Restaurant Card Processing Fees Explained
What are card processing fees?
Every time a customer pays by card, a slice of that payment goes to the companies that move the money. That's the card processing fee. It comes off the transaction before the money reaches your bank account.
Most restaurants pay between 0.5% and 2.5% per card transaction. Where you land depends on the card, your provider and how your provider prices things.
Several parties take a fee on each payment, but your provider usually rolls them into one percentage, so you never see the split.
Who takes a cut?
Almost every card payment involves three of them.
The card scheme - Visa or Mastercard - charges a scheme fee for using its network. It's small.
The card issuer, which is the customer's bank, charges an interchange fee. This is usually the biggest piece, and it changes with the card. Consumer debit, consumer credit and commercial cards all carry different rates.
The acquirer is your payment processor. It adds its own margin on top. Providers compete on this part, and it's the part you can actually negotiate.
| Fee component | Who charges it | Typical range |
|---|---|---|
| Interchange fee | Cardholder's bank | 0.2% – 1.5%+ |
| Scheme fee | Visa / Mastercard | 0.1% – 0.3% |
| Acquirer margin | Your payment provider | 0.1% – 0.8% |
How it splits on any one payment depends on the card type and your pricing model.
Pricing models
Blended pricing is one flat rate, say 1.5%, on every transaction whatever the card. Easy to understand. It usually costs more if a lot of your customers pay by debit, because debit cards carry lower interchange and a flat rate doesn't pass that saving on to you.
Interchange plus (also called cost plus) means you pay the real interchange rate plus a fixed margin for the acquirer. You can see exactly what you're paying for, and once your volumes are high enough it's often cheaper.
Tiered pricing sorts transactions into bands, each with its own rate. It's complicated and it usually works out worse for the restaurant. Avoid it unless the total effective rate is clearly lower than your other quotes.
Why restaurant card fees vary
- Card type. In the UK, interchange on consumer debit cards is capped at 0.2% and on consumer credit cards at 0.3%. Commercial cards have no cap and can cost 1.5% or more.
- How the card is taken. A card tapped or inserted in the restaurant costs less than a card-not-present online order.
- Volume. Bigger merchants usually pay less per transaction.
- Contract length. A longer contract sometimes gets you a lower rate, but you're stuck with it if a better offer turns up.
What restaurants typically pay
| Transaction type | Typical blended rate |
|---|---|
| In-person contactless / chip and PIN | 0.5% – 1.4% |
| Online card payment | 1.2% – 2.5% |
| American Express | 1.5% – 3.0% |
A busy restaurant turning over £1 million a year on a blended 1.2% rate pays about £12,000 a year in card fees. That's before monthly terminal or gateway charges.
Other charges to watch for
The percentage is the number providers lead with. It's rarely the whole bill. Look out for:
- monthly or annual service fees, charged whatever your volume
- terminal rental, per device per month, if you don't own the hardware
- authorisation fees of a few pence on every transaction
- chargeback fees when a customer disputes a payment
- PCI DSS compliance fees
- early termination fees if you leave before the contract ends
Ask for the full fee schedule before you sign, not just the headline rate.
How to reduce card processing fees
Review your contract every year. Your volumes change and your rate should change with them. Plenty of providers will cut the rate if you ask, especially if you have a competing quote in hand.
Know your card mix. If most of your customers pay by debit, an interchange-plus deal will probably beat a flat blended rate.
Buy your terminals instead of renting them. Rental over a three or four year contract adds up. Own the hardware and that cost is gone.
Connect your payments to your POS. With a separate card terminal and POS, someone has to match the two up by hand, and it's harder to see what you actually took after fees. An integrated restaurant POS puts both in one place.
Get more orders direct. Delivery marketplaces usually take 15–35% commission, which makes card fees look tiny. An order through your own restaurant website or branded app costs a fraction of that.
How Flipdish handles restaurant payments
Flipdish has payments built into its restaurant POS system, online ordering and self-service kiosks.
In-person and online payments go through the same platform, so reconciliation happens automatically. A sale at the counter, on the website, in the app or at a kiosk all lands in the same financial report.
You also deal with one contract and one support team, not separate agreements with a payment provider, a POS vendor and an online ordering company.
If you run several sites, you can see net revenue for each location without stitching spreadsheets together.
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