If you run a restaurant, you need to accept credit cards. However, it’s important not to rush into a credit card processing agreement. Whether you’re just starting out or looking for a new payment processor to get lower rates, fewer fees or better service, you should carefully consider multiple companies.
We’ll go over everything you should consider to select the right credit card processor for your restaurant.
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A payment processor is a service that allows you to accept payments using credit, debit and EBT cards. Some payment processors also let you accept other forms of payment, such as Apple Pay, Google Pay, Samsung Pay, PayPal and Venmo. Most companies offer multiple processing methods so you can accept credit cards in your restaurant, on your website or on the go (if you offer delivery service).
There are many payment processors, and each has advantages and disadvantages. Before you sign a contract, make sure you know the features, benefits, rates, equipment and policies.
Once you decide on a payment processor and complete the paperwork, it usually takes one or two days to set up your account and at least a week to receive, set up and test your equipment. Once you begin using the processor, funds are typically deposited into your account within a few days.
Many entities and services are involved in credit card processing.
Here’s what happens during a credit card transaction at a restaurant:
Credit card processing fees vary by company and factors such as merchant transaction volume. There are several types of charges.
Monthly flat fees are set amounts that are charged monthly to pay for various services. They usually comprise customer service and statements, but they could also include the following:
The processing fees make up the amount you are charged every time you accept a credit card transaction.
These fees are charged only in specific situations:
There are multiple credit card processing services to consider for your restaurant. To make it easy for you, we analyzed them and chose the very best payment processors. Here are a few of the top choices for your restaurant.
Stripe is a good option for restaurants that process less than $3,000 each month, new establishments that don’t know their monthly processing volume yet, or seasonal restaurants. It’s easy to get approved as a Stripe merchant, which is helpful for startups. Stripe charges a flat rate of 2.9 percent plus 30 cents per transaction for in-person payments, with no monthly fee. Learn more in our full Stripe review.
Lightspeed’s point-of-sale (POS) system is robust and easy to use. It includes restaurant-specific functions such as menu and floor management, online ordering, takeout and delivery, and multilocation management. Although you do not have to utilize Lightspeed’s payment processing if you use the company’s POS, it does make the process easier. POS plans start at $69 per month for a single register, and the payment processing rate is 2.6 percent plus 10 cents per transaction, regardless of the pricing tier for your POS. Learn more in our review of Lightspeed.
Clover is similar to Lightspeed in that it offers a complete POS system that is designed for restaurants and offers optional payment processing. Clover’s POS hardware options, the Clover Flex and Clover Mini, can be used to take table-side orders and payments. The POS software supports online ordering and delivery, order sending to the kitchen, menu creation and kitchen inventory management. POS systems, which include hardware, start at $160 per month for 36 months. Processing rates are 2.3 percent plus 10 cents per transaction for in-person orders and 3.5 percent plus 10 cents per transaction for online or phone orders. Discover more features in our full Clover review.
Choosing the best credit card processor for your restaurant is not a simple task. There are many options, rates vary greatly and service terms are often difficult to decipher. If you already own a POS system and don’t want to upgrade, you’ll need a processor that can work with your current system.
We recommend researching three to five processors before you make a decision. That way, you can choose the company that provides your restaurant with the best credit card processing service at the lowest price. Although it’s a significant investment of time, it will save you money and frustration. We recommend following these steps:
Ask your peers about their experiences with payment processors, the companies’ rates and whether they negotiated better prices or terms.
Start by finding reputable reviews online. When you’re reading customer reviews, though, keep in mind that people are more likely to post comments when they’re upset than when things are going well.
Your bank may be able to provide reasonable processing rates and be convenient to work with, especially if you have a good relationship and history with it. However, you’ll likely get better rates, terms and service from companies that specialize in credit card processing.
If you already benefit from using a restaurant POS system, ask your representative which services are compatible with your system and which ones they recommend. Keep in mind that many POS providers offer credit card processing and your system may work only with that company’s service, in which case you may have to wait until you’re ready to upgrade your equipment to switch processors.
Before calling credit card processors for pricing quotes, you need a clear picture of which services you want from the company. Be prepared to answer questions about your business so the processor’s account representatives can understand your processing requirements and provide you with an accurate quote.
Before you select a credit card processor, research three to five companies and compare their rates, services, fees and terms.
Evaluate the payment processors to make sure they meet your needs, fit within your budget and will likely approve your business. Then, narrow your list to three to five payment processors. Call each one, and spend at least 20 minutes discussing rates, fees and service terms. If you feel a company is a good fit for your restaurant, request a written quote and a complete contract (including an application, the terms of service and a program guide).
Don’t provide your Social Security number or bank account data, and don’t sign the application until you’re ready to commit. Some companies may use this information as consent to set up an account, because the application is actually part of the contract. When you’re on the phone with account representatives, evaluate them for their thoroughness, patience and product knowledge. You may be working with this company for a long time, and these providers are, in a sense, your business partners — so evaluate the relationship seriously at the outset.
To find the best payment processor for your business, consider these important factors.
Processors have different rates for card-present and card-not-present transactions. If you accept credit cards both in your restaurant and online, you’ll need price quotes for both methods. If you do the bulk of your business one way, choose a payment processor with a low rate for that type of transaction.
If you need new or updated equipment, the account representative can give you a quote. Consider how many credit card terminals, card readers or POS systems your restaurant needs. If you already own a POS system, verify that it’s compatible with the processor.
No matter which credit card processing company you choose, you want flexible terms with the freedom to switch services if you find better pricing or service elsewhere. You also want to avoid nonstandard fees. The best credit card processing companies offer the following terms:
When you apply to a payment processor, there is an approval process because the processor takes a risk with every merchant it accepts. Higher-risk merchants may not get approved or may be subject to higher processing rates. Understanding the criteria helps you choose which payment processor to apply to and allows you to prepare the required information.
Some credit card processing companies consider your monthly sales volume if they provide custom price quotes. Other companies require you to process a certain dollar amount each month to qualify for an account. If you process below this amount, the service may refer you to a different processor. Others may not have a volume requirement but instead charge a monthly minimum if your processing volume is low.
If a processor offers multiple pricing models, the average size of your sales tickets helps the rep determine which pricing model is the most cost-effective for your business.
As with most business relationships, you’ll have better options if you demonstrate good credit and a proven sales record. If your credit isn’t great or you’re just starting out, some companies may refer you to other processors or charge higher rates until you improve your credit or establish a processing history.
When you have good credit and a proven revenue history, you’re in a good position to negotiate rates, so be sure to request price quotes and contracts. The credit card processing industry is extremely competitive, and companies will vie for your business.
Selecting the wrong processor can be an expensive mistake. Based on our years of research, here are the areas you should examine carefully.
Some processors require you to sign a contract lasting three years or more. Additionally, some contracts renew automatically for additional two-year terms. You have only 30 days to exit your contract without being charged hundreds of dollars or more in early-termination fees and liquidated damages, which is money the processor would have received if you had finished your contract.
Some contracts automatically enroll you in a club or sign you up for additional services. You typically have 30 days to opt out, but if you don’t, you may be stuck paying for services you don’t want or need.
Some processors advertise free equipment if you sign a contract for a one- to three-year term. However, this equipment can include monthly insurance or service fees, and most require you to return the materials at the end of the term. You’ll likely save money in the long run by purchasing hardware upfront.
Leasing processing equipment is rarely a good idea. Most leases have noncancelable four-year contracts. In most cases, you’ll pay more for the equipment over the course of the contract than you would have if you purchased the equipment. Plus, at the end of the term, you must return the equipment or pay to purchase it. In most cases, there’s no way to exit the lease early, even if you close your business and return the tools.
Some credit card processing companies advertise low starter rates but fail to reveal their full rate schedules. These companies use a tiered pricing model, and the starter rate usually applies only to regular debit cards that you accept in person. Other types of cards have higher rates. Ask how many pricing tiers there are, how much they cost, and which types of cards and transaction methods apply to each. Although tiered pricing can be a good option for restaurants that accept a high percentage of regular debit cards, industry experts recommend interchange-plus pricing for most businesses.
Most credit card companies charge several standard fees, including a monthly fee, a monthly gateway fee and an annual PCI compliance fee. However, some companies charge other, uncommon fees, such as application, setup, annual, customer service, IRS reporting, online reporting, semiannual postage and handling, and quarterly technology fees. If you don’t understand a fee in the contract or on your bill, ask your account representative to explain it or request that it be removed.
After you’ve called multiple credit card processing companies, requested price quotes and read full contracts, you should feel confident in choosing the best processor for your restaurant.
Once you submit your completed application, the company can approve it, set up your account and ship any equipment you purchased. If you’ve chosen a company with month-to-month service and purchased unlocked equipment, you can have peace of mind. You’ll know you can take your business elsewhere if the services don’t meet your expectations, your rates increase or you find lower prices.
Lori Fairbanks contributed to this article.