The Restaurant Credit Card Processing Guide

Credit Card Processing

Cash isn’t king in the restaurant industry.

That honor belongs to credit cards, debit cards, and other forms of non-cash payments, with the credit and debit cards holding the largest bounty—roughly 75% of all payments to dine-in restaurants alone.

If you’re starting a new restaurant or operating an existing cash-only restaurant, it’s time to explore the benefits of restaurant credit card processing.

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Should Restaurants Accept Credit Cards?


The restaurant industry is famous for its razor-thin profit margins, and the card payment industry is equally famous for charging high credit card processing fees.

So, is it worth it to accept credit cards at your restaurant or cafe?

We think the answer is yes, despite how scary the numbers can look on the surface. This is because you can often offset the costs of credit card processing with the benefits that come from happier customers, higher sales, easier accounting procedures, and improved operations.

We’ll discuss some of those key benefits below.

Not what you’re looking for? Check out our general guide on How to Accept Credit Card Payments for a discussion of storefront, mobile, and online payment options relevant to every type of business.

Benefits of Restaurant Payment Processing

  • Happier customers

    Most diners prefer to pay for their meals with credit or debit cards, and many people no longer carry cash on a regular basis. That means cash only businesses might lose customers. Even if you have an ATM on site—a typical solution for cash-only restaurants—you’ll lose customers who don’t want to pay the high withdrawal fees common at ATMs.

  • Higher sales

    People paying with credit cards also tend to spend more money—tacking on those desserts and high-cost dishes. A higher sales volume leads to more credit card processing fees, of course, but other types of fees (rent, payroll, and the like) won’t go up in the process, so higher sales can still be a big win for your business.

  • Fewer mistakes

    We sometimes forget that it takes money to handle cash. Cash has to be accurately counted, securely stored, and safely transported, and it’s easy to make mistakes late at night when everyone’s trying to close up shop and get home. Accepting credit cards, on the other hand, reduces the amount of cash your restaurant has to handle, and it reduces the chance of mistakes when handling cash at the end of the night.

  • Simplified Accounting

    Another benefit is that accepting credit card can help you keep your accounting straight. The banks will basically do the work for you. No counting. No having to go to the bank. No holding a bunch of cash over the weekend while banks are closed.And a business can’t lie about its income either because the IRS already knows about the transactions. They’re right there on your monthly statement. You can also go into your online bank account and see the big deposits coming in from each company—Mastercard, Visa, American Express, etc.—and figure out what to put aside for you quarterly sales tax bill. You can almost do the calculation in your head.

  • A cleaner environment

    Frankly, cash is disgusting. It gets passed around from person to person and rarely cleaned. And while it’s true that credit and debit cards are also pretty filthy, they still come into contact with fewer human beings over the course of the day. Furthermore, recent technology allows many credit and debit cards a contact-less payment option.

  • A safer environment

    The less cash your restaurant keeps on hand, the safer everyone is. You’ll reduce the likelihood of employee theft, of course, but your restaurant is also far less likely to get robbed if it doesn’t keep a bunch of cash sitting around.

    Taken together, we believe accepting credit cards allows the greatest number of customers access to your restaurant’s services, and it will also streamline your sales and accounting.

Restaurant Payment Processing


How to Get Started


To accept credit cards at your restaurant, you’ll need the right kind of bank account and the right kind of equipment.

The bank account you’ll need is called a merchant account, which is basically an account that holds the funds from credit and debit card payments while the players involved in the credit card payment process do their work. Once a payment gets settled, the funds get transferred from the merchant account to your business’s bank account.

If your restaurant qualifies, you can start a dedicated merchant account with an acquiring bank or payment processor. In that case, you’ll own the account, and it will only hold and transfer funds for payments made to your business. Getting merchant account can be expensive at first, but it tends to be the right fit for larger operations that process a lot of payments.

Alternatively, you can go with a payment aggregator. A payment aggregator basically allows multiple businesses to use a single merchant account. On the plus side, payment aggregators typically have lower standards for accepting new businesses (often a good thing for small business credit card processing). The trouble, though, is that your restaurant will likely pay higher fees to work with a payment aggregator than you would pay if you started a merchant account with an acquiring bank.


Credit Card Processing Equipment


The equipment you need, however, is more complicated question. Fundamentally, you just need a way to transfer card information to your payment processor, but this can happen in a variety of ways depending on your restaurant’s needs, including the following:

  • Traditional Credit Card Terminal
    Traditional standalone credit card terminals will do the job for many restaurants and cafes. They’re simple and cheap, and they only require only a landline to keep them working.Most credit card terminals can read magnetic stripe and EMV chip cards. If you’re willing to pay more, you can also get models equipped with “near field communication” (NFC) technology and accept newer forms of payment, such as Apple Pay and mobile wallets.
  • Wireless Credit Card Terminal
    The simplest wireless credit card terminals are basically just the wireless versions of their traditional “wired” cousins (the traditional payment terminals mentioned above). However, more sophisticated (and more expensive!) “smart terminals” are also available, and these are essentially the equivalent of an integrated point-of-sale (POS) system.Of course, plenty of restaurants choose wireless terminals simply because it’s the type of technology most of us are now most comfortable with. Choosing wireless or mobile technology can potentially save your restaurant time on training new people AND allow you to process payments offline if your internet connection goes down.
  • Integrated Point-of-Sale (POS) System
    A POS system is a more complicated (and more expensive) credit card payment solution than a traditional payment terminal, but it’s ideal for restaurants that want to integrate payments with other aspects of their operations. You’ll typically get a cash drawer, barcode scanner, printer, and monitor with just about any POS system.More advanced POS systems can also help you manage your employees’ hours and your restaurant’s inventory (among numerous other possible features).
  • Online Payment Options
    You also might consider the possibility and benefits of online credit card processing. To that end, you would need either a business website paired with a payment gateway, or a listing at an E-marketplace that caters to the restaurant industry.

Ultimately, you’ll have more credit card payment options than you’ll ever need. The trick is to evaluate how you currently do business, consider additional ways that you want to do business, and then identify the payment options that fit those needs.


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