While accepting credit cards is a priority in today’s restaurant landscape, securing a solid processing deal can be a challenge for many restaurateurs. Without the proper knowledge of credit card processing companies’ usual rates, or contract terms, it’s easy to get pushed into a deal that doesn’t have your best interest in mind. A good credit card processing company should be able to effectively support your business, through provided benefits, accommodated rates, discounted equipment, and other potential offerings they could deliver based on what your business explicitly needs.

What is Payment Processing?

If you’re unfamiliar, here’s a quick overview of payment processing from the most basic definition to detailed procedures.

Payment processors are services that provide you the ability to accept and process payments utilizing credit, debit, EBT cards, and other forms of payment.

Who’s Involved in the Process?

• Consumer: The cardholder / the purchaser
• Merchant: This is you, the individual or business selling the product or services.
• Card Network: The network space for the credit card brands, like Visa, Mastercard, American Express, or Discover. These major companies establish the interchange and assessment fees, as well as jointly instate the security standards for PCI compliance
• Credit Card Processor: They handle the communication between the merchant, credit card network, and the card holders bank to facilitate the money through to the merchant’s bank account.
• Payment Gateway: This is an encryption network that protects credit card information and securely transfers it from the merchant to the credit card processor.
• Issuing Bank: This is the bank that issues the customer’s credit card, which is responsible for communicating to the payment gateway or credit card processor whether the customer’s account has enough funds to cover the purchase
• Acquiring Bank: This is your bank, once the transaction has finished, you’ll receive the funds here.
• Merchant Account Services Provider: These organizations provide temporary accounts that hold the funds until they’re deposited into the acquiring (your) bank.

Rates and Fees

Monthly Flat Fees

These are a set amount of fees charged monthly for various services provided by your payment processor.

• PCI Fee: Charged in reference to the required security measures that must be followed to protect customer data
• Batch Fee: The fee for collecting your transactions in a batch for a deposit
• Merchant Account Fee: General fee for utilizing an operational third-party merchant account
• Payment Gateway Fee: If you use a third-party gateway, you’ll usually pay this separate fee. Otherwise, it’s included in your monthly fee

Processing Fees

These fees are made up of the different charges that occur when processing a credit card transaction.

• Flat Fee: A percentage of every sale, charged on each purchase
• Interchange-Plus Fee: This is the interchange rate established by card networks, in addition to a markup fee
• Transaction Fee: Sometimes added to a flat rate or interchange plus rate, ranging between 5 to 35 cents

Situational Fees

Fees that are being charged regarding specific circumstances.

• PCI Compliance Fee: Incurred monthly fine based on the failed implementation of security requirements
• Chargeback Fee: A fee incurred following a refund of your product or service
• Nonsufficient Funds Fee: Charged if the bank account does not contain sufficient funds to pay required fees to the credit card processor

Choosing the Payment Processor That Supports Your Restaurant

Choosing the best processor for your business isn’t as simple as choosing the best-looking deal on the surface. The options available provide a plethora of rates, accommodations, and service terms that may seem attractive in one area, while simultaneously detrimental to another area of your business.

The following are steps you can take to properly identify which processor will effectively support your business.

1. Compare Experiences with Other Restaurant Owners

Consult your peers on their experience in negotiating the terms and rates with their payment processor and assess how you can utilize that knowledge in negotiating your contract

2. Assess Your Bank’s Options

If you already have a healthy working relationship with your bank, you could simply run your payment processing through them. Negotiating your preferred rates and terms should be easy if you already have a familiar rapport. However, the best and most flexible deals usually lie beyond your bank; in the companies that specifically specialize in credit card processing.

3. Work with Your POS Service Provider

If you’re already equipped with a POS system, your representative should be able to offer recommendations for compatible payment processing services. However, these provided processing services often work only within their system, so you may be stuck with this processing deal until you can also upgrade your equipment.

4. Gather Information on Your Restaurant

The only way you can make an educated choice for your business is by having a clear picture in your head of the kind of deal your specific business needs. Equip yourself with the knowledge of your business so the processor’s agents can thoroughly understand your requirements and provide you with a pricing quote.

How Payment Processors Evaluate Merchants

Monthly Sales Volume

Processing companies will assess your monthly sales volume for two reasons. Sometimes it’s simply to assess the custom price quotes they can provide. Other processors have a monthly minimum that needs to be met for you to qualify for an account. Not all processors have a requirement but will still charge a monthly minimum if your processing volume is low.

Average Sales Ticket Size

If they offer different pricing models, your sales rep usually asses your average sales ticket to determine which model is the most economical for your business.

Your Credit Rating and History

Just like most business or payment relationships, your credit determines your reliability as a client.  You may be charged higher rates or referred to other processors If you have a history of weak credit or if you’re just starting. Once your credit has improved or you’ve established a processing history, these rates should lower.

What to Look for in a Payment Processor

Your Accepted Payment Methods

If you both accept credit card payments in-store and online, you’ll be provided two different pricing quotes for those different methods, either card-present or card-not-present. If the bulk of your transactions is done through just one method, you can narrow down your choices by locating a payment processor that has a particularly low rate for those transaction types.

Needed Processing Equipment

If you already own a POS system, confirm whether it’s compatible with the processor. If you need new equipment, you’re processing representative should be able to give you a quote.

The Best Processing Terms

The best type of deal no matter which processing company you choose offers flexibility to adjust over time, allowing you to switch services if you find a better deal somewhere else. A good deal will usually adhere to the following terms

• No Setup or Application Fee: Some processors still charge these fees, and some do. Make sure to inquire with your potential processor about their policy so you are not caught off guard down the line.
• Purchasable Unlocked Processing Equipment: Credit card companies will often offer low-cost deals on equipment that may seem enticing on the surface but is more expensive in the long run. It’s much more cost-effective to buy the equipment outright, which you can keep and continue to use if you happen to move to a different processor.
• Month-to-month processing agreements: The best processors don’t lock you in an immovable contract for a year. They recognize the unpredictability of the payments industry and provide a month-to-month contract under more flexible terms, that allow you to cancel or change processors without incurring any volatile termination fees.
• Rate-Lock Guarantee: The consistency of your credit card rates usually isn’t protected under these contracts; most processing companies will constantly increase your rates as they see fit. However, there are a few that provide rate-locked guarantees, which promise to secure your rates for the entire lifespan of your account.

Making the Jump

It’s easy to be fleeced into a seemingly beneficial processing deal if you aren’t aware of the benchmarks that these processing companies should be meeting. For all intents and purposes, a good credit card processing company doesn’t force you to meet their standards; but collaborates to reach the most beneficial compromise for both the processing company and your business.   If you utilize this knowledge, matching yourself with the right credit card processing partner should be much simpler moving forward.

If you’re looking for an all-in-one credit card processing solution that can both process your payments and simultaneously support your business through multiple avenues, contact us at RevitPay. Our team is open and ready to collaborate on a contract that supports both your business and ours