Not all credit card processing is the same. It seems like it should be uniform, but it is anything but. Depending on the type of business you operate, you may be charged different rates for payment card processing. For example, online only sites are typically charged higher rates and fees for processing cards than brick and mortar stores are. That’s because it’s believed there is less of a risk associated with physical transactions compared to digital ones.
Restaurant credit card processing similarly has different needs than any other industry’s credit card processing. Keep reading to learn more about credit card processing for restaurants.
Party of Four
On the surface, it seems like there are only two groups involved in every credit card transaction: the customer and the merchant. In reality, there are four. There is the merchant who receives the payment, the merchant account holder (acquiring bank) that the merchant uses to process payments and refunds, the issuing bank that provides the card to the customer and funds to the acquiring bank, and the customer who initiates the payment process.
The funds in every transaction you process are, in effect, lent from the issuing bank to the acquiring bank. That basically means that restaurant credit card processing is you borrowing money through the acquiring bank from the issuing bank. This lending is one of the main reasons you need to pay fees and rates associated with every credit card transaction.
The issuing bank’s fees are called interchange fees, the acquiring bank’s fees are called the discount rate. These fees are charged as a percentage of each transaction. Depending on your credit card processing agreement, there may be more rates and fees associated with each transaction.
Every financial transaction, especially those that involve issuing and acquiring banks, include some risk. For this reason, funds deposited by the issuing bank to the acquiring bank aren’t available for immediate withdrawal. Furthermore, many merchant accounts require assets to mitigate their risk, so plan accordingly for your restaurant to wait for funds to become available for withdrawal.
More Affordable Rates
One of the best features of restaurant credit card processing is that the fees and rates associated with it are typically low. That’s because restaurants are generally brick and mortar establishments with little to no risk of returns, refunds, or chargebacks. These low rates and fees are given to businesses like restaurants because the goods are inexpensive and used quickly. This standardized service elicits fewer complaints and demands for refunds.
Restaurant credit card processing can be quite complicated, but it doesn’t have to be. To learn more about payment processing for your restaurant contact Allied Wallet today. We offer competitive, affordable rates for credit card processing and have a long history of partnering with restaurant both new and established. Call Allied Wallet today to learn about credit card processing.