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A Complete Guide to Restaurant Credit Card Processing

Aside from cooking and serving food, the most important process in running a restaurant is a reliable credit card processing system. It doesn’t matter how great your food or service is, if you have a checkout process that’s not efficient, it can damage your reputation.

Modern restaurant owners know their payment processor is more a necessity than choice today. Need proof? How much cash do you have in your wallet? Not much? More often than not, people choose to pay with a card, and if you don’t have that option available, they may take their business elsewhere.

Restaurant Credit Card Processing Basics

Whether you’re a brand new eatery or you run an established franchise, offering your customers a fast, easy checkout experience often leads to loyalty.

Before you can offer more than one payment option, you need to partner with a reputable payment processor, also known as an acquirer. This is a middleman who handles the facilitation of payments between a credit card network, the customer’s issuing bank, and your restaurant. Payment processors clear and route each payment into your bank account.

When you find a payment processor, the rest is rather straightforward. It usually takes around 10 days or fewer to get up and running–three days for application processing and about a week to set up and test your new system.

One of the most important benefits of a payment processor is protection against fraudulent payments. In the event a deceptive transaction does occur, affecting your security, the processor assumes responsibility.

Is there a catch, though?

As with any added layer of security, there is a cost. Payment processors aren’t free. Each cashless transaction you accept has a fee that can be as much as 4% of the transaction’s value.

Restaurant Point-of-Sale Systems

Some restaurant owners tackle point-of-sale, or POS, systems incorrectly. Many opt for a POS system and then locate a payment processor. But if you don’t require very specific features, it’s better to choose your processor first and choose from their compatible POS systems.

If you choose your POS system first, you must choose a processor that supports that specific system. Usually, this might not be a big deal. For instance, universal POS systems are compatible with multiple payment processors. However, most systems can only be used with just one or very few credit card processors. These exclusive POS systems allow payment processors to assess higher fees because there is no competition with other providers. An example of a flat-rate solution is Square – their “one size fits all” approach often means your business could end up over-paying, especially as you grow.

Payment Processing Methods You Should Know

Point-of-sale technology has grown beyond being a mere cashless payment method. In fact, not only can these systems take payment via credit and debit cards, but they’ve evolved to contactless methods such as tapping the physical card or just holding a mobile phone near the POS terminal.

Customers no longer need to swipe their cards thanks to these improving technologies. Swipe transactions led to many waves of abuse and credit card fraud claims. In response, EMV chip development began, raising the bar for card security features. This chip limits how much data is shared during transactions. When a customer inserts their card, all confidential information remains private. Payment processing systems equipped for chip cards and PCI compliance ensure cybercriminals and other scammers are unable to retrieve your customer’s information.

Unfortunately, for some customers paying with a credit or debit card might not be an option–say, they forgot their card at home or their bank didn’t issue a physical card. Contactless payments, as mentioned above, allow the customer to hold their mobile device (with the appropriate apps installed) over your POS system for 100% contactless payment.

These various forms of payment began emerging when businesses realized people prefer cashless payment solutions that also offer improved security features – for both the merchant and the customer.

Typical Restaurant Merchant Account Rates

So, for all this convenience and protection, what should you expect to pay? Depending on your merchant services provider, that number can vary greatly. A rough estimate is around 2.75% per transaction for flat-rate processors like Square. This can be a valid option if you’re a small café with very low average ticket prices ($10 or less) or low monthly volumes ($2000 or less in credit card transactions).

Other providers charge flexible rate transaction fees beginning around 1.9% with a competitive interchange plus fee model. If your average transactions are higher, or you have a higher monthly volume than average, this can be a much better solution than a flat rate. Yet remember, not all “interchange plus” providers are low-cost.

Improve Your Restaurant Checkout Process with an Enhanced POS and Payment Processor

If you have reservations regarding the investment in installing or updating a POS system–that’s normal. After all, it’s up to you if you want your restaurant to be a cash-only business. But society, in general, is moving increasingly towards becoming cashless, which means you must embrace tech advances to remain competitive. By taking the forms of payment your customers wish to use, you can improve your operation and manage your diner, bakery, or bistro with more ease.

While there could be a surge in costs initially, updating your restaurant credit card processing systems has benefits that far outweigh payment options. Updated POS technology can speed up your business operations and make every process smoother. The added convenience is a win/win for everyone from your customers to your waitstaff and kitchen help.

Questions to Ask Before Choosing Your Restaurant Credit Card Processing Provider

This is a big decision. Great partnerships empower you, offer you the ability to choose what you need, and grant flexibility to your customers–all while keeping your costs low.

On the other hand, getting involved with a bad or one-sided payment processing relationship could mean expensive contracts you don’t understand, that could change at a whim, and that you can’t get out of.

If you need to renovate your restaurant or just hire another server, you have a process by which you choose the best person for the job – you should approach choosing a restaurant payment processor in the same fashion. Review your options, interview promising candidates, and compare their services and prices.

Here are some questions to get you started:

1) Are their rates competitive?

Comparing apples to oranges doesn’t work–for your search to be fruitful, take a look at per-transaction costs and flat-fee rates. For instance, your transaction fee might be lower, but the processor might charge a higher flat fee in order to compensate. Look at this from a broader viewpoint–praise transparency without the complexities.

2) Do you really need a merchant ID?

If you have a really small café or bakery, maybe not. If you’re an upscale eatery with large volumes, having your own merchant ID could be crucial.

3) Does the pricing fit?

Compare processors offering the same pricing model to discern the greater value. If the price is right and the processor offers what you need, you may have found a match. It’s important to see what sets each processor apart from others.

4) Could there be surprise charges down the road?

You should have a real outline of every charge and potential charge. You should clearly understand your agreement terms, including the scope of the contract and its length.

5) Does this processor integrate with your current POS system and software?

For efficiency purposes, it’s a good idea to partner with a payments processor that offers hardware that can integrate with your current POS system.

6) Do they offer customer support? Service?

Whether you have a question about a statement fee or your hardware is malfunctioning, your restaurant payments processor should be available when you need them – especially on evenings and weekends which are often the busiest times for restaurants.

7) Are you locked into your contract? If so, for how long?

Contract lengths and scopes of service vary from processor to processor. More importantly, you should look for a payment processor that’s flexible and transparent. It’s a good idea to have your accountant or advisor review the contract prior to signing, just to be certain there won’t be surprises down the road.

8) What’s the company’s reputation?

Read testimonials and case studies regarding how well your potential provider’s service is received from some of its current and past clients. You can find much of this information on the processor’s website–don’t be shy. Reach out to these companies and ask how the processor is working for them, what they like, and what they think could be improved.

Choosing a Good Restaurant Credit Card Processing Vendor – Partner with LOLA POS

There are so many processors to choose from that finding one that fits your exact needs might seem overwhelming–varying rates, terms, and other features.

If you already have a POS system at your restaurant, the best course of action is to choose a compatible processor, or acquirer. Look at the top three companies you discover and ask fellow restaurateurs their advice–don’t just settle on the first one you find. You can also scour online reviews or social media comments for insight.At LOLA POS, We Work for You® is more than just a slogan–we really do what it takes to support your success. If you have questions or need help understanding something better, reach out and we’ll walk you through the process. Ready to discuss restaurant payment processing? Wondering how LOLA POS is different? We’re here to help!

At LOLA POS, We Work for You® is more than just a slogan–we really do what it takes to support your success. If you have questions or need help understanding something better, reach out and we’ll walk you through the process. Ready to discuss restaurant payment processing? Wondering how LOLA POS is different? We’re here to help!

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