Take a swipe at credit card fees

What are your biggest operating expenses? If you’re like many restaurant operators, food and labor come out on top, followed by a frustrating one: credit card swipe fees. Sean Kennedy of the National Restaurant Association weighed in on the issue recently, saying, “These swipe fees have more than doubled over the past decade, costing U.S. businesses more than $160 billion in 2022. A lack of competition between the major credit card processing networks is why swipe fees continue to skyrocket.” Last year, a bipartisan bill was introduced in the House and Senate that would require at least two competing card-processing networks to be enabled on every credit card. But what are restaurants to do in the meantime, now that credit card transactions have become consumers’ go-to payment method? Start by studying the range of fees and structuring options so you know where there might be room to negotiate. Processing fees generally range from 1.5-3.5 percent but can climb as high as 6 percent per sale. Fees can be flat, based on a subscription rate, or involve a two-tiered fee charged by the card processor and network (and there may also be hidden fees you didn’t expect that appear on your invoice). There are pros and cons to different fee structures and some may be more suited to your restaurant’s size or stage of development than others. Being able to demonstrate your sales growth and transaction volume over time, as well as your compliance with PCI standards and efforts to prevent fraud, may give you room to negotiate a lower fee. It may also help to review your current payment system to see how often transaction mistakes are made that can result in additional fees – is there room to simplify your system to avoid those kinds of issues? Finally, you might incentivize cash payments, discourage card payments under a certain amount, or use digital menus that automatically upsell to guests so that the card transactions you process are more worthwhile.