Restaurant Credit Card Processing

According to a study from the Travis Credit Union, the average American carries about $46.29 cash in their pockets. And of the total number, only 16% claimed they had money on them at all times. 

With subsequent world economic and health changes, that percentage is sure to have decreased. Recently, the same group conducted a similar survey, finding that now three in five people prefer not to carry cash in their wallets. 

This is why talking about credit card processing is essential as a restaurant owner. As it stands, a majority of restaurants have gone full acceptance on credit cards. Most credit card processing restaurant outlets now have the means to expand to broader horizons, thanks to strategic solutions. You can too when you partner with PaymentUSA.

Restaurant Payment Processing: An Overview

A restaurant owner can easily start using credit card processing if they partner with a provider. However, there are other roles the payment processing partner plays. With restaurant credit card processing services, you can quickly get top tools and integrate them with your business, even choosing the optimal payment terminals – allowing you to focus on other crucial aspects of the restaurant. 

Regarding payment processing for restaurants, key factors and stakeholders are in place. They include:

  • The customer’s bank
  • Payment terminal and/or POS system
  • Credit card network 
  • Card-issuing financial institution
  • The business bank account

Before going further into the business of restaurant payment processing, let’s list the types of restaurants available. The type of business plays a crucial role in determining the type of merchant account suitable for its growth.  

Fine dining and sit-down

Fine dining/full sit-down restaurants usually process higher-than-average checks than other types. Besides the entrees, these outlets also sell alcohol, which is another reason for the large check size. Desserts and appetizers also increase the check total. 

Bars and pubs

Just like the full sit-down restaurants, bars also have higher than average checks, with alcohol the major contributor. With this establishment type, the equipment and aesthetics matter more than the cost.  

With bars and pubs, there are many variables in play. The ability to open and maintain a customer’s tab, automatic happy hour pricing, and drink recipes are all available functions on a POS terminal. 

Quick serve

Quick serve restaurants tread a fine line between making their rates more expensive than their interchange charges. For some restaurants in this category, the flat rate will be higher than the interchange and vice versa. 

There is no guideline to follow here. However, if your transaction, on average, is under $10, the flat rate is low. This puts a limit on the capacity of your equipment options, though.

Key Terms to Know with Restaurant Payment Processing

Before going further, let’s define some important terms here. This will help you to understand what is involved with debit and credit card transactions. 

  • Cardholder: the cardholder is your customer or guest – the owner of a card who wants to make a purchase of your goods or service. 
  • Merchant: the business selling goods and services to the cardholder. It is the merchant that has to accept payments. Most merchants are not required to accept debit and credit cards, but accepting them gives an edge. 
  • Processor: the processor provides the technology and processing options to enable the merchant to accept credit card payments. This can be a third party or an extension of the merchant’s acquiring financial institution. Most of the time, the processor is also responsible for providing the terminals or devices through which payment is made and accepted. 
  • Acquiring bank: the acquiring bank is the institution where a merchant holds and maintains an account. An agreement between this financial firm and the merchant allows the bank to process all credit card transactions. Depending on the deal, an acquiring bank can also be the merchant’s payment processor.
  • Card networks: the firms that own and process credit card transactions. They are also responsible for setting up a part of the processing fees. They are the primary stakeholder in approving whether a credit card transaction goes through or not. 
  • Issuing bank: the issuing bank is responsible for issuing the credit card that a card network owns. They also have the final say on whether any transaction can be accepted or declined. Of all major card networks, only American Express and Discover  act as their own card issuers. 

How Restaurant Credit Card Processing Works

Now that the definition of binding terms is out of the way, it is necessary to understand what goes on during payment processing for restaurants. 

Restaurant payment solutions revolve around three areas – authorization, authentication, and settlement. Understanding each aspect is essential to knowing how restaurant credit card processing works as an establishment owner. 

You should also understand that the description follows for card-present transactions. For card-not-present transactions, the process is almost the same although it starts online through a virtual terminal or mobile device. Due to digital strategies, many restaurants use QR codes, online ordering, and other means of cardless transactions to reduce staff interaction with customers. 


Credit card processing for restaurants begins the moment a customer presents the card for payment. Next, the card is either tapped, swiped, or dipped on a terminal. This payment equipment then sends the cardholder’s information to an acquiring bank for processing. 

Once the acquiring bank receives the details, it automatically transmits them to the card network for onward processing. At the card network, the company checks the card details to ensure they are valid and forwards the security code, expiration date, card number, transaction amount, and billing address to the issuing bank for payment. 


At the issuing bank, verification is done on the validity of the payment card and the cardholder’s account. This is to confirm if there are funds to match the payment. Next, the issuing bank can approve or decline the transaction authorization request and send the result to the merchant via the same channels it came from before. 

After receiving the authorization result, the merchant can print a receipt and offer it to the cardholder, which signifies the end of the transaction. 


Restaurant payment processing does not end there for you as a merchant. While authorization and authentication take minutes to complete, settlement is another matter.

The merchant will summarize all transactions at the end of business into a batch and send them to the acquiring bank for processing. This “batch” information will then be moved by the bank to the card network for the necessary settlement. It is now the card network’s responsibility to forward payment requests to each issuing bank for onward clearance.

Typically, each issuer should clear the funds within 24 to 48 hours and subtract the fees it shares with the card network. In the end, the acquiring bank will deposit the said amount into the merchant’s account. This is after removing the service or processing fees. 

This is how restaurant payment processing typically works. While the process is almost the same for all providers, the rates they charge their customers differ. 

How Restaurant Credit Card Processing Helps your Business Grow

The right restaurant credit card processing services can propel your business to greater heights. However, looking at the different rates (more on this in the coming section) involved, you might be tempted to forgo this solution altogether. But while it might seem expensive, there are several ways restaurant credit card processing can help you grow. 

Wide range of payment options

For one, you will be tapping into a broader range of customers. According to a study by TSYS, only 15% of diners at a full-service dine-in restaurant preferred to pay in cash – and that was before the pandemic. 

Offering different modes of payments to your customers is a sure way to increase the chances of attracting more clients to your establishment. Plus, most card networks now offer discounts and other incentives for purchases relative to restaurants. Hence, most consumers search for restaurants that allow them to use their credit cards and rack up points with their dining. 

Safer checkout

Credit card processing strategies are one of the best ways to protect checkout for you and your customer. A common scenario for fraudulent activity is when a server takes a customer’s cards to swipe at the register. Reputable restaurants reduce this instance by handing their guests the equipment to check out themselves. 

Credit card tip processing is also possible with a POS. Here, the guest can quickly authorize payment for a meal and tip in one transaction. This reduces the fees you have to pay. Customers are satisfied with a professional service, and your business does not have to worry about excessive billing fees.

Customer loyalty

The average American is a lover of loyalty programs and prefer to frequent restaurants that have a loyalty program since there are rewards. Restaurant loyalty programs allow merchants to collect information on guests and list frequent visitors. 

With restaurant credit card processing services, it is easier to track repeat customers since you can encourage them to sign up for the program. It’s also a great way to increase revenue through those who repeatedly visit your establishment.

Additionally, if you partner with a provider that offers this type of loyalty reward program, your business can quickly return money to a guest’s card once they pass a certain threshold. 

Such a gesture can easily put your business in the mind of customers and encourage them to continuously patronize you. 

Separate new from repeat guests

The accessible analytics features are part of restaurant credit card processing solutions. Each guest visit creates data, and you can easily distinguish between a new customer and an existing one. 

Having a separate list of returning consumers and new guests is an excellent way for a restaurant to gain insight into its growth index as you examine trends in your transaction history. 

If the ratio of new guests to existing ones is high, it is an indication that your loyalty program is not working as it should be. 

Pricing Structure for Restaurant Credit Card Processing

When it comes to restaurant credit card processing, there are three pricing structures available. These are the interchange plus, flat rate, and tiered charges. Each of them comes with pros and cons. However, the one that suits you best depends on what you need as a merchant.

Interchange plus

The interchange plus (IC+) is one of the oldest forms of restaurant payment processing pricing. With this method, the payment processor places its processing fees on top of the credit card fees. The main component of these fees is the “interchange” charges, which are set by the card network and remitted by the card issuing financial institution. 

Interchange plus fees differ based on the transaction, card, and card network type. Each of them combines to set a different rate. 

With the credit card type, there are different limits. Hence, it is easier to see a student credit limit with a lower processing fee than an international credit card. The payment type also factors in. Restaurants can receive payments in the following ways: 

  • Manual
  • Swipe
  • Dip and sign
  • Chip and pin
  • Digital payments 
  • Tap

Generally, payment processing for restaurants has high fees on how secure the payment form is. For instance, a mobile payment is less expensive than a credit card swipe because the latter is susceptible to fraud. 

The benefits of the interchange plus model are twofold:

  • High level of transparency. With the credit card charges different from the payment processor’s charges, it is easy for a merchant to see precisely how much they are to pay to the processor for the restaurant credit card processing services. 
  • It is easier to know the percentage of customers using a specific card type. Hence, you’ll be able to know which card drives up the payment processing fees. 

With interchange plus, it could become complicated to go through the statement reports for many restaurant owners. Also, it can be challenging to make future analyses and to prepare a budget. 

Flat rate

Flat rate pricing is becoming more popular with the level of simplicity and clarity it carries. With the flat rate price structure, restaurant credit card processing solutions are built around a flat fee percentage. 

However, there are exceptions with card-not-present and American Express card forms, as they have their own flat rates. Yet, this depends on the provider that a restaurant partners with. 

The primary benefit of this structure is the high level of transparency and clarity it brings to the restaurateur. Here, it is easier to know exactly what to pay for. This also allows the merchant to plan for the future since the rates are fixed. 

The only drawback with a flat rate pricing structure is the lack of detail when it comes to card processing fees. 

Tiered fees

With a tiered restaurant pricing structure, the payment processing provider places a card’s interchange charges into different tiers or categories. Many tiers can be created, but a three-tier platform is most common – with qualified, mid-qualified, non-qualified payments. 

The qualified tiers incur the lowest fees, and transaction fees are higher with the mid-qualified and non-qualified payments. 

All qualified tier transactions must meet a processor’s requirements since they are at the end of the chain. A failure to meet the criteria will bump them to mid and non-qualified. 

Knowing which type of credit card falls into which tier is the best way to understand how to resolve monthly fees. Hence, you should read the contract terms to know what the qualifications are to place a credit card in the qualified tier. 

How to Choose a Restaurant Credit Card Processing System?

The decision of choosing which payment processor to partner with is never an easy one. That’s because it usually affects your business’s profit margins and the cash flow as well. Not just about cash, adequate restaurant payment processing helps you provide optimal customer service to your guests. 

When choosing a restaurant credit card processing system, there are six main factors to watch out for, depending somewhat on the variables of your restaurant. Let’s briefly look at these factors.

Average deposit times

The first and probably most important metric is knowing how long it is before you get paid. A reliable question is asking how long a payment processor takes to deposit funds into your merchant account. 

Two business days is about right. A more extended period should cast doubt. However, remember that the faster the deposit times, the higher the processing fees may be. 

Payment processing system security

A secure payment gateway should be a crucial part of the restaurant payment processing services you’re looking for. This vital corridor links the customer’s transactions to the suitable processors for payment. An up to date payment processing system can process all types of payments. 

Restaurants must also meet the Payment Card Industry Data Security requirements (PCI DSS). This guideline ensures that all customers’ card details are safe and secure throughout the transaction. In essence, choosing the right payment processing provider that complies with PCI guidelines means your business does the same.

Competitive pricing model

Every payment processing firm has its own unique pricing structure. Besides the usual monthly fees, restaurant payment solutions also come with other charges. A few include the PCI compliance fee, batch fee, statement fee, chargeback, and a host of others. 

When selecting a reliable payment processor, it is important to ask about the pricing structure. To determine this, the processor will look at the restaurant’s details. Facts like credit score, restaurant type, and chargeback history are also considered. 

You’ll also be asked if you prefer to use swiped card transactions or the keyed-in transactions. Which you choose will influence the fees your company pays. 

Hence, it is necessary to go for a payment processor with different payment options so you can choose the pricing structure you want. 

Payment processor's strategy for chargebacks

One crucial aspect you should not overlook is how a processor handles chargebacks for you. Chargebacks are an unnecessary headache, especially for small restaurants that still stick with the conventional POS system and don’t have the budget for chargebacks. 

It’s always challenging to see your revenue reduced and bear the costs of chargebacks from guests who claim different issues. You must know how a potential processor handles issues of chargebacks. This includes a clear explanation of what you need to do, including the strategies available to help. 

Transparent service contract

A common problem is how companies present contract agreements to potential partners. In many, there are hidden clauses that are not explained. This is the origin of hidden fees. 

In addition, many agreements lock small restaurants into long-term contracts. Those who wish to opt out early must pay cancellation or termination fees. 

These shady agreements could lead to irregular cash flow for your business and other operational issues, leading to huge expenses. No restaurant owner wants to spend part of the budget on stiff fees that arise from unclear service contracts. 

You can rely on PaymentUSA’s clear restaurant credit card processing services. With our well-guarded strategies, you can be assured of plans that fit your budget and are sustainable for your business’s growth. All restaurants will receive competitive and fair agreements that agree with their business plans. 

Seamless integration with management tools

It is necessary to partner with a payment processing provider that allows you to integrate your tools or features with their equipment, either software or hardware. And if you already have equipment for credit card payment processing and decide to move to a new processor, you can easily reprogram the tools to fit your terminals at no extra cost to you. 

Some payment processing firms also include credit card processing tools when you activate a merchant account with them. Ensure that this is in writing so you won’t have to pay later. 

Customer support

The range of support you get from your provider plays a huge role in the customer satisfaction you provide. Most restaurants operate beyond the daytime working hours. Hence, their payment services must be in good condition at these times too. 

Part of processing credit card payments online for restaurants involves access to active customer support. 24/7 customer service allows your staff members to have professional aid in cases of a malfunction in the tech and keeps your customers happy, whatever the time of day.

Wide range of payment terminal options

One of the best features you can get from a payment processing provider is a range of terminals to select for your business. This largely depends on what you need for the restaurant. Do you need terminals at each table so customers can use self-service? Or would you prefer them to come to a central register to pay for the service?

These and other similar questions are what you should ask the potential payment processing partner.

Allow PaymentUSA to Handle your Restaurant Credit Card Processing

With our digital payment solutions, you can capitalize on making transactions secure, simple, and fast. We tailor industry-specific features to meet your needs.
When you partner with PaymentUSA, we work to streamline business operations, including:

  • Staff scheduling, change in menu, and inventory tracking through proprietary tools.
  • Reduced accounting errors with pay-at-table technology to get customers in and out fast.
  • Flexible gift card options to boost diner loyalty and attract new customers.
  • Smart server stations that are spill-proof, user-friendly, and can be installed quickly. 

At the end of the day, we deliver precisely what your restaurant needs with a full suite of real-time reporting capabilities. We understand the frustrations of payment fraud since no industry is entirely immune to threats. This is why we are overprotective when it comes to PCI compliance for credit card processing restaurants. 

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