Should You Pass On Credit Card Fees to Guests?

Ah, those dreaded credit card processing fees. As a business, you see these fees show up on your monthly profit/loss statement and you immediately want to start slamming your face into a wall made of cinderblocks because those credit card processing fees are absolutely butchering your profits at the end of each month and each year. This is brutal, especially if you are an independent bar/restaurant owner where the margins are so razor thin, and you just don’t have the standards in place to combat it.

Now, at this time, most of you probably just take this in stride and accept it because you figure there isn’t much you can do about it, but that’s what we’re here to talk about today. The problem is that 70% of payments are made with credit cards now these days. You can’t just be a cash-only place if you really want to compete. Whoever said “Cash is king,” didn’t factor in the convenience of swiping a piece of plastic instead of carrying a wad of paper around in your pocket.

That means that the BIG QUESTION looming on many bar/restaurant owner’s mind is: what can you do about this? Well, as I’m sure you have cleverly deduced from the title of this article, you can and should consider the possibility of transferring this burden to your guests because it is far less burdensome on them than it is for you.

And for many of you, I know your initial reaction might be, “No way. My guests would be pissed. They will go somewhere else and I can’t afford to lose my regulars.”

However, this is simply not true. I’m not saying that there aren’t people out there who might complain, but there are simply certain people who will complain about anything and everything. You see them on the Internet all the time, trolling forums and review sites. They bitch about things I can’t even fathom being an issue. “I can’t believe I have to select a language when calling this company on the phone. We’re in America. I shouldn’t have to do that!”

And yes, I’m perfectly aware that me complaining about complainers makes me a hypocrite, but I don’t care because they suck.

My point being, if the percentage of complainers is a large number, then we as business owners need to pay attention. But we have tested this ourselves using GoTab, a mobile order and pay system that has the ability to transfer credit card fees legally to the guests. In addition, we have also had a large feedback pool from owners who have transferred this surcharge to the guests.

The result? Very little pushback. And even when there is pushback, it’s more to clarify.

“What’s this on the bill?”

“Oh, that’s the processing fees. Many restaurants are doing this now as a convenience fee. If you’d like to pay cash, we can easily remove that fee.”

“Oh, gotcha. No, no problem. I’ll use my card.”

This is how most of those conversations go, and it’s because in this day and age, especially after COVID-19 hit, people have been forced to order food from their phones, and they have become used to paying some sort of fee. Either a delivery fee or a convenience fee.


Let’s do the math really quick. Check it out. As everyone knows, processing fees for bars/restaurants will commonly range from 2% – 4%, with the most common average being right at 3% with the average transaction fee being right around $0.25.

So if you do the math, if the average check size is $50, the surcharge on that check for your guest based on the averages would be $1.60.

That’s very minimal for your guests, but for an independent restaurant doing $1 million in sales, this adds up to an extra $35,000 – $40,000 in expenses just for providing convenience. In an industry where the average profit margin is 3 – 6%, this extra 3 – 4% nearly puts you in the red.

So, if you’re a little bit intrigued and you’re asking yourself, “Hmmm…should I consider doing this for my bar/restaurant?” The answer is yes. I’m not going to be like those blog posts you read where the author is like, “There are many things to consider and you have to weigh all the options before deciding the best course of action…blah, blah, blah.”

You don’t need any fence-riding, try-to-please-everyone opinion here. I’m going to shoot you straight and just tell you what I think.

In this case, unless you are a high-volume, high-profit establishment, there is no reason not to get at least a portion of this money back. If you’re really stressed about it, then take half. Share the charge with the guests so it’s collaborative. But after taking a closer look at this, there is really no reason not to put this system in place, in my humble opinion.

Ok, so if I’ve convinced you, or even if you are still considering it, let’s talk about how we implement this. Or better yet, let’s do a little Q & A because you probably have some questions about the logistics of putting this in place.

#1: Is it legal to transfer the credit card fee to the guests, also known as a surcharge?

In most states yes, currently there are five states that outright prohibit or limit a surcharge and they are Colorado, Connecticut, Kansas, Oklahmoa and Massachusetts, which is baffling to me. Why are these states protecting people dining out, which is a luxury—not a necessity—and punishing small business owners trying to survive?

Don’t get me started on this, I’ll get all heated up. I get very protective of my independent business bar & restaurant owner peeps. Again, in most states this is legal, but you need to make sure you have a POS system (or a manual way) that allows you to do this. I’ve already mentioned GoTab, but I’ll mention it again because I love it, and it allows you to add a convenience fee which covers the processing fees.

With that said, the rest of the states have legally approved surcharging for restaurants, as long as long you follow a few simple rules. In addition, the credit card companies have their own surcharge policies, many of them are common to the state though.

In fact, let’s look at Visa’s policies on this.

credit card surcharge

Go ahead and look that over as long as you need to. My favorite part is the orange box in the bottom right where Visa states that they are “opposed to surcharging, a practice that penalizes cardholders for using their preferred form of payment.” Really? You’re concerned about the cardholder? I call bullshit. All Visa is concerned about is that surcharging keeps them from collecting money from their customers. Either way, they could care less about the the owners of the businesses.

At any rate, make sure to check each credit card’s surcharge policies to ensure that you stay within the legal limits.

Can a surcharge be charged in other countries than the U.S.?

Nope. Next question.

Can I require a minimum credit card purchase?

Yes, you can. In most states you can require a minimum charge of up to $10 if you want.

And the final question, which I know many of you have, even if you won’t admit it:

What do I say to my guests who complain about it?

For this, I want you to remember one thing: the way you feel about your business and the value you put on it will be felt by your guests. And what I mean by that is if you’re an owner or manager that feels like they need to offer cheap food and drinks and keep offering specials and discounts to get people in the door, then you don’t think much of your place, and your guests aren’t going to think much about your place either.

On the other hand, if you provide a remarkable experience for your guests every time they come in, you treat them like family and you make them feel special, you don’t have to explain anything. You don’t have to apologize for anything. 99% of them won’t even question it.

So when someone asks what the surcharge fee is all about, you provide a sincere, empathetic response. You say to them, “Yes, I understand why you’d question this, but you are welcome to pay cash and there will be no surcharge. We are just an independent business trying to succeed and so we need to offset these high processing fees that are killing us each month. Our other option was to raise the prices on the menu, but if I’m being honest, if I raised the price of every menu item just $1, your check would be another $6 – $8 higher than it is now. Instead, it’s only $1.50 more, and this way we’re able to survive and still keep providing you with amazing food and service and I’m able to pay my staff to do so.”

Does that make sense? That’s it. Be light about it. This explanation alone creates empathy from them and the tough situation you’re dealing with to keep providing a great place for them to come.

I guarantee you that they won’t have a problem with it. Most guests don’t anyway, and the ones that do are usually more curious than anything at what the surcharge is.

And then lastly of course, make sure that your POS system is able to print out a receipt that says “Surcharge” on the ticket, as that is one of the policies you need to abide by.

That’s going to do it. I hope this has helped. If you’re someone who has been thinking about doing this, or more than likely, you’ve never even considered doing this, it’s time to start considering it. Again, it’s a small fee for them, but a big chuck of capital for you. Be valuable, be amazing, they won’t even care.

Thanks for being here. I appreciate it. I’m going to see you next time.