Restaurant Credit Card Processing: A Helpful Guide

Read Time: 6 min

If you’ve clicked on this article, chances are you’re curious about restaurant credit card processing and possibly acquiring it for your business. Congratulations! This is a major step as dining is rapidly becoming a cashless experience in the US. Last year, 81% of the money spent at full-service restaurants in America was charged to a debit, credit, or prepaid card. With restaurant-goers’ growing demand for cashless and contactless payments, restaurant payment processing services are more necessary than ever. Find out everything you need to know to meet the changing needs of the guests at your eatery.

Restaurant Payment Processing Overview

a man at a table with a plate of cookies paying through restuarant credit card processing

In a nutshell, a restaurant can acquire credit card processing when a business owner works with an acquirer (payment processing company or bank) to accept electronic forms of payment, including debit and credit cards.

But that’s not all. In order to accept credit card payments, the payment processing company plays many roles. They provide you with integrations, help you choose your hardware like the right payment terminals, and offer customer service support. This is so you can focus on the aspects of your business that matter.

Taking debit, credit, and electronic payments involves communication with several parties and entities. Depending on your service provider, these can include:

  • The customer’s bank
  • The payment terminal or POS system at your restaurant
  • The credit card network (Discover, Mastercard, and Visa to name a few)
  • The card issuing bank
  • Your business bank account

Payment processing companies are quite valuable because they handle this communication for you in a matter of seconds. Additionally, they protect against fraud risks and chargebacks to verify and secure transactions.

Does your business need restaurant credit card processing?

The odds are if you’ve clicked on this article, the answer is ‘yes.’ This is a completely natural progression if you’re attempting to expand your business or simply offer more payment options.

The fact is, diners expect to purchase just about anything with their card or phone. In a recent study, only 50% of respondents admitted to carrying cash on their person and only half of the time. With this data and the cultural shift toward digital payments and credit cards, restaurant payment processing is a must these days. So now, let’s get into the cost of restaurant credit card processing.

Restaurant Credit Card Processing Rates

There are a lot of factors that go into credit card processing fees. The price you pay for merchant services can range depending on business history, credit score, chargeback rate, and more. For restaurant payment processing, it’s important to consider the rates you’ll see for the transactions that come your way.

These fees can fall into one of three main categories:

  1. Flat Fees. Pay the same fee per transaction, no matter how big or small.
  2. Tiered Pricing. Different fees are charged based on the type of transaction.
  3. Interchange Plus. A transparent model that allows the business owner to see exactly how much each fee is per transaction. They do this by showing you the bank/card assessment and interchange fees and then adding a processor markup.

Let’s dig deeper into these methods to see which is the right fit for your business.

Flat rate

When it comes to flat-rate pricing, processors add up all processing fees and charge that amount per transaction.

Some of the fees that companies can include in this rate are:

  • Monthly service fee
  • Annual fee
  • Batch fee
  • Online reporting fee
  • Statement fee
  • Terminal fee
  • Network access fee
  • Processing fees
  • Situational fees

While this approach may seem straightforward, it can often lead to overpaying for various transactions. Especially where the price of the item is very low. For example, you sell a water for $2 and the fees amount to $1.50 per transaction. This may hurt your profit margin after the cost is factored in so verify before you agree to restaurant credit card processing with these terms.

This approach also does not take into account that different credit card providers charge different fees per transaction.

Tiered pricing

In this pricing model, the processing fees, card fees, and processor fees are added together and not broken down clearly. Then, based on the type of transaction, charge a fee.

As mentioned before, there are three types of transactions that determine your fee based on the card used:

  • Qualified: These are comprised of debit cards and non-rewards credit cards
  • Mid-Qualified: When card information must be keyed in or swiped rewards cards are used, they fall into this tier
  • Non-Qualified: This category includes business credit cards and high-rewards credit cards

This pricing model is useful for large businesses that know exactly how their customers prefer to pay.


Interchange-plus is one of the most popular options restaurant owners choose, as it’s the most transparent regarding fees. This model shows each bank and credit card fee per transaction, with the payment processor’s fee, added on top. It appears by line item, so you can see exactly how much was paid in fees per transaction. This is different from the previous two models where fees are grouped together.

Interchange-plus pricing does not guarantee you will pay the lowest fees. Because of this, it’s important to talk to merchant services providers to see what they charge for restaurant credit card processing. 

How to Choose the Right Payment Processor

Making a decision on which restaurant payment processor you should partner with can be a daunting task. Based on this one decision, you can deeply affect your profit margins and the flow of business. You want to provide your diners with an easy way to pay using their favorite methods. On the flip side, you want to be able to have the transaction cleared quickly, effectively, and with protection against fraud. Any credit card machine should be effective at helping to improve the efficiency of the business.

How will you know what company to choose? Here are a few tips to help you evaluate if you’re already paying too much in credit card processing fees.

What to Look for in a Payment Processor for Your Restaurant

Because many payment processors offer yearly contracts, the decision you make today can greatly affect the state of your business a year or two down the line. Restaurant owners, such as yourself, need to truly understand all of the pros and cons of the service being offered and whether or not it will be the right fit for your customers and business by analyzing several factors. Here are our five suggestions to keep an eye out for when acquiring restaurant payment processing.

Competitive pricing

If you feel that you may be paying too much in transaction fees, make sure to review the breakdown of what you are paying now and compare it with other payment processors who can provide you with a better rate and value.

Restaurant margins are often small, so it is important to choose a company that understands your industry and offers low fees. You’ll need to first decide which fee pricing model is ideal for your specific business and then compare ALL fees by various companies to see who can offer your the most competitive rate.

Responsive customer service

When problems or questions arise, you’ll want to feel confident in knowing that there is someone you can contact and obtain fast service from. Select a provider who has the experience, track record, and proper/knowledgeable customer service representatives to assist you when you need it.

Versatile POS system & terminal options

An important factor to consider is how you want your customers to pay. Will you need terminals at every table so that customers can pay themselves or do you want each diner to come up to a counter? Does that counter have enough space for a full POS system or will a smaller option such as a tablet be needed?

Make sure to discuss these requests with your potential payment processing company.

Transparent contract

Make sure each and every fee you’re expected to pay is clearly outlined in the agreement. Not only that, but review the length and scope of the contract and ensure that you are 100% clear on what will and will not be provided as far as services during the term. This can be found in your merchant agreement.

Integration Compatability

a chef at his restaurant writing down restaurant payment processing on a notepad

If you already have the equipment you use to collect payments, see if the new provider can work with your existing technology. If they can’t, will they be able to reprogram your equipment for free?

There are scenarios where it may be cheaper to have your equipment replaced. It will be essential to communicate with your provider and see what will most benefit your business.

Make Your Restaurant Business Even Better

Whether a bistro, fast food restaurant, fine dining, or everything in between, chances are your customers are looking for more ways to pay. More and more often customers want to pay with their cards or electronic payment methods. It’s time to meet that need by offering more options via restaurant payment processing.

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