Why Are Restaurants Charging Credit Card Fees

Why Are Restaurants Charging Credit Card Fees

As you walk into a restaurant for a quick bite or an evening with friends, it’s unlikely that you stop to think about the payment process that must take place before your food arrives. Yet more and more restaurants are now introducing credit card fees in order to cover costs associated with processing payments via debit or credit cards. This means that when customers opt to use those methods of payment, they could be left facing additional charges on top of their meal bill. But what lies behind this new trend in the restaurant industry? In today's post, we'll be taking a closer look at why so many eateries are charging credit card fees – and what customers can do to minimize its impact on their wallet.

Restaurants have to pay a credit card processing fee for every transaction

With the increasing popularity of credit cards, most restaurants have come to accept them for payment. What many people don't realize however is that for every transaction, the restaurant has to pay a fee to the credit card company. This fee can range from 1-4% of the total cost and as such it affects the margins by which restaurants are able to turn a profit. It is easy to overlook this additional cost when eating out, but just bear in mind that each time you pull out your plastic, it comes at a cost to the restaurant's owner.

Some restaurants are passing this cost on to customers by adding a credit card surcharge

As more and more restaurants switch over to digital payment options, it is becoming increasingly common for them to recoup the processing costs of credit card transactions by instituting a credit card surcharge. This fee typically remains consistent across all locations and is billed at the end of the meal. Though some customers have resisted this additional cost, there has been no major pushback from consumer advocacy groups due to its nature as a pass-through cost. Ultimately, the use of this surcharge practice depends on the restaurant's discretion but is currently widespread in hospitality businesses large and small.

You can avoid this surcharge by paying with cash or debit

When dining out, one way to avoid credit card transaction surcharges is by paying with cash. Since cash payments are exact and come with no fee for processing a charge, it can be more cost-effective than opting for a credit card purchase. Another option for those who prefer the convenience of plastic over paper is to use a debit card instead. Taking this approach eliminates most – if not all - surcharges from restaurants as debit cards are read like any other payment method during the transaction. However, some establishments may add a fee when using a debit card so checking in advance can save you money and hassle down the road.

If you do use a credit card, be sure to ask if there is a surcharge and try to find one that doesn't charge one

For those who are looking to use plastic to pay for their meals, it's important to ask if the restaurant or store participates in a surcharge beforehand. Luckily, not all restaurants participate in surcharges, so take the time to do your research and find the ones that won't make an extra charge on top of what you already owe.