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Restaurant Payment Processing: The Ultimate Guide In 2023

Restaurant payment processing has come a long way in the past few years. With new restaurant payment technology, restaurants now have more options regarding how they want to take payments. 

This guide will explore all the options available in 2023 and help you decide which payment processor suits your restaurant business. But first, let’s define what a payment processor is.

What Is a Payment Processor?

A payment processor is a company that facilitates the transfer of money from one party to another. They serve as the middleman between merchants, banks, and customers. Payment processors ensure secure and efficient payments using advanced encryption, authentication protocols, risk management systems, and fraud prevention tools.

Payment processors also work with financial institutions to help businesses accept credit cards and other forms of electronic payments. This enables businesses to make sales without worrying about handling cash or dealing with multiple currencies. When customers make purchases online or in person, the payment processor will process the transaction through their secure network and ensure it is handled promptly and safely.

Payment processors can provide businesses with services such as invoicing, billing, customer service, and an array of other services such as merchant accounts, payment gateway integration, and reporting. Payment processors also help ensure customers’ sensitive data is securely stored and protected from unauthorized access or fraudulent activity.

Payment processors are an important part of any business’s financial operations. They can greatly enhance the customer experience by making it easier for them to do business with a company. Having a reliable payment processor in place can help businesses increase sales and improve operational efficiency while ensuring their customers’ information remains secure.

Payment Processing Players

Payment processing involves multiple players whose roles are essential to ensure a secure and seamless payment experience. The key players in the payment ecosystem include:


The consumer is the individual or business who makes a purchase. They are responsible for providing payment information to the merchant and must have an account with one of the card brand networks, such as Visa or MasterCard, to make their purchase.


The merchant is the business that sells goods or services to the consumer. They are responsible for accepting payments from consumers and processing them through a payment processor which connects them to the card brand network.

Card Brand Network

The card brand network handles all transactions between merchants and consumers. Every credit or debit card issued by banks is associated with one of these networks, and they are responsible for approving every transaction using their cards. 

The three major card networks (Visa, Mastercard, and American Express) have their processing services, which merchants must use to accept customer payments.

Credit Card Processor/Payment Processor

The payment processor is the middleman between the consumer, merchant, and card brand network. They are responsible for securely transmitting payment information from the consumer to the merchant and processing it through the card brand network. This allows merchants to accept credit and debit cards as payment without worrying about managing secure communication protocols or dealing with customers directly.

Payment Gateway

The payment gateway is the software platform that connects the merchant, processor, and card brand network. It securely sends payment information from the consumer to the merchant and then processes it through the card brand network for approval. This reduces manual errors in processing payments and allows merchants to accept payments from their customers quickly.

Issuing Bank

The issuing bank is the bank that issued the credit or debit card to the consumer. They are responsible for authorizing their customers' payments and ensuring they have enough funds to cover their purchases.

Acquiring Bank

The acquiring bank is a merchant’s bank responsible for receiving customer payments and depositing them into the merchant’s account. This allows merchants to quickly receive money from their customers without waiting for cards to clear or cheques to arrive in the mail. It also ensures that merchants get paid on time. This makes it easier for businesses to manage cash flow and reduces costs associated with manual payment processing.

Merchant Account Services Provider

The merchant account services provider is a company that provides services to merchants who process payments. They are responsible for setting up and maintaining merchant accounts, handling customer support inquiries, providing fraud protection and dispute resolution services, and managing chargebacks.

Credit Card Facilitator

The credit card facilitator is an intermediary between the merchant and the card brand network. They are responsible for helping to set up merchant accounts with the card brands, processing payments through the payment gateway, and facilitating communications between the merchant and card brand network. This helps streamline the payment process for merchants and ensures that all transactions occur securely.

Overall, these players make up a complex payment processing system that enables consumers to securely purchase goods or services using their credit or debit cards. Without them, eCommerce would be much less efficient and convenient than it is today.

Payment Processing Rates

When choosing a payment processor, it is important to consider the fees associated with each service. Payment processors typically charge three types of fees: 

1. Flat Fees

Flat fees are usually charged as one-time, fixed costs, meaning customers pay the same amount each time, regardless of the total transaction amount. 

Depending on the payment processor, these charges may include merchant account fees, payment gateway fees, annual fees, batch fees, monthly fees, network access fees, and online reporting fees. PCI (or Payment Card Industry) fees are also often required for secure online payments. Additionally, statement and terminal fees may be assessed for certain transactions. 

These fees can quickly add up, so it’s important to compare the cost structures of different processors before making a decision. Many payment providers offer discounted rates or waivers on some flat fees depending on the type and volume of transactions, so be sure to ask about these before signing up.

2. Processing Fees 

Processing fees are the costs associated with processing payment transactions. These fees typically include an interchange fee, a flat fee, a card brand fee, a payment processor markup, and a transaction fee.

  • Card-issuing banks charge interchange fees to cover the cost of providing credit or debit cards. 
  • Payment processors charge flat fees for processing transactions. This fee is usually a fixed rate regardless of the amount processed.
  • Card brand fees are often levied by credit or debit card companies such as Mastercard, Visa, or American Express.
  • Payment processors charge payment processor markups for fraud prevention and customer support.
  • Transaction fees are charged by payment processors for each transaction processed and can range from a few cents to a few dollars, depending on the transaction size.

It’s important to understand that different payment processors may have different fee structures, so shopping around and comparing the fees before committing to any payment processor is essential. Understanding processing fees can help merchants save money and choose the best payment processing solution for their business.

They should also pay attention to changes in processing fees over time since many processors tend to increase their rates periodically. Merchants should evaluate their accounts regularly or when significant changes occur to ensure they get the most competitive rate.

3. Situational Fees

These fees are charged when a certain situation or circumstance occurs. 

  • A cancellation fee is charged when a payment is canceled.
  • A chargeback fee is charged when customers dispute the charge with their credit card company. 
  • An international fee is charged for transactions that take place in foreign currency.
  • A liquidated damages fee is charged when a customer fails to meet the agreed-upon terms of their contract. 
  • A monthly minimum fee is charged if the total transaction volume in a month is below a certain amount.
  • NSF fee is charged when a customer's payment fails to clear.
  • A set-up fee is a one-time charge when a customer first sets up their payment processing account.

How to Choose the Best Payment Processor for Your Restaurant

Choosing the right payment processor for your restaurant is essential. The right processor can make it easy to accept payments and improve restaurant customer service, while the wrong one can lead to delays and frustrations. So how do you choose? Here are some factors to consider when selecting a payment processor:

1. Payment Types

Make sure the provider accepts the types of payments you plan to take. Most processors will accept credit and debit cards, but some may also support contactless payments, ACH transfers, or other means of connecting with customers.

2. Security

Look for a processor that takes security seriously. This includes using advanced encryption methods to keep data safe and ensuring that customer information is stored securely. Check whether the processor has measures to protect against fraud and identity theft.

3. Fees

Be sure to compare fees between different providers. Some may have a flat fee, while others charge a percentage of each transaction or a combination of both. Different payment processors charge different fees, so understand what those fees are before signing up.

4. Features

Many payment processors offer features beyond basic payment processing, such as loyalty programs, gift cards, and more. Consider what additional services you might need for your restaurant and look for a provider that offers them.

5. Customer Service

If you have questions or run into problems with your payment processor, you want to know if someone is available to help. Look for a provider with good customer service so you can get the support you need quickly and easily.

By following these tips, you can make sure that you choose the best payment processor for your restaurant and give yourself peace of mind.

Frequently Asked Questions About Restaurant Payment Processing

As a business owner, it’s important to understand the different payment processing methods available to you. In this FAQ section, we’ll look at some of the most common payment methods used in restaurants and explain how payments are processed. We’ll also discuss the payment workflow and provide an example of a payment processor. This will help you choose the best option for your restaurant and ensure those customer payments are processed smoothly.

What Are the Common Payment Methods In Restaurants?

Restaurants offer a variety of payment methods to their customers. Common payment methods used in restaurants include:

How Are Customer Payments Processed?

Customer payments are processed in various ways depending on the type of payment. Credit and debit cards, for example, generally require customers to provide payment information online or by phone. This payment type is usually processed through the card-issuing bank’s payment gateway, which connects to a payment processor to verify and complete the transaction securely. 

On the other hand, ACH payments require customers to provide their account and routing numbers, which are then used to transfer the funds directly from their bank account into the merchant’s designated bank account.

In other cases, customers may pay via e-wallets, such as Google Pay or Apple Pay. E-wallet payments are processed through the customer’s online account, which then transmits the payment securely to the merchant’s designated account.

What Are the 3 Steps to Process a Payment Card Transaction?

When processing a payment card transaction, there are three essential steps that you need to complete for the transaction to be successful. These three steps include:

  1. Authorization and Electronic Data Capture: This step is the first part of processing a payment card transaction, where all relevant data associated with the customer’s purchase is gathered. The merchant’s credit card terminal or (Point of Sale) POS system begins this process by requesting authorization from the customer’s financial institution for the purchase amount. The customer’s card is then swiped or inserted into the credit card reader, and all necessary data is securely transmitted to the customer’s bank. The bank will then determine if sufficient funds are available in the customer’s account to cover the purchase amount and return an authorization code.
  2. Funding: Once authorization is granted, the customer’s bank will transfer the funds for the purchase and send them to the merchant’s bank account. This is usually done within 24-48 hours of the initial transaction.
  3. Settlement: The final step in processing a payment card transaction is the settlement, which involves reconciling all transactions that have occurred over a given period. This is done by comparing the totals from the merchant’s account to totals from the bank processing the transaction. Once both parties have verified that the information is accurate, they will settle any outstanding payments or fees.

What Is an Example of a Payment Processor?

Examples of popular payment processors include Bank of America, Elavon, and Chase. These payment processors provide secure transactions by encrypting financial information and authorizing payments. 

What Is Payment Workflow?

Payment workflow is a system used by businesses to simplify their accounting processes and ensure efficient payment of invoices. It involves streamlining the entire process from creating an invoice, distributing, approving it for payment, and then processing it.