensive and more economical to lease or it is part of a bundled package and that is why they can give the merchant a lower rate on credit card processing. Again this is NOT TRUE.

The merchant sales agent in this scenario is making more on the lease payments than the credit card processing so there is a big incentive for the agent to lease equipment and lock up the unsuspecting merchant for 3 or 4 years. Example: Most credit card terminals cost in the range of  about $200 to $300 (or more if a separate pin pad is needed) and the agent will lease it to the merchant at $39.00 (or more) for 3 years for a total of $1,404.  In this situation, the agent can make about $1,000 on that sale, so you can see their incentive to lease terminals. We let most of our merchants have a terminal to use FOR FREE and in most situations, we can meet or beat the current credit card processing rates they are paying.

5.  Don’t use a POS system that does not integrate with a chip card reader.

The market is flooded with various POS (point of sale) systems and some of them still require the merchant to swipe the credit card on the side of the POS Monitor. Merchants need to understand that Visa, MasterCard, American Express and Discover and established October 1, 2015, as the deadline when credit card fraud liability would shift to merchants if they did not start using EMV certified equipment or upgrade to a system that accepts and processes the new chip cards.

We advise merchants all the time on the right POS choice for their business since we are not tied to one POS company.  I have vetted many POS companies over the years and advise business owners on the pros and cons of several systems so they can make an informed decision on which POS better fits their particular needs. Some of these features include inventory management, choosing the best GrubHub alternative to save money, online ordering reservations, online ordering software for restaurants, employee management, automated tip adjust, table mapping, coursing, social media integration and gift cards.

Micros (which was bought out by Oracle) still commands the largest share of the POS market and did not come up with a solution, leaving merchants to fend for themselves. Initially, the only choice these merchants had was to use a standalone terminal that did not integrate with their expensive Micros POS system. Eventually, an integrated solution was introduced by a third party provider but it does not work with all versions of Micros, and sometimes required upgrades which could cost merchants several thousand dollars. The solution itself also turned out to be fairly expensive and so some restaurants using Micros are still not accepting chip cards which leaves them subject to credit card fraud and even so called “friendly fraud”. 


We hope these Five Tips on Credit Card Processing for Restaurants have shed some light on an often confusing subject and will better prepare you when it comes to reviewing or changing your current credit card processing situation. We are always available for free consultations and analysis of your recent processing statements. We enjoy leveling the playing field for small business owners when it comes to electronic payment solutions.  

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