As a restaurant owner, credit card processing is something you can’t ignore.

Consider the following facts:

  • Across the board, most consumers prefer to use debit cards and credit cards over cash – and this trend is only growing. TSYS found in a 2017 survey of 1,000 consumers that 44% preferred debit cards and that 33% preferred credit cards. Only 12% said they preferred cash.
  • If any of your customers pay using a debit card, credit card, or a contactless payment option, you have to pay a fee for credit card processing. That means that working with a credit card processor (a.k.a. a merchant account provider, or MSP) is unavoidable.

So, unless you go cash-only, you’re going to find yourself paying those processing fees; there’s really no way around it.

And, you might start to wonder how much you’re really paying for your credit card processing.

The costs of these fees can add up quickly. On average, you most likely will find yourself paying anywhere from 2-3% in fees for every credit card or debit card purchase your customers make.

But what kinds of fees can your credit card processor charge you? Are there some you don’t even know about? Are there some you can avoid by negotiating with your current processor or switching to another company?

Discover the true cost of credit card processing in today’s article.

What Are All of those Fees You’re Paying?

Have you ever looked at a paycheck or a mortgage statement and noticed that certain percentages of your money were going to things you didn’t really know anything about?

It’s the same with credit card processing. There are many different kinds of fees a credit card processor can charge you, and when it comes down to it, you may not really know where your money is going after all – especially when you see an itemized lists of all your monthly fees that have names you’ve never heard of.

If this sounds like you, you’re not alone; that’s why we’re here to demystify some of the laundry list of fees you may be charged.

Though this is by no means an exhaustive list, here’s a breakdown of the types of fees that payment processors typically charge businesses for.

1) Application and Setup Fees

This is one of the first fees you may be charged by your payment processor. You could potentially have to pay to apply to work with a payment processor – or, once you’re approved, for the equipment the payment processing group sets up for your restaurant.

2) Monthly Fees

Monthly fees are exactly what they sound like: fees your credit card processing company will charge you every month primarily to cover the costs for call centers. The amount can vary but is generally in the $10 to $25 range per month.

3) Monthly Minimum Fees

Credit card processors will charge you a monthly minimum fee if you don’t meet their minimum monthly transaction total. This rarely occurs as your monthly volume will cover this minimum. The average monthly minimum fee is $25.

4) PCI Compliance Fees

On the surface, pursuing PCI compliance is a good thing. Being PCI compliant essentially means that you’ve taken proactive measures to prevent theft, fraud, and security breaches in your business. (That’s why Midwest POS is PCI QIR-certified.)

Most payment processors will charge a monthly fee for helping you with this compliance.

5) Terminal/Equipment Fees

Credit card processors can charge businesses for terminal/equipment fees for the use of devices like payment terminals. Fees can vary from $5-$60 per month. As a general rule, do not do a lease on a standalone credit card terminal. Those are very unfavorable terms to the merchant.

6) Interchange Fees

Usually the most expensive fee you’ll be charged by your credit card processor, an interchange fee is a fee you are charged for a certain percentage of any transaction with an average range of 2-3% per transaction. This fee is from the issuing bank based on the type of card used: debit/corporate/rewards/etc.  Rates can differ based on the type of card used, how your business is categorized, and if someone is paying in-store or online.

7) Monthly Gateway Access Fees

It’s possible that you may be charged monthly fees (usually between $10-30 per month) for using the payment gateway your payment processor provides. Payment gateways are used to authorize (or deny) the processing of payments and to transfer payment data from your processing system to financial companies.

8) IRS Reporting Fees

Your payment processor may charge you for the transaction information they provide to the IRS. Thankfully, of all the fees you’re charged, this is usually the least expensive and is only an annual fee.

The Danger of the Other Hidden Fees: Early Termination Fees (ETFs)

Are you being charged any of the fees we listed here? Do you feel that you’re being charged too much? If that’s the case, you really have two main options:

  1. Negotiate rates and fees with your current payment processor.
  2. Shop around, compare prices, and find a new provider.

This sounds great on paper, and depending on the current point-of-sale company and payment processor you’re working with, it could definitely be possible.

But, there’s a major caveat.

There is one other type of fee you may be charged: early termination fees (ETFs).

Most payment processors require that you sign contracts (3 years is industry standard) and charge you a fee if you try to break your contract early.

Unfortunately, this contractual language can sometimes be buried in 50 or more pages of legalese that many restaurant owners don’t take the time (or have the time) to read before they sign the dotted line.

Additionally, payment processors that have ETFs and long-term contracts may not patently spell things out so that you know what you’re getting into before you sign up to work with them.

The problem is that you might get stuck in a contract with a provider that charges hefty early termination fees.

That means that if their payment processing fees go up, you’ll have to pay them.

So… What Can You Do?

By now, you have a basic understanding of some of the fees your payment processor may be charging you, what to be wary of, and the dangers of early termination fees. The question is: What’s next?

To begin with, if you’re already working with a payment processor, look at all of the fees you’re being charged. Have questions? Reach out to their customer support team or your account rep. Ask about what you’re being charged. If you feel that the fee is unnecessary or could be lowered, negotiate with them.

Though it might surprise you to hear this, many payment processors are actually open to negotiating with their customers. Why not give it a try?

If you’re unsatisfied with your processor, look at your contractual obligations. If you’ll have to pay hefty early termination fees to cancel your account, you may just have to ride it out until the end – unless you’re willing to pay the fees just to break the contract.

If you’re ready to explore different options, don’t just rush into it; take your time to explore what’s available to you. There are tons of payment processors out there. Do a quick Google search and read through ratings of different companies. Compare them.

Check out their ratings on the Better Business Bureau. Get quotes from each company. Do your research; see what each processor is truly offering and ask about long-term contracts. In general, you may want to avoid processors that charge early termination fees.

Thankfully, though, you don’t have to be in this alone. Local trusted technology advisors like Midwest POS are here to help you wade through the sea of different options out there and find the best option for you – one that works with your restaurant, your POS software, and your payment processing equipment. We have a trusted partner on staff to assist with the credit card discussion.

Have any questions about payment processing? Thinking about making a switch? Looking for support? Get in touch today!

Please contact us at Midwest POS via phone 800-773-4007 or email