Merchant Processing Tips for Restaurants

We have put together these Merchant Processing Tips for Restaurants that will assist you in making the best decisions for your restaurant. Whether you operate a fast-casual restaurant, diner or fine dining restaurant, 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. Not all processors are the same and no all sales agents are the same.

In the fast-paced hospitality industry, restaurant owners and managers deal with multiple situations and have to make numerous decisions on a daily basis. These merchant processing tips for restaurants will save you time and better prepare you for when you have to make a decision or review your current pricing plan. Between numerous POS systems on the market today, online ordering and deciding on gift cards, it can be a bit overwhelming, but we are here to help. We not only provide great service, but we also help our clients by providing them with some of the best credit card processing rates available.

Ask to See Your Processing Rates in the Contract Before You Sign

Make your sales agent go through the merchant processing application in detail and specifically point out what you are paying as an authorization fee for each sale and how many basis points. Don’t just sign without reviewing the fees in the agreement to see if they match what you were quoted. Grab your calculator and compare your current authorization rate and basis points to what the agent quotes as your new rate. If you are uncertain how to do these calculations feel free to give us a call.  

Beware of “Transaction Fees”

If there is also a “transaction fee” you 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 claim you are only paying a $.05 “transaction fee” without explaining there is also a “authorization fee of .05 that applies to every sale. If you see those two fees on your application before you 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, or you are using a POS system that requires payments to go through a gateway.

Ask What Are Your “Monthly Fees”, Even If You Don’t Process

You should 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. These merchant processing tips for restaurants will help you understand exactly what your total monthly fees are, so ask the agent what you would be paying even if you do no processing in a particular month.

Online Ordering Integration with Marketing

  • Does your processor provide online ordering integration into your website and POS system?
  • Does your processor provide integration, but charge an additional monthly fee? 
  • Does your processor provide free marketing to increase your orders or just provide marketing tools?
  • Does your processor do the marketing, posting and link building?  

In today’s tech connected society tech evolves too quickly for most small business owners to keep up. This is especially true with mobile marketing leaving restaurant owners and managers frantic to keep pace.

Businesses understand that partnerships with various marketers or online ordering companies can be extremely beneficial. Challenges still exist for small businesses trying to compete with larger businesses that use mobile marketing campaigns to promote discounts and special offers. These merchant processing tips for restaurants should help level the playing field.

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 excuse that the terminals are either too expensive and more economical to lease. They may even claim it is part of a bundled package and that is why they can give the merchant a lower rate on credit card processing. This is simply NOT TRUE. Sales agents make a big fee if they lease a merchant a terminal for $39.00 per month for 3 years for over $1,400. Most terminals only cost about $300.00. 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. If they stop processing with us, we simply require that they return the terminal to us.

If a Chip Card Does Not Work Don’t Key Enter the Number

Today, chip cards are widely used, but there are still some precautions you must take in order to avoid chargebacks and credit card fraud. For instance, if a chip card does not work, the merchant should ask for another form of payment. If they swipe the card or key enter the credit card number and it works, then it is likely a counterfeit card and the merchant will be hit with a chargeback. This is one of those merchant processing tips for restaurants that owners and managers did not know.

Don’t use a POS System That Does Not Integrate With a Chip Card Reader.

While the market is swamped with all sorts of POS (point of sale) systems, some of them still do not process chip cards. The merchant is still required to swipe the credit card on the side of the POS Monitor. Merchants need to understand that Visa, MasterCard, American Express and Discover established October 1, 2015, as the deadline when credit card fraud liability would shift to merchants if they did not upgrade to an EMV enabled system that processes the new chip cards. Talech POS system is one of the fully integrated systems to choose from and our clients find the pricing is reasonable as well.

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. Continuing to use an old POS system that is not EMV enabled to process chip cards, exposes the restaurant to several risks. The rate of chargebacks is more significant and a data breach is more likely. Also, the fines and penalties can put a restaurant out of business and general commercial insurance will not cover the loss if you are using non-EMV compliant POS equipment. We are providing these merchant processing tips for restaurants not just to save them money, but also to help them reduce risks.

Gift Cards are a Great Way to Increase Business

Whether you are using a POS system or just a terminal, gift cards are now available to all restaurants, large and small. Gift cards can carry your logo so think of it as a piece of advertising someone is carrying around in their wallet or purse. Businesses use them to reward employees for their performance and people use them as gifts to friends or relatives. Who doesn’t love the present of a gift card to one of their favorite restaurants?

Always do your yearly PCI Compliance

I know this is a big pet peeve for most merchants, my clients included, but it is important. If you don’t do it you are charged extra each month that you don’t do it. Over the years, this can add up to thousands of dollars you have paid your processor just because you didn’t fill out a questionnaire. It will also keep you in compliance and reduce your risk. Everybody likes to reduce risk.  If you are afraid your systems are not up to date and that is the reason you are not in compliance, at least try to get through the questionnaire. If your systems are that big a problem then it is time to call in an expert. A managed service person to diagnose any problems in your system and going forward, remotely monitor your systems to keep them running smoothly or notify you when a problem arises. This is one of the most important merchant processing tips for restaurants and yet the least followed.

Merchant Processing Tips for Restaurants - Conclusion

We hope these merchant processing tips for restaurants have shed some light on saving money and reducing risk in the restaurant industry. Don’t forget our advice on online ordering software as well, choose one that will increase your business versus a system that just accepts orders through your POS system.  Our team is always available for free consultations and analysis of your recent processing statements. We enjoy helping small business owners when it comes to electronic payment solutions.  


Powered by NXGEN Payment Services, a Registered MSP/ISO of Elavon, Inc. Georgia.