As a restaurant owner, the best way to sift through this is to understand the fundamentals of credit card processing so you can make more educated decisions regarding your payments.
The bottom line: Credit card processing fees for restaurants vary considerably. The difference? A fantastic payment processor will pay for itself with the insights it provides.
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Challenge Your Restaurant Payments Processor with All These Questions
Choosing to accept payment using a credit card in your restaurant can appear to be a no-brainer. After all, 81 percent of transactions nowadays are cashless.
But that decision, if made incorrectly, could wind up costing you thousands of dollars annually in restaurant payments fees.
Making Sense of Your Investment
A decision which has this much effect on your revenue shouldn’t be taken lightly. Nonetheless, many small business owners seem at credit card processing in precisely the exact same way they consider paying the electric bill: a necessary cost to forget.
Consider this: Generally, the fee for a $100 transaction may be as much as $3. That’s $3 each and every time someone swipes their card in your company.
What are you getting from that investment?
Ask The Right Questions
If you are not asking questions, you are not putting enough thought into your choice. When the choice is as large as credit card processing, your list of questions must be thorough.
- What fees will I be billed?
- What sort of customer service do you provide?
- What features do I get beyond payment processing?
- Can you integrate seamlessly with my restaurant POS?
If the processor you’re thinking of doing business with can not answer these questions with answers that make you happy, then it is time to take your business elsewhere.
The Way to Avoid Hidden Fees When Selecting Restaurant Credit Card Processor
As a small organization, you rely on your payments spouse for cash flow. And like with most services, you have a range of alternatives.
Get the ideal partner for your organization by learning more about these choices, and which fees you’ve got control over. Here is a look at the most common hidden charges, and suggestions on ways to prevent or minimize them.
The first and most important step is to understand how your payment processor assesses your charges. Some payment processors do not fully disclose their charges as they can be complicated to describe and unnecessarily wealthy.
The next step is to evaluate the value you are getting out of your payments service. If it simply can help you transfer money, you deserve more. Upserve helps merchants accept payments plus track customers and grow revenue. This way, processing becomes the motor under the hood of your company that unlocks your information and forces smarter marketing programs.
As a starting point, always review your payment processor contract in depth before signing and ask about anything you do not understand. This lets you determine where your money will be moving, and gives you a opportunity to negotiate with your payments service prior to committing.
Three Ways to Avoid Hidden Charges
- Learn how to analyze your payments fees. As soon as you understand what you’re being billed, you have a much better starting point for discussion.
- Look out for variable charges. Avoid signing a contract which has changeable cancellation charges and stick with a fixed fee rather.
- Look out for companies that may raise your speed at any time. Make sure that your contract states that your fees won’t increase.
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Common Extra Charges
Most the processing fees you pay end up at card issuing banks (the banks whose logos appear on your credit cards) via Interchange. The rest of the fees which you pay must help your payments spouse cover the cost of servicing you account, and more importantly, fund construction technology which help turn your shop information into new revenue.
To better understand your chip’s markup on Interchange, have a look at this list of common additional fees to be on the watch for. Unfortunately, the majority of them are standard among payment processors and must be stated clearly on your contract. If they are not, do not be afraid to inquire and shop for a spouse that communicates fees honestly and reduces unnecessary surcharges.
- Annual/Monthly Charges: A monthly or annual fee for conducting your account. We have seen them as large as $99 per month, with more fees which accrue if you do not fulfill a monthly sales minimum.
- Minimum Monthly Fee: A minimum quantity which you’re expected to generate every month. If your monthly charges are less than this minimum, then you’re charged the difference.
- Payment Gateway Fees: This charge applies if you are using an online payment gateway rather than software or a terminal.
- Chargeback/Retrieval Fees: A fee charged when a customer disputes a transaction and contacts their card issuer for a refund. These are usually priced at $10 to $25 per item.
- Cancellation/Termination Charges: An extra fee charged for terminating your contract is regular, but watch out for fees which are variable, not fixed.
- Surcharges: Enhanced Reduced Retrieval (ERR) programs offer a teaser or base rate, but might add hefty surcharges to 40 percent of transactions if they’re downgraded (subject to some greater mid or non-qualified rate).
- Statement/Customer Fee: Typically $5 to $20 a month. This is merely a way to get more revenue out of you.
- Batch Header Fee: Most merchants batch one time every day. Typically priced at 5 to 20 cents per batch, but it can add up if you batch multiple times every day.
- Retrieval Fee: While it’s uncommon, this fee takes place when a cardholder questions a card transaction. A normal cost ranges from $2 to $10.
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Breaking Down Restaurant Payment Processing Fees: Three Places Your Money Goes With Every Swipe
Have you ever wondered what happens whenever your customer swipes their credit or debit card?
A proportion of the transaction goes to processing fees–the cost of accepting cards and doing business. Those fees are sent to three different areas: the card-issuing lender (Interchange), MasterCard and Visa (Assessments) and, eventually, processors/acquirers (the sole spouse any merchant can handpick).
You might be surprised to learn that approximately 80 percent of these fees do not go to your chip; they go straight to banks and to MasterCard and Visa in the kind of Interchange and Assessment fees.
Let us discuss how every transaction is divided.
Interchange drives 75 percent of the cost of accepting credit cards in your company and the Interchange speed is set by Visa and MasterCard. This money goes straight to the card-issuing banks (the emblem on your credit card). Dozens of signature, premium and platinum cards all charge different fees. Wondering why? Those platinum clients can cost upwards of $200 a head to get in advertising costs. Interchange pays their acquisition invoice.
Assessments are the little annoying fees such as international fees and per-item fees which comprise 5% of the costs of accepting cards. These are also referred to as association fees and are set by Visa and MasterCard. Think of them as being like the charges on your mobile phone bill: Anytime you go out your strategy, by using extra minutes or by drifting, you get more charges tacked on. Some processors mark up evaluations, but at Upserve we pass on those charges at-cost to merchants, never a cent more.
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Restaurant credit card processing fees are the only negotiable fees within transaction costs. If you wish to reevaluate your processing fees, you will want to discover a processing partner who provides competitive pricing, however, equally important, also provides you the most value for what is too often treated as a commodity service. To begin to understand what you pay for processing now, ask your spouse what pricing model they use. There are three possible models:
- Tiered: Groups Interchange programs into various tiers or buckets, usually with very little explanation about why certain card types have been grouped in certain tiers. Processors can alter tier groupings and rates any time they like.
- Enhanced Reduced Retrieval (ERR): supplies a teaser or base rate, but might add hefty surcharges to 40 percent of transactions.
- Interchange Plus: One easy rate for all transactions that is also known as pass-through pricing. This includes the exact Interchange fee determined by the Visa, Mastercard and Discover (the cheapest possible speed ). If this fee ever drops, you will save automatically and will not need to renegotiate your pace to understand those savings.
Next Generation Restaurant Credit Card Processors Are Shifting Restaurant POS
Who has time to develop into a restaurant POS and credit card processing pro? You’re busy running a successful restaurant. But here is the thing about that: A savvy restaurateur like you knows that if you are paying for a service, you need to find the most you can from it.
That is called our guess is you are not getting enough from the existing POS and payments processor.
What’s Next Generation Restaurant Credit Card Processing?
Credit card processing is traditionally seen by merchants as a utility — such as your gas or electricity — something you put up then forget about for as long as possible. That’s the old method of doing business and it is doing harm to your bottom line.
Today there is a fresh batch of next-generation chips making waves in the industry and changing the way restaurants consider credit card processing. They are not utilities, they are technology firms continuously innovating and finding new ways to add value to your company.
In other words, if you are working with the best one.
Traditionally, negotiating the speed you paid to process credit card payments was the only place you might get additional value for your organization. That is still important, but you should not just worry about how much you pay per swipe, you should also be asking:
What additional value can I get from my chip?
Switch Your Restaurant Credit Card Processing Into an Investment
Much like rent or utilities, credit card processing fees are just another basic yet crucial expense for a restaurant. It’s a fairly straightforward support; your restaurant pays a fee for the ability to get funds through clients’ credit cards, then these funds are deposited to your bank account.
How Can Credit Card Processing Help Your Restaurant Grow?
Restaurants need solutions that will help them serve their guests, create a better overall experience, be more efficient, and help them make more money. While a credit card processor’s most important purpose is to help your restaurant accept payments by your restaurant POS, there’s so much more a chip can do for your company.
Faster, Safer Checkout
The most frequent case of credit-card fraud at a restaurant takes place when servers require a guest’s card from the table and swipe it in the register. To mitigate the possibility of fraud in your organization, hand guests a tablet computer so that they can self-checkout. In this manner, their card does not render their sight, also increasing the transparency of this procedure.
Another advantage to using an iPad restaurant POS is that the guest can authorize the cost of the meal and the trick in 1 transaction, which reduces your amount of authorizations and penalties. This cuts the time it often requires the card and charge to return. Guests will be happy with the quicker service, and you’ll be happy when your restaurant can serve more meals every day.
Identify New Versus Repeat Guests
Each transaction your restaurant POS processes provide your restaurant with valuable restaurant analytics. Data is created by means of a guest’s visit, and every guest is a new patron or returning patron.
For a restaurant to last, it has to maintain a healthy mixture of new versus repeat guests. Examining the patterns on your transaction history over time permits you to gain insight into this ratio. If the proportion of new guests versus repeat guests is large, this might be an indication that you’re not building loyalty in your restaurant.
Customer Loyalty Programs
The typical American home is a part of 18 loyalty programs — with the restaurant industry promising 9.7 million of these members. Restaurant customer loyalty programs enable restaurants to collect information regarding guests and use it to increase earnings through those who see most. But you need people to really sign-up to your program; its advantages and rewards will decide whether it seems worthwhile.
While most loyalty programs offer you a discount, you may set your restaurant apart by providing money back — or, in this case, credit back — with a guest’s credit card transaction. If your processor provides this sort of loyalty program, it is going to enable your business to put money back on a guest’s card following a transaction pushes them beyond a certain financial threshold. The immediate gratification of the plan will please your guests and help build your repeat business.
Our Challenge to You: Get More from Your Processing
At Upserve, we believe every company owner deserves access to additional value beyond processing. So be honest with yourself when you respond to the queries regarding your processing, the replies have real consequences for the success of your restaurant. If you want the best restaurant credit card processing available, Upserve will help you to get more insights, efficiency, and profits.
►►► ConnectPOS is a cloud-based POS software compatible with multiple platforms including Magento, Shopify & Shopify Plus, and BigCommerce.
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