Recent headlines in The Wall Street Journal and New York Times about rising credit card fees have stoked confusion and fear among many restaurant brands, which already operate on thin margins.
To help make sense of what’s happening—and, most importantly, what’s not—we’re breaking down the news, what it means for restaurants, and what you can do about it.
What was reported
On Aug. 30, 2023, The Wall Street Journal reported Visa and Mastercard are planning to increase fees many merchants pay when they accept guests’ credit cards beginning in October and April. As a result, merchants could shell out an additional $502 million annually in fees. Mastercard and Visa have since put out statements refuting the claims in the article.
Adding to the confusion is a New York Times piece from Aug. 14, 2023, that talks about the impact of credit card fees on restaurants. However, most of the examples refer to processor fees (not fees issued by credit card brands) or exaggerate the effect of network fee updates released by the card brands.
What’s actually happening—and what it means for restaurants
In reality, only Visa adjusted interchange (IC) rates during this release, and just for online transactions, not in-store transactions. But both Visa and Mastercard added or increased a few network fees. Restaurant brands, like all other merchants that accept credit cards, will have to incur the fees associated with Visa’s—and any other credit card brand’s—rising rates.
The greater threat, especially for restaurant brands, is payment processing fees. While they may look simple on paper, the devil is in the details. For example, a payment processor might offer a rate of 2.9% + $0.35 per transaction. It seems straightforward, but the cost of accepting payments goes beyond the processing fee and often includes charges not shown in the rate.
Over the years, we’ve heard from numerous restaurant brands about payment processors hiding fees, overcharging for services, and even charging for unnecessary items without consent.
What you can do about it
While restaurant brands, unfortunately, have to eat credit card fees, many don’t realize most processor-level fees are negotiable. As a result, some have increased menu prices or added a surcharge to pass the extra cost on to guests.
Here are a few things you can do to manage the high cost of accepting payments:
- Carefully review all statements every month.
Look at the fine print and encourage your franchisees to do the same. Some payment processors won’t contact you about fee adjustments or increases. Instead, they make it your responsibility to catch the change in a statement or learn about it by monitoring their website or blog. If something looks off, notify your payment processor.
- Negotiate processor-assessed fees.
You can negotiate any fee assessed by your payment processor—especially if you’re up for contract renewal. If you’re being charged monthly fees, ask if they are assessed by the processor or by the credit card brand. It can be hard to distinguish. If, for example, your merchant statement shows a $15/month charge listed in the “Other Fees” category, it’s worth flagging unless there is a specific service you signed up for and are using.
- Explore other restaurant payment solutions.
You no longer have to settle for legacy payment processors with excessive fees, inaccessible data, limited functionality, and security issues. Consider switching to a modern, restaurant-specific payment stack designed to help you drive digital sales, prevent fraud, and streamline day-to-day payment processes—with transparent, up-front pricing.
When evaluating payment stacks, restaurant brands often look for the cheapest rate. Once locked in, they tend to stick to the provider—regardless of any issues that arise—due to the hassle of switching. Onboarding a new payment processor alone can take weeks, but most often takes months. And yet, inaction can come with a high price tag. Let our team of restaurant payment experts help ensure you keep as much of your hard-earned revenue as possible.
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