Running a restaurant is no easy feat, and dealing with payment processing can often add to the complexity. With various fees, hardware options, and security concerns, it’s easy to feel overwhelmed by the choices available. But don't worry—this guide is here to simplify things for you. Whether you’re a small independent café or managing a chain, understanding restaurant payment processing can help you run your business more efficiently and keep your customers happy.
In this guide, we’ll break down the key aspects of payment processing, including how it works, the pricing models to consider, how to choose the right hardware, and tips for keeping your accounts in order. We’ll also explore the latest developments in payment technology, such as QR codes and mobile apps, and discuss how upcoming changes like tipping legislation might affect your business.
Understanding Restaurant Payment Processing
Before diving into the details, it’s helpful to understand what’s happening behind the scenes when a customer pays with a card. The process involves several key players: the merchant (that’s you!), the acquiring bank (which handles the transaction), the payment gateway (which securely transmits the payment data), and the issuing bank (your customer’s card provider).
When a customer taps, inserts, or swipes their card, data is sent from the payment terminal to your acquiring bank, passed through the payment gateway, and then checked by the issuing bank. If everything checks out, the issuing bank approves the transaction, and the funds—minus processing fees—make their way back to your merchant account. All this happens in just a few seconds, but understanding this process can help you choose the best systems and avoid hidden costs.
Pricing Models: What’s Right for Your Restaurant?
Payment processing fees are an inevitable part of running a restaurant, but understanding the different pricing models can help you manage costs effectively. The most common pricing models are:
Tiered Pricing: Different rates for different types of transactions.
Interchange-Plus Pricing: A fixed markup added to the interchange rate set by card networks.
Flat-Rate Pricing: One consistent rate for all transactions.
If you're a smaller restaurant, flat-rate pricing might provide the simplicity you need. On the other hand, larger establishments may benefit from the transparency of interchange-plus pricing, which often works out cheaper with high transaction volumes.
It’s worth reviewing your pricing model regularly to make sure it’s still the best fit for your business. Keeping an eye on fees can save you a lot of money in the long run.
Integrating with EPOS Systems and Back Office Solutions
For restaurants, seamless integration between payment systems and EPOS (Electronic Point of Sale) or back-office software is crucial for efficient operations. Whether you're managing orders through takeaway providers like Uber Eats, Deliveroo, or Just Eat, tracking stock levels, or generating financial reports, your payment system needs to sync effortlessly with your EPOS system. This integration ensures that orders flow smoothly from the takeaway platform to your kitchen and payments are processed without a hitch. It not only streamlines day-to-day operations but also reduces errors, improves efficiency, and enhances the overall customer experience.
If you're unsure which EPOS systems or payment processors best suit your restaurant’s needs, The Payments Directory® can help. Offering an informative list of suppliers, allowing you to compare options based on integration capabilities, pricing, and customer reviews, ensuring you find the perfect match for your business.
How Often Should You Review Your Accounts?
With all the hustle and bustle of running a restaurant, it’s easy to let things like account reviews slip. But it’s important to check your accounts regularly—ideally every year. Doing so will help you spot any unnecessary fees, ensure you’re on the right pricing model, and give you a clearer picture of your overall financial health. A little time spent reviewing your accounts can lead to better cash flow and more informed decisions about your payment processing setup.
Security Matters: Protecting Your Customers
Keeping your customers’ card data secure is critical to building trust and staying compliant with industry standards. The Payment Card Industry Data Security Standard (PCI DSS) lays out strict rules for protecting credit card data, and every restaurant must ensure their payment systems meet these requirements.
Key steps to improve security include encrypting card data, limiting access to sensitive information, and regularly monitoring your systems for vulnerabilities. You might also consider tokenisation, which replaces card details with unique identification symbols that protect the data without compromising its security.
Embracing New Payment Technologies: QR Codes and Apps
In recent years, QR codes and mobile ordering apps have become increasingly popular in restaurants. These technologies not only offer a smoother experience for your customers but also help you streamline your operations. By using QR codes, customers can view your menu, place orders, and pay directly from their smartphones—keeping everything contactless, which has become even more important in today's world.
Mobile apps can further enhance the customer experience by integrating with loyalty programs, offering exclusive deals, and tracking repeat visits. Whether you run a small eatery or a larger establishment, adopting these technologies can help you stay competitive and improve customer satisfaction.
Preparing for New Tipping Legislation – October 2024
The upcoming changes to UK tipping legislation, due in October 2024, will ensure that all tips go directly to your staff, without deductions. This is great news for your employees but means you'll need to ensure your payment systems are set up to handle tips fairly and transparently. If you haven’t yet, it’s time to start thinking about how this will affect your business and ensure you're compliant with the new regulations. Be sure to communicate openly with your staff and customers to avoid any confusion.
Building Customer Loyalty with Payment Solutions
Loyalty programs are an excellent way to keep your customers coming back, and when integrated with your payment systems, they can be seamless. Platforms like Payment Loyalty make it easy for customers to earn points, track rewards, and feel valued every time they pay. By incorporating loyalty schemes into your payment process, you not only boost customer retention but also encourage larger spends. It’s a win-win for both your business and your customers.
Choosing the Right Payment Terminals
It’s important to select the right payment terminals for your restaurant. Traditional POS systems might offer a robust solution, but mobile and contactless options provide flexibility that can improve the customer experience. With contactless payments becoming the norm, ensure your terminals support EMV, Apple Pay, Google Pay, and even QR codes to cater to a wide range of payment preferences. Choosing terminals that integrate seamlessly with your POS system will also help streamline your operations and reduce errors.
Wrapping It All Up
Restaurant payment processing doesn’t have to be complicated. By understanding the key players, reviewing your pricing models regularly, and embracing new technologies like QR codes and mobile apps, you can keep your business running smoothly and improve the customer experience. Don’t forget to prepare for changes in tipping legislation and consider how loyalty programs can keep your customers coming back for more. With the right setup, you’ll be well on your way to building a more efficient, customer-friendly restaurant.
