7 Things Every Restaurant Owner Needs To Know About Card Processing

Save thousands of dollars by understanding credit card processing. Restaurateurs need to become experts - and by doing so you will put more money into your pocket every day.

For most restaurant owners, credit card processing isn’t a hard or convoluted concept. Many restaurateurs simplly set up with the first merchant service that comes along, and be on their way - there are more important things to attend to, right? Wrong! Credit card processing is an important part of operating the business. 

Too many restaurant owners do not know the intricate details of credit card processing, nor do they know all of the best options available to them - especially the options that could affect their bottom line.

Restaurant owners typically do not want to go through the hassle of researching rates from different credit card processing companies and therefore they sign up with the first company that comes along. Many times, to make things simple, they sign up with their bank, or a company they are familiar with. 

The problem is that food and beverage businesses end up paying thousands of dollars more than they should, and many don’t even know it.

The purpose of this article is to help restaurant owners develop a better understanding of credit card processing and then determine which optin is best for them, not their current processor. The goal is to encourage business owners to dig a little deeper, go the extra mile, and find the best rates and overall business solutions - solutions that could save them thousands of dollars. 

Credit cards are the most common form of payment for most restaurants, and if understood and managed right, can add to greater profits while providing better customer service. 

If after reading the information below you are more confused than ever, please consider calling a merchant services representative with Proxe Pay. Our job is to show you what you are currently paying, and let you know if we can find you a better rate (with enhanced merchant services). Our clients will tell you that Proxe Pay provides incredible service  - because when your business is profitable, so is ours.

According to the National Restaurant Association, here is what you need to know about processing payments made with a card.

1. Monitor interchange rate increases and undisclosed fee mark-ups: Interchange fees are imposed by credit card brands such as Visa® and MasterCard® for the passing of financial transactional information among your restaurant, your payments processor, the card brands and the banks that issue the payment cards.

Card brands typically adjust interchange fees and rate categories in April and October of each year. When rates increase, many processors mark them up to enhance their own revenue—often without disclosure. Watch for these extra mark-ups and negotiate them with your processors.

To find out what you're really paying in card processing fees, pull out your calculator and grab your merchant account statements. The chances are that you are paying a lot more than you thought.

2. Ensure you get fee reductions too: Some fees adjusted by card brands include reductions in certain transaction categories. While many processors pass along fee decreases to restaurateurs, not all receive them. Know that you can negotiate terms with your card processor to make sure that you do.

3. Determine if the middlemen are worth it: As soon as a restaurant customer swipes a payment card, as many as 12 additional entities can take a cut from that one transaction. Just a few of these middlemen might be an independent contractor, an accounting firm, a non-processing bank and the network software provider. Some restaurateurs do not allow these extra sources to be involved. Identify any middlemen and pay for them only if they’re adding value.

4. Examine unexplained surcharges, chargebacks and tiers: Many card processors and middlemen include undisclosed fees that are often classified as “surcharges.” They are pure profit with no value. They are also debited from your account well after the date of transaction with little or no explanation. Known as “bill-backs” or “enhancements,” these mark-ups make rates appear lower than they are.

Some card processors use pricing tiers to enhance their profits as well. Remain observant of this pricing, and discuss it with your card processor if needed.

5. Encrypt your customers’ cardholder data and use a segregated network for card processing: Keep your customers’ data—and your business—free from risk. Customers’ payment-card data must be encrypted all the way from the swipe to being received by the card brand. Payment data must also travel on a secured network that is separate from any public wireless networks you may offer in your establishment. Insist on state-of-the-art security from your card processor, and don’t pay unnecessary fees for it.

6. Maintain basic data security standards: Work closely with the company that installs your payment terminals and software to ensure you are changing any default passwords and keeping both your hardware and software up to date. Also, be sure to adhere to PCI Data Security Standards and complete an appropriate self-assessment questionnaire; this will reduce your cost of PCI compliance and risk of being noncompliant (risk paying fines or legal fees).

7. Apply real-time fraud and transaction monitoring: Thieves work hard to find ways to steal from restaurants and other merchants. Credit and debit card fraud costs American businesses billions of dollars annually. Real-time fraud and transaction monitoring is vital to your success.

To detect and prevent fraud, have controls for analyzing transaction patterns and types in real time, identify suspicious activity and act to counter it swiftly. Assess any particular risks to you and your customers. Your payment processor should assist you. If they don't, call us because we will.

When assessing your current credit card processor, make sure you have 24/7 support. Because so many of your customers use debit and credit cards, any problem that prevents or delays transactions at your point of sale can be catastrophic. Beyond your issues with revenue, your customers might leave dissatisfied. Be sure that your card processor offers live support all day every day. 

The information above was originally published by the National Restaurant Association. To read the full article click here. 

About Proxe Pay - the first choice of small businesses for credit card processing.  Proxe Pay delivers payment solutions and products to help grow small businesses. Trusted by over 100,000 happy merchants, Proxe Pay makes the process of opening a merchant account easy and affordable. Proxe Pay's merchant services allow small businesses to accept all major credit cards and debit cards, even EBT. Receive a free credit card reader when you sign up today!