The Green Sheet Online Edition
June 9, 2025 • 25:06:01
Cutting swipe fees: A game changer for restaurant margins
Running a restaurant is more than just the ability to serve up good food; it is the management of a complex system of overhead to inventory and customer retention just to keep the lights on. The National Restaurant Association estimates that, on average, restaurants operate with a profit margin of just 3 to 5 percent (see bit.ly/4kQEryH).
These are slim margins by all accounts and highlight the urgency to count costs, especially swipe fees. Those ever-present transaction fees can add up quicker than tips for a restaurant’s best server. One overlooked avenue that can make a major difference is payment processing, a critical component that provides the chance to improve efficiency, reduce costs and optimize the bottom line.
Swipe fees hit the margins
Swipe fees at first glance can feel minuscule; however, these quickly add up in a sort of snowball effect that is amplified through restaurants due to high foot traffic and active points of sale. The fees run between 1.5 percent and 3 percent per purchase. Couple that to the already thin profit margins, and this becomes a pain for restaurateurs.
Payment processors play a vital role in achieving operational success for restaurants by improving cash flow management and creating a variety of payment options to meet different consumer requirements. Every restaurant, whether it be a café or full-service establishment, can stand to benefit from secure and efficient payment solutions that look to partner with business owners to level up their business operations.
Take a restaurant with a high turnover as an example. The amount in savings payment processors provide could be going to an employee’s wages, utility bills or equipment upgrades.
Uncontrollable swipe fees and inefficient business operations are the types of obstacles that hinder business growth, as small businesses are already having to grapple with rising costs due to inflation, labor and materials.
Transparent pricing: eliminate the element of surprise
For restaurants that need to iron out the kinks affecting the bottom line, it is essential to have a payment processing solution that puts the business owner first. Fortunately, payment processors across the board are stepping up to help restaurant owners minimize their expenses by providing innovative pricing models and cost saving solutions.
One of these solutions is the interchange-plus pricing model, which is split into two parts, the interchange fee and the processor markup. This model can provide transparency by separating the costs of interchange fees and processor markups for businesses accepting credit cards.
For business owners seeking a more predictable solution, flat rate pricing can level the playing field by eliminating the complexities associated with interchange fees by applying a fixed fee on each transaction regardless of the transaction method or card type. This is crucial as it adds a layer of predictability to financial forecasting, as small businesses often grapple with a myriad of different expenses.
The payment processor can also make provisions that isolate the processing fee and shift the processing costs away. Dual pricing can give customers a transparent option that provides incentivized discounts to customers paying by cash or debit or a slightly higher rate when using credit cards to account for processing costs.
This solution can allow restaurants to avoid taking on swipe fees and remain fully compliant with regulations, unlike surcharging which is restricted in some states.
Another method is a dedicated cash discount program. This rewards customers who pay with cash to receive an automatic discount. This ultimately results in a win-win situation: the restaurant can benefit from reduced processing fees and customers end up saving on the bill.
Manage operational expenses, boost profitability
These methods can help manage operational expenses and boost profitability so that businesses can ensure they are investing more in their operational growth.
Transparency and efficient payment options can only stand to benefit consumers being made aware of what avenues are available to improve their purchasing experience. This can go a long way to establishing consumer trust and retention.
Ultimately, restaurants are in a highly competitive industry.
As the economic climate continues to shift and average consumers grapple with rising living expenses, restaurateurs must prioritize what is in their control.
In this case, it is about steering the ship and choosing the right payment processing solution that not only enhances the processing experience but one that also directly prioritizes profit margins and the bottom line. 
Austin Mac Nab is CEO and founder of VizyPay, a Waukee, Iowa-based provider of payment technology solutions for rural small businesses across the United States. With over 20 years of experience, Mac Nab is an expert in the payment processing, bank card, automotive, restaurant and retail industries. In 2017, Mac Nab launched VizyPay with the goal of disrupting the status quo of the payments space to help rural small businesses level up their operations and save money on processing fees. Under Mac Nab's leadership, VizyPay was listed on Forbes FinTech 50 and is the #2 fastest growing company in Iowa with 100+ staff and thousands of customers. In 2022, Mac Nab was awarded the Electronic Transaction Association's Forty Under 40 Award and named Technology Association of Iowa's CEO of the Year. Contact him via LinkedIn at www.linkedin.com/in/macnab07.
Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.
