Is your restaurant losing money on credit card transaction downgrades? (1/2)

Is your restaurant losing money on credit card transaction downgrades? In the hospitality industry, paying by credit card is fairly standard. And, most restaurateurs understand there is a cost to process a credit card transaction charged by the Card Associations (e.g. Visa? and MasterCard?) However, many restaurateurs don’t understand that they might not be getting the best possible rate (cost) on each transaction because of their point-of-sale (POS) systems settings or the restaurants operational procedures. This lack of understanding could cost your restaurant hundreds of dollars each year. Keep your card reader clean to save on transaction costs. The best possible interchange rate offered by Visa and MasterCard requires the cardholder or customer to be present and for the credit card to be swiped and read by your POS system or terminal. When a credit card is swiped but not read by your POS equipment, it forces the server to key in the credit card number. This seemingly insignificant event (keying in a credit card) will cost your restaurant more for the transaction. Depending on your operational procedures or POS equipment settings, a $100 transaction will cost 31 to 60 cents more on Visa and 39 cents more on MasterCard for a key-entered transaction versus a swiped and read transaction*. How can you prevent some key-entered transactions? Well, spillage is an every day event in the restaurant industry, and your POS equipment (and more importantly your credit card reader) may be on the receiving end of anything that splatters. So, restaurateurs should clean their credit card readers once or twice a year or whenever the reader is known to be dirty. This means if your employees are key-entering more credit card transactions than usual, it might be time to clean your POS equipment. Your card processor can tell you how to safely clean your POS equipment. But not all key-entered transactions cost the same either. The vast majority of restaurants have their POS equipment set up to not prompt for a ZIP code when a transaction is key-entered. Restaurateurs do this for convenience, but it may be costing them more money. The convenience side is easy to understand C a server swipes the credit card, but the card reader doesn’t read it. Most restaurateurs don’t want the server to go back to the customer and ask for their ZIP code. First, it could be embarrassing to the customer. Plus, the server is now spending additional time to complete the transaction. Convenience is important. However, consider that a $100 key-entered Visa transaction costs 31 cents more than a swiped and read transaction if your POS system or terminal is programmed to ask for the ZIP code, and the ZIP code is entered*. This same transaction costs 60 cent more than the swiped and read transaction if your POS equipment isn’t programmed to ask for the ZIP code and the correct ZIP code is not entered. Customized receipts can help you lower costs on credit card transactions. Restaurateurs need to weigh convenience and cost to determine the path that is most productive and profitable for your restaurant. One possible solution is for the server to ask for the ZIP code when giving the check to the customer. Or, some card processors offer restaurateurs the ability to customize terminal receipts online. This capability allows you to simply go online and add a ZIP code line to the receipt footer so the server wont have to physically ask for the ZIP code (older terminals may not have this capability). ZIP code information may also be useful to your restaurant for demographic and ad campaign tracking. Batching out your credit card transaction batches within 2 days can also help lower your costs on card transactions. Although, you have two days to clear your card transactions, it is recommended that you batch out within a 24-hour