Restaurant Payment Processing

In today's fast-paced digital age, customers expect a seamless and secure payment experience when they dine out. Whether you run a small cafe or are the owner of a large fine dining restaurant, having the right payment processing system in place is essential for providing excellent customer service and maximizing your revenue. With the right payment processing system, you can offer your customers a range of payment options, including credit and debit cards, mobile wallets, and even contactless payments. Discover everything you need to know about restaurant payment processing and how you can make the payment process as convenient as possible for both your customers and staff.

What Is Payment Processing?

Payment processing refers to the entire journey that a payment takes from the moment a customer swipes their credit card to the moment the funds are deposited into your restaurant's bank account. It involves a series of steps and technologies that work together seamlessly to facilitate secure and convenient transactions.

In payment processing, a third-party company known as a payment processor verifies the customer's card details, checks for sufficient funds, and ensures that the transaction meets all security requirements. Once the payment is authorized, the third-party sends the funds to your restaurant's merchant account, before it is eventually deposited into your restaurant’s regular business account.

What Is a Payment Processor?

The payment processor, also known as the merchant services provider, is the company that handles the actual processing of the payment. These companies play a crucial role in facilitating the secure and efficient transfer of funds between the customer, the restaurant, and the financial institutions involved.

At its core, a payment processor is a company that handles electronic transactions on behalf of businesses. When a customer makes a payment using a credit card, debit card, or any other electronic form of payment, the payment processor ensures that the funds are transferred from the customer's account to the restaurant's account.

What Does a Payment Processor Do?

One of the primary functions of a payment processor is to authorize and authenticate transactions. When a customer makes a payment, the payment processor validates the payment details, checks if the customer has sufficient funds, and verifies the authenticity of the payment card. This process helps to mitigate the risk of fraud and ensures that only legitimate transactions are processed. In addition to transaction authorization and settlement, payment processors provide a range of additional services such as fraud prevention tools, reporting and analytics, recurring billing options, and integration with other business systems such as point-of-sale (POS) systems and accounting software.

Restaurant Credit Card Processing

When it comes to restaurant payment processing, credit card transactions play a vital role. With more and more customers opting to pay with their cards, it's essential for restaurants to have a seamless and efficient credit card processing system in place. Some of the benefits of credit card processing for your restaurant include:

  • Convenience for Customers - Credit card processing offers convenience to your customers by allowing them to pay with their cards instead of carrying cash. By accepting credit cards, you can cater to a wider range of customers and provide a hassle-free payment experience.
  • Increased Sales - Studies have shown that customers tend to spend more when using their credit cards compared to cash payments. By accepting credit cards, you can potentially increase your average bill size and generate higher sales for your restaurant.
  • Security and Fraud Protection - Credit card processing provides built-in security measures that help protect both your customers and your business. With encrypted transactions and fraud detection systems in place, you can minimize the risk of fraudulent activities and unauthorized transactions.
  • Streamlined Operations - Implementing a credit card processing system can streamline your restaurant's operations. Instead of manually handling cash, your staff can focus on providing excellent customer service and attending to other important tasks.
  • Improved Cash Flow - Unlike cash payments, credit card transactions are processed electronically, resulting in faster and more efficient payment settlements. This means that your restaurant can receive funds from credit card transactions directly into your business bank account, reducing the need for manual cash handling and improving your cash flow.
  • Access to Reporting and Analytics - Most credit card processing systems offer robust reporting and analytic features. These tools can provide valuable insights into your restaurant's sales trends, customer behavior, and other key metrics.

Restaurant Credit Card Fees

When it comes to running a restaurant, one of the most important considerations is how to handle payment processing. In today's business climate, accepting credit card payments is not only expected by customers, but it also offers convenience and security for both parties involved. It's essential for restaurant owners to understand the fees associated with credit card transactions to ensure they are making informed decisions. Familiarize yourself with some of the most common restaurant credit card fees below:

  • Interchange Fees - Interchange fees are charged by credit card companies and banks for processing credit card transactions. These fees are typically a percentage of the total transaction amount, plus a flat fee.
  • Processing Fees - In addition to interchange fees, restaurant owners may also be charged processing fees. These fees cover the cost of the technology and services required to process credit card transactions.
  • Chargeback Fees - When a customer disputes a credit card transaction and requests a refund, the restaurant may be hit with a chargeback fee. It's important for restaurant owners to have clear policies and procedures in place to minimize the risk of chargebacks.

What Is a Convenience Fee at a Restaurant?

A convenience fee is a charge added to a customer's bill to cover the cost of providing additional service or convenience. In the context of restaurant payment processing, a convenience fee is typically applied when customers choose to pay with a credit card or other electronic payment methods. In order to offset costs like processing fees and interchange fees, some businesses choose to pass along a convenience fee to their customers.

What Is Contactless Payment?

Contactless payment refers to a method of making transactions without the need for physical contact between the payment card or device and the payment terminal. Instead of swiping a card or inserting it into a machine, customers can simply tap their card, smartphone, or wearable device on the payment terminal to complete the transaction. When utilizing contactless payment, your restaurant can reap the following rewards:

  • Speed and Efficiency - With a simple tap, customers can quickly complete their transactions, reducing the time spent at the payment counter. This not only enhances the overall dining experience but also allows restaurants to process payments faster, resulting in shorter wait times for other customers.
  • Enhanced Security - Unlike traditional payment methods where the card may leave the customer's hand, contactless payment ensures that the card never leaves the customer's possession. This reduces the risk of card skimming and fraud.
  • Versatility - Contactless payment methods are versatile and can accommodate various forms of payment. Whether it's a contactless-enabled credit or debit card, a smartphone with mobile payment capabilities, or even wearable devices like smartwatches, customers have a range of options to choose from.
  • Increasing Consumer Adoption - Touch-free payment methods are trending among consumers, as many customers now prefer these payment methods to minimize physical contact and reduce the risk of transmitting germs. By offering alternative payment options, restaurants can attract these safety-conscious customers and provide them with a convenient and secure payment experience.

Restaurant payment processing is an ever-evolving field, with new technologies and trends constantly emerging. As a restaurant owner or manager, staying up-to-date with the latest payment processing solutions can give you a competitive edge in the industry. By providing a seamless, secure, and convenient payment experience for your customers, you can build trust, enhance customer loyalty, drive revenue growth, and ultimately increase profit margins for your restaurant.

Posted in: Foodservice Trends|Management & Operation|By Kevin Singhel
The information provided on this website does not, and is not intended to, constitute legal advice. Please refer to our Content Policy for more details.
External Link

You are about to leave the security of WebstaurantStore.com.

We are not responsible for the privacy policy or any content, links or software, or any consequences from your access to or use of the technologies, websites, information and programs made available on this new site.

Do you want to proceed?

Related Resources

  • How to Prevent Dine and Dash

    When a customer leaves without paying their bill, it not only results in a loss of revenue for the establishment, but it also creates a sense of unease among staff members who may feel helpless in preventing these occurrences. Preventing dine and dash is a key part of restaurant security and loss prevention, making it essential for dine-in locations. Although dine and dash is relatively common, there are several steps that you can take to greatly reduce the risk of dine and dash occurring in your establishment. Below, we've outlined how your restaurant can prevent suffering from dine and dash, as well as the steps your restaurant can take should you ever fall victim to the crime. Use these links to learn more about how to prevent dine and dash from occurring: Dine and Dash Meaning How to Stop Dine and Dash What to Do When a Customer Dines and Dashes Dine and Dash FAQ Dine and Dash Meaning Dine and dash refers to the act of leaving a restaurant without paying for the meal. It's a form of theft that can have serious consequences for both the restaurant and the individuals involved. Not only does it result in financial losses for the establishment, but it also damages its reputation and can lead to a loss of trust from other customers. Is Dine and Dash Illegal? Yes, dine and dash is illegal. When customers intentionally leave a restaurant without paying, they are committing theft. In most jurisdictions, this act falls under the category of "theft of services" or "defrauding an innkeeper”. In some cases, dine and dash may be considered a misdemeanor, resulting in fines or even jail time. In other instances, it could be considered a felony if the amount stolen exceeds a certain threshold. How to Stop Dine and Dash Discover some of the most effective methods your restaurant can employ to combat against dine and dash: 1. Train Your Staff One of the most effective ways to prevent dine and dash is by training your servers to be vigilant and proactive. Make sure they are attentive to customers, especially those who appear suspicious or exhibit unusual behavior. Encourage them to engage with customers, build rapport, and establish a friendly atmosphere. By doing so, your staff will deter potential dine and dashers and create an environment where customers feel valued and want to pay for their meals. 2. Install New Security Systems Investing in state-of-the-art security systems reduces the likelihood of dine and dash incidents. Consider installing surveillance cameras strategically throughout your establishment, including at entrances, exits, and cash registers. These cameras act as a deterrent and can provide valuable evidence in case of any wrongdoing. 3. Alter Payment Systems Another effective method to prevent dine and dash is by altering your payment systems. For instance, you can implement a policy where customers must pay before receiving their food. This ensures that payment is made upfront, minimizing the risk of someone leaving without settling their bill. Alternatively, you can require customers to provide a credit card or other form of payment as collateral upon arrival, which will be charged in the event of a dine and dash attempt. 4. Hire a Host/Hostess Having a host or hostess stationed at the entrance of your restaurant can be a valuable asset in preventing dine and dash incidents. The presence of a host adds a layer of security and helps deter potential wrongdoers. A host can greet and seat guests, monitor the dining area, and keep an eye out for any suspicious activity. Additionally, they can assist in identifying potential dine and dashers and alert the staff accordingly. 5. Take More Reservations When a customer makes a reservation, they must provide you with details such as their name and contact information, making it easier to track them down if dine and dash occurs. Reservations also allow you to plan staffing accordingly, ensuring that you have enough staff to provide attentive service and keep an eye on all customers. Knowing how many guests to expect with a new reservation system allows you to allocate resources efficiently and minimize the risk of dine and dashers slipping through the cracks. 6. Change Floor Plans Consider redesigning your restaurant's floor plan to create a more secure environment. By optimizing the layout, you can enhance visibility and reduce blind spots, making it easier for your staff to monitor all areas. Additionally, strategically placing cash registers and exits in visible locations can act as a deterrent for potential dine and dashers. Designing your floor plan to increase the distance between seating areas and potential exits also makes it more difficult for dine and dashers to quickly sneak out unnoticed. What to Do When a Customer Dines and Dashes If your restaurant is a victim of dine and dash, it's crucial to maintain a calm demeanor. While it's natural to feel upset and angry, reacting impulsively can create unnecessary chaos. Follow the steps below to increase the chances of identifying the culprit and preventing future occurrences of dine and dash. Collect Information - The first thing to do after a dine and dash occurs is collect as much information as possible on the customer. This can include checking customer records, asking for a description of the perpetrator from other guests, and reviewing any security camera footage. Contact Authorities - After collecting information, notify your local police department immediately and provide them with a detailed description of the individual who left without paying. The more information you can provide, the better chances law enforcement will have in apprehending the culprit. Alert Local Restaurants - Although dine and dash can be spontaneous, it is usually planned ahead of time and often leads to other incidents. Alerting other restaurants around you allows them to remain vigilant and assess their own dine and dash security measures ahead of time. Analyze Security Weaknesses - If you’re a victim of dine and dash, it’s important to analyze your restaurant’s security and identify the weak spots that allowed the dine and dash to occur. For example, you may need to schedule more workers to keep an eye on customers, move seating farther away from exits, or install new security cameras. Dine and Dash FAQ Below we answer some of the most common questions asked about dine and dash: Is Dine and Dash a Felony? Depending on the amount of money lost during dine and dash, the crime could be considered a felony. Many jurisdictions have a monetary threshold that once crossed, a misdemeanor becomes a felony. If the dine and dash exceeds this threshold, the culprit may be charged with a felony. Do Servers Have to Pay for Dine and Dash? In many cases, servers are not required to pay for dine and dash incidents. That being said, some restaurants may deduct the cost of the unpaid bill from the server's tips. Familiarize yourself with your jurisdiction’s tipping laws as this practice is not legal in all states. The Fair Labor Standards Act (FLSA) also prohibits employers from making deductions from an employee's tips that would bring their wages below the minimum wage. How Common Is Dine and Dash? Dine and dash is relatively common, so it’s important for restaurants to remain vigilant to protect themselves. When a customer leaves without paying, your restaurant is losing out on a lot of potential revenue. When you consider that these incidents happen multiple times a year, the financial impact can add up quickly. How to Stop Virtual Dine and Dash As delivery and online orders become more common, virtual dine and dash cases have increased hand-in-hand. Some common examples of virtual dine and dash include customers disputing the charge on their credit card, claiming the food never arrived, or claiming that they never ordered the food at all. To prevent this from happening, ensure you keep meticulous records of what orders consist of and who is ordering each meal. Additionally, instruct delivery drivers to take photos of orders when they’re delivered, as the photographic evidence of a completed order can help you dispute false claims. Preventing dine and dash incidents is crucial for any restaurant owner. Not only does it protect your bottom line, but it also ensures a safe and enjoyable dining experience for all your customers. By implementing a variety of preventative measures, you can significantly reduce the risk of dine and dash incidents in your establishment and have the peace of mind to focus on other aspects of your restaurant.

  • Automatic Gratuity: What You Need to Know

    Giving your server a tip is a cultural expectation of dining at a restaurant in the United States. Recently, more restaurants have added automatic gratuity charges to the final bill, which some customers find confusing. While the purpose of this charge ranges from simplifying checks for large parties to eliminating tipping, automatic gratuity plays a unique role in restaurant bookkeeping and employee payroll. Use this guide to auto gratuity to fully understand how it works, the laws surrounding the charge, and the pros and cons to decide if it's right for your restaurant. What Is Automatic Gratuity? Auto gratuity is a legal service charge added to a party's bill that goes directly to the waitstaff serving that table. Usually, this gratuity equals 18% of the check and is only applied to parties of six or more to ensure that servers receive ample compensation for their efforts. A restaurant will generally print this policy on its menu to alert patrons before they receive their bill. Is Automatic Gratuity a Tip? No, automatic gratuity is a service charge. This classification means the amount is predetermined and considered a fee, so the customer is legally obligated to pay it. Why Do Restaurants Add Gratuity for Large Parties? In the past, automatic gratuities often ensured adequate compensation for a server when handling a large party. A table of this size could want to split their bill, and as a result, confusion or miscalculation could arise and leave the server improperly tipped. Is Automatic Gratuity Legal? Yes, automatic gratuity is legal. Laws instated by the IRS rule that automatic gratuity is a service charge, and no legislation prohibits this practice. However, state laws may differ on if this charge is compulsory. In some states, restaurants must mention automatic gratuities on the menu or verbally inform customers about the fee before they receive it. To avoid confusion or conflict, clearly state your automatic gratuity policy on your menu or have your servers inform any affected parties at the beginning of their meal. Can You Refuse to Pay Automatic Gratuity? No. Customers cannot refuse to pay automatic gratuity since the payment is a service charge. Tips are optional and freely given by customers, but charges on the receipt from the restaurant itself are mandatory fees. Not paying the automatic gratuity is the same as not paying for the food. However, a recommended or suggested tip is not the same as an auto gratuity. With suggested tips, the percentage is merely a guideline, not a requirement. The customer may choose what tip amount they want to give their server, if any. Restaurants should clearly label suggested tips and automatic gratuities on the bill. Auto Gratuity Law In 2012, the IRS stated that automatic gratuities would be classified as service charges beginning in January 2014. With this update from the IRS, automatic gratuities count toward employees' regular paychecks and are taxed differently than traditional tips. Employers must also report charges as a wage on payroll reports, not as tips. If the restaurant institutes auto gratuity, the server's income must be at least equal to the state's minimum wage since they are not receiving any tips. Due to the differences in taxation and classification, traditional tips allow employers could pay employees less than minimum wage because of their supplemental tip income. However, with automatic gratuity counting as a service charge and not a tip, servers must receive the legal minimum wage of their area for their shifts worked with only auto gratuity on guests’ bills. What Is the Difference between a Service Charge and a Tip? A service charge differs from a tip in that a service charge is counted as a wage, whereas a tip is a separate source of income. The following guidelines determine if something qualifies as a tip. The customer gives it freely The customer determines the amount It is not affected by employer policy or negotiation The customer is free to choose who receives the payment As a service charge, automatic gratuity is compulsory. Unlike a tip, automatic gratuity funds are considered restaurant funds and are not specifically designated as the property of the server by the customer. An employer may share part or none of the automatic gratuity funds with their employee. Pros and Cons of Automatic Gratuity Here are some pros and cons of implementing an automatic gratuity policy in your restaurant. Pros of Automatic Gratuity Helps avoid confusion when large parties split bills Is a service charge designated as restaurant funds, so the restaurant owner can choose how to allocate the total Cons of Automatic Gratuity Requires restaurateurs to pay employees minimum wage for any shifts worked where no traditional tips were given Discourages customers from tipping more than the gratuity, even if they would normally leave a 20% tip While automatic gratuity can help ensure adequate compensation after serving large parties, it can also bring about some challenges regarding your restaurant's bookkeeping. If you want to implement an auto gratuity policy in your establishment, familiarize yourself with the applicable legislation in your state. Remember that automatic gratuity funds are taxed differently than tipped income for servers, and print your policy on your menu or another prominent place to avoid confusion with customers. <aside class="pquote"> <blockquote> The information provided on this website does not, and is not intended to, constitute legal advice. Please refer to our Content Policy for more details. </blockquote> </aside>

  • Corkage Fee Guide

    Offering your own selection of wines is a great way to boost alcohol sales, but there are situations where allowing customers to bring in their own bottle can add a personal touch. Patrons may be looking to pair a specific wine with a particular type of food, or they may just be looking to add some personal flair to a celebration or event. Regardless of the reasoning, there’s a lot to gain from establishing clear corkage fees and policies for customers to follow. Below, we’ve created a complete corking fee guide that you can use to ensure customers receive proper corking etiquette and have the best experience possible. What Is a Corkage Fee? A corkage fee is the price charged to guests who choose to bring their own bottle of wine to a restaurant. Corkage fees usually exist at restaurants that already serve wine. The practice of allowing guests to bring their own wine is considered a courtesy to guests. Occasionally, a bar or restaurant might charge a corking fee for providing their own wine as a means of raising their bottom line or covering their wine service costs. Why Do Restaurants Charge a Corkage Fee? A corkage fee includes the labor and cost involved in wine accommodations. The fee may cover some or all of the following amenities and efforts supplied by the bar or restaurant: Revenue lost from not purchasing the restaurant’s wine Use of restaurant or lounge space The restaurant’s investment in their own wine service program, including efforts related to curating a wine list, keeping a sommelier on staff, and training staff on their wine selection Accommodations relating to the wine (wine buckets, corking wine, or disposing of bottles) Corkage Fee Costs Below we provide information about average corkage fee costs and the reasoning behind differing fees. How Much Is a Corkage Fee? The average corkage fee ranges from $10 to $40 per bottle but may be as high as $100 or more. The price varies depending on the restaurant and may occasionally change according to the type of wine brought in. Some restaurants charge a corkage fee that matches the cost of their least expensive wine. Are Corkage Fees Per Bottle? In most restaurants, corkage fees are per bottle. Corkage fees might also be per table or per person (known as per glass or per "stem"). How to Calculate Corkage Fee A restaurant’s corkage fee is usually commensurate with the level of service provided by the restaurant. So, a steep fee likely associates with a high-end restaurant that has elegant types of glassware, a wine list, and sommeliers. A lower fee, on the other hand, associates with less involved alcohol-related amenities and service. Guests might open their own wine, pour their own glasses, and use less-sophisticated glassware. Corkage Fee Etiquette Allowing guests to bring their own bottle of wine is considered a courtesy. As such, there is proper etiquette to follow when bringing your own bottle of wine. Below are some tips to follow if you want to bring a bottle to a restaurant. Understand the restaurant’s policy (if they allow it or not) along with their corkage fee. If you are unsure, it is best practice to call ahead if the information is not clear on a website. Make sure there are food options that will go with your wine. Bring the bottle in a carrier or on its own, not in a paper sack. The purpose of bringing your own bottle should not be to save money but to enjoy a unique bottle that is not provided by the restaurant. To get the best value out of a corkage fee, bring in a bottle valued more than the corkage fee. Offer the server and sommelier a taste as a sign of respect and camaraderie. Consider buying a bottle from the restaurant in addition to the one you've brought. Tip on the corkage fee. Do You Tip on a Corkage Fee? It is custom to tip on a corkage fee. In most instances, the corkage fee does not go to the server as a service charge but to the restaurant itself. Guests are expected to tip on the corkage fee in the same way they might for any other drink or food item. Corkage Fee Tipping Any extra effort the server goes through to accommodate you with regard to your wine is not reflected in the corkage fee, so tipping on your corkage fee is expected. The server will typically open the wine, pour it, refill glasses, store your wine at the proper temperature, and provide the appropriate stemware. It’s common to tip on the corkage fee in accordance with the level of service provided by your server. How Much Do You Tip on a Corkage Fee? If the service is satisfactory, it is recommended to tip the usual 15-20% on a corkage fee as you would any other food or drink item. Because the fee itself will usually be lower or higher depending on the service of the restaurant, your tip will fluctuate accordingly. For example, a $10 corkage fee would only add an extra $1-2 to your tip, whereas a $40 corkage fee yields an extra $8 to your overall tip, which will typically be appropriate if it is a high-end restaurant. Do All Restaurants Have a Corkage Fee? Not all restaurants have corkage fees. Restaurants that do allow you to bring in your own alcohol, even when serving their own wine, usually have corkage fees if you choose to bring in your own bottle of wine. On the other hand, bring-your-own-wine (BYOW) or bring-your-own-bottle (BYOB) restaurants typically have a low or nonexistent corkage fee. If you want to bring your own bottle to a restaurant, always check with the restaurant to understand their policy. Do BYO Restaurants Have Corkage Fees? Many BYO restaurants don’t have corkage fees because they do not serve alcohol. Since they do not have cocktails, wine, or beer lists, the costs and services (sophisticated wine glassware, sommeliers, wine list) associated with alcohol-serving restaurants are less likely to be present. Therefore, BYOs do not need to make up for lost profit. In addition, BYO restaurants usually do not have a liquor license, and any cost associated with alcohol may be considered an unlawful charge by the restaurant for the alcohol. However, some BYO restaurants do have a corkage fee. Corkage Fee FAQ Below, we answer some of the most frequently asked questions surrounding corkage fees: What Does Free Corkage Mean? Free corkage means that the establishment has a corkage policy, but charges no money. These restaurants allow patrons to bring in their own bottles of wine and still perform wine service free of charge. Free corkage is typically offered during special events or occasions in order to entice potential customers. What Is a Bottle Charge? Just like a corkage fee, a bottle charge is a price charged to guests who bring their own bottles of wine. Depending on the restaurant, the two terms can be used interchangeably, but still refer to the same concept. Waiving a Corkage Fee If bringing your own bottle, some restaurants may waive the corkage fee if you also purchase a bottle of their wine. Additionally, some restaurants host $0 BYOB night, completely waiving the corkage fee with no additional purchase required. This is a great promotional event to attract new customers looking to bring their own wine. Recorking Wine Recorking wine is the act of taking partially-consumed bottles of wine home from a restaurant. Even if customers bring their own bottles, they are still beholden to recorking laws. Typically, wine bottles must be recorked or resealed before being taken home, but some state laws dictate they must be secured in a bag as well. Be sure to double-check your state laws before offering recorking services to patrons. Whether customers want to celebrate a personal event with a sentimental bottle of wine or just bring along their favorite type, having proper corkage etiquette established at your business is beneficial. No matter what type of restaurant you operate, offering patrons the ability to bring their own wine allows customers to add a personal touch to their dining experience. Just make sure that your corkage policy is clearly established and that staff is trained on how to handle proper corkage etiquette. Doing so will make the overall experience much smoother for both customers and staff.

    • Shop Now

    Archives

    Webstaurant TVProduct demonstrations, how-to's, & descriptions ArticlesIn-depth information and tips for running a successful restaurant Buying GuidesTools to help you find the perfect product for your business