Choosing the Best Payment Processor For a Restaurant

The most popular way to pay at restaurants is through card transactions, whether it's credit or debit. According to a PYMNTS study, 68 percent of consumers use their credit cards to purchase food at a restaurant, equating to $29.8 billion in sales in February 2022. While credit cards seem easy and simple for consumers, the payment method impacts a restaurant's bottom line more than guests realize. 

The average credit card processing fee ranges from 1.5 and 3.5 percent, which can be a major expense for restaurants. 90 percent of restaurant operators are small businesses, competing for every dollar they earn. These small businesses must be aware of the options they have when it comes to choosing a payment processor to handle these interchange fees and make sure they do not rack up and instead help a restaurant owner keep their doors open. Credit card processing fees are one of the major expenses for restaurants, next to food and labor. To ensure a restaurant is minimizing its expenses, and increasing its profits, it’s crucial to have a payment processor that fits the restaurant's needs. 

Establish Business Needs 

Before choosing a payment processor, restaurateurs should research the different options out there. Many processors offer different deals, technology, pricing and other unique options. Before initially choosing one, it’s important to establish the restaurant's needs. The payment industry can be complicated to understand, so the first steps are to establish transparency, ask questions and outline what the restaurant needs. 

Reasonable Pricing 

With hundreds of payment processors, if establishing reasonable pricing is a priority, it’s essential to work with a processor that is smooth, reliable and clearly outlines what fees are accounted for. Unfortunately, hidden fees and undisclosed monthly minimums can come through when working with a processor. It’s essential to ask what the processor's fee structure is, as there are three common methods including: 

  • Tiered Pricing – arranges rates into tiers with a different price for each tier, determined by the transaction. 
  • Interchange Plus – the pricing adds a markup of a set percentage above the interchange rate to each transaction, having the processor take the markup as its payment. 
  • Flat Rate Pricing – a fixed dollar amount or fixed percentage the merchant pays a payment solutions provider monthly or biweekly.

Interchange Plus is the most common and most recommended option for small businesses, specifically restaurants. As stated, restauranteurs should determine which method is best for their restaurant before choosing a processor and pay attention to long-term contracts. Before signing a contract, look for an automatic renewal clause that could extend the contract term after the initial period has expired. Early termination fees vary greatly but typically run around $300–$500. In a worst-case scenario, a contract might also include a liquidated damages clause that could set a business back thousands for closing its account.

The Technology 

Many payment processors offer high-end technology many smaller restaurants aren’t equipped for. Working with a processor that offers quick and digestible technology with different payment options is a great choice for restaurants, making it easier for the business as well as the customer. 

With payment processing comes the credit card terminal to process credit and debit card transactions in person. The equipment can be expensive for a restaurant just getting started, but leasing a terminal can cost more in the long run, as many processors establish a small monthly leasing fee. While it sounds minor, leasing contracts lock merchants into four-year leases that cannot be canceled. For example, for a four-year lease with 48 lease payments costing $25 a month will add up to $1,200 over the life of the lease, without owning the equipment. 

Find a processor that meets the restaurant’s technology needs, whether it's high-end or basic equipment. 

Customer Service 

Unfortunately, many payment processors fail to consider the importance of customer service. When choosing a processor, customer service must be a priority. To keep a business running seamlessly and accepting payments at all times, it’s critical to find a provider that offers around-the-clock support, ensuring that the restaurant,  the employees, and the customers don’t run into unpredictable situations, resulting in losing money. 

The payment industry can be hard to digest. However, by establishing the restaurant’s needs and looking for the right qualities, it can be a great experience to find a payment processor and a tool that helps the business thrive. Choose one that will establish trust and ultimately, help save money to keep the restaurant booming.