Provided by the National Restaurant Association
Payment cards are a commonly used form of payment at most restaurants. If understood and managed correctly, your payment-card processing can add to greater profits with reasonable costs.
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 the 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 revenueundefinedoften 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, use the National Restaurant Association’s Card Processing Rate Calculator.
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, bill-backs 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’ dataundefinedand your businessundefinedfree 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.
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 can assist you.
8. 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.
By mastering the details of processing, you can ensure that payment cards remain a reliable and increasing source of profit for your restaurant.