Restaurant Credit Card Processing

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

With recent world economic developments, that percentage is sure to have reduced. Recently, the same group conducted a similar survey and found that three in five would prefer not to return to handling cash. 

That is why talking about credit card processing is essential as a business owner, particularly if you operate a restaurant. As it stands, many restaurants have gone full-acceptance on credit cards, giving them the means to broaden their horizons. Yours can too when you partner with PaymentUSA.

To help you understand how to begin taking credit card payments, we’ve produced this article to bring all the relevant information to your fingertips.

Restaurant Payment Processing: An Overview

A restaurant owner can comfortably use credit card processing if they partner with an acquiring provider to accept online payments, which includes cards. However, there are other roles the payment processing partner plays. With restaurant credit card processing services, you can quickly get access to top tools and integrate them with your business, allowing you more time to focus on other crucial aspects of the restaurant. 

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

Before going further into the business of restaurant payment processing, let’s look at the types of restaurants available. The type of restaurant plays a crucial role in determining the suitable type of merchant account and the sort of fees you will be charged.

Fine dining and sit-down

Fine dining/full sit-down restaurants usually process higher-than-average checks than other types of food service businesses. These outlets also usually sell alcohol, which adds to the check size. Desserts and appetizers also round up the check total.

Bars and pubs

Just like full sit-down restaurants, bars also process higher-than-average checks, with alcohol a 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, happy hour pricing, drink recipes – all on a pre-programmed POS terminal.

Quick serve

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

There are no guidelines to follow here. However, if your transactions, on average, are under $10, the flat rate will be low. This puts a limit on your equipment options, though.

Key Terms to Know with Restaurant Payment Processing

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

How Restaurant Credit Card Processing Works

Now let’s look at 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 this description is for a card-present transaction. For card-not-present transactions, the process is almost the same but takes place 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 their card for payment. Next, the card is either tapped, swiped, or dipped on a terminal. The payment equipment then sends the cardholder’s information to the 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. The issuing bank then approves or declines the transaction authorization request and sends the result to the merchant. 

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 the authorization and authentication take minutes to complete, settlement takes longer.

The merchant will summarize all transactions at the end of business day into a batch and send them to the acquiring bank for processing. This batch of information will then be moved by the bank to the card network for the necessary settlement. It is then 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 metrics that differ are usually the rates they charge their customers. 

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 charges (more on that soon) that come with restaurant payment processing, you might be tempted to forgo this solution altogether. While you may be able to save money, 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. Many restaurant-goers are wary of carrying cash to pay for a service. 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 Covid-19 pandemic. 

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

Safer Checkout

Credit card processing restaurant strategies are one of the best ways to protect checkout for you and your customer. The most common scenario for fraudulent activity is when servers take customers’ cards to swipe at the register. Reputable restaurants reduce this by handing their guests a tablet to pay themselves. 

Tip processing is also possible with a POS terminal. Here, the guest can quickly authorize payment for a meal and tip in one transaction. This reduces the fees for you. 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. This means that most diners prefer to frequent restaurants that have a loyalty program since there are rewards. That’s good news because restaurant loyalty programs allow merchants to collect information on guests and list frequent visitors and big spenders. 

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

However, this depends on whether you partner with a provider that offers a loyalty reward program type. With this method, your business can process loyalty rewards such as quickly returning 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

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

Having a separate list of returning consumers and new guests helps a restaurant thrive. This way, you can gain insight into your 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 restaurants, there are three pricing structures available. These are the interchange plus, flat rate, and tiered charges. Each has its pros and cons depending on what you need as a merchant.

Interchange plus

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’ charge, which is 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 combines to create a different rate. 

Payment type also factors into interchange plus fees. Restaurants can receive payments in the following ways: 

  • manual
  • swipe
  • dip and sign
  • chip and pin
  • digital payments
  • contactless

Generally, payment processing fees for restaurants depend 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:

  • 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. 
  • With the interchange plus model, 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. Also, it can be challenging to make future analyses and to prepare a budget. 

Flat rates

Flat rate pricing is becoming more popular because of 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 payments, as they have their own flat rates. 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 a restauranteur. Here, it is easier to know exactly what you’re paying for. This also allows a merchant to efficiently 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. These tiers are called qualified, mid-qualified, and non-qualified. 

Qualified tiers have the lowest fees, and transaction fees are higher with the mid-qualified and non-qualified payments. 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 qualifications apply 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. And aside from the money aspect, good restaurant payment processing helps you provide optimal customer service to your guests. 

When choosing a restaurant credit card processing system, there are six factors to watch out for. These depend on the variables of your restaurant, so you should shortlist candidates that meet your criteria.

Average deposit times

The first and probably most important metric is knowing how long it takes to get paid. Always check how quickly a payment processor can deposit funds into your merchant account. 

Two business days is a reasonable length of time. A more extended period should cast doubts. 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 processors for payment. An up to date payment processing system can process all types of payments. 

Restaurants must meet the Payment Card Industry Data Security requirements (PCI DSS). These requirements ensure that 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 there are a host of others. 

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

You’ll also be asked if you prefer swiped card transactions or keyed-in transactions. The type you choose will influence the fees you pay. 

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

Payment processor chargeback policy

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 stick with the conventional POS system and don’t have a large budget. 

It’s always challenging to see your revenue reduced and bear the costs of chargebacks from guests claiming different issues. Some might say they have never eaten at your restaurant, and another person used the card. Others simply claim their experience was not worth paying for.

You must know how a potential processor handles issues of cashbacks. 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 providers present the contract agreement to partners. For many, there are hidden clauses that the salesperson does not explain. 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 their budget on fees that arise from unclear service contracts. 

You can rely on PaymentUSA’s clear restaurant credit card processing services to be transparent. With our strategies, you can be assured of a fair, competitive plan that fits your budget and is sustainable for your business’s growth.

Seamless integration with management tools

It is necessary to partner with a payment processing provider that allows you to integrate your existing payment and management tools with their equipment, both software and hardware. Suppose you already have equipment for credit card payment processing and decide to move to a new processor. You should be able to easily reprogram the tools to fit your terminals at no cost to you. 

Some payment processing firms also include credit card processing tools when you activate a merchant account with them at no extra cost. Ensure that this feature is in writing so you won’t have to pay later.

Customer support

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

Part of processing credit card payments online for restaurants involves access to active customer support. A 24/7 customer service allows your staff members to have professional aid in cases of technical issues, reducing the likelihood of negative customer reviews.

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 a self-service? Or would you prefer customers 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. This negates the risks of long customer queues and high billing costs, among several bottleneck issues.

When you partner with PaymentUSA, we work to streamline business operations, including:

  • Staff scheduling, menu changes, and inventory tracking through proprietary tools.
  • Reducing 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 quickly installed. 

At PaymentUSA we deliver precisely what your restaurant needs with a full suite of real-time reporting capabilities. We also understand the frustrations of payment fraud. This is why we are stringent when it comes to PCI compliance for credit card processing restaurants.

Payment USA