Your restaurant works hard for its money and as a restaurateur, you know the value of a dollar. So, when it comes to processing payments, your restaurant needs more than just a terminal.
Payment processing for consumers and merchants is a big deal. According to Payments Canada’s 2016 Canadian Payment Methods and Trends report, in 2015, the payments market in Canada grew to 20.9 billion transactions worth more than $8.9 trillion.
As a restaurateur, concerns go beyond simply accepting payments and having the most up-to-date technology. The impact of payment processing for restaurant owners can best be summed up by Dan Ferracuti, owner of Safari Bar & Grill and Drums & Flats in Toronto. “Payment processing is a huge expense. When we first opened it was probably a 50-50 split as far as people paying cash as opposed to credit, and now it’s probably 90-10 as far as credit cards go. Nine out of 10 transactions are either credit or debit — there’s very little cash anymore.”
Often, restaurant owners seek recommendations from their POS provider when choosing a payment processor. Alex Barrotti, founder & CEO of TouchBistro — an iPad POS that integrates with nine different payment processors — explains that restaurants often look to them during the sign-up phase to help find a solution. “We base it on their needs. If they are a quick-service restaurant, then we might go with one solution; if they are a full-service restaurant and they need mobility or payments at the table, then we would go with a different solution. Not every payment partner today has a full suite of offerings.”
READ THE FINE PRINT
Crucial to finding a processor is understanding the fine print. Wolfgang Guembel, founder & president of Lock Street Brewing Company in St. Catharines, Ont. knows the feeling of getting burned. “There’s fees on the back-end that you don’t see until you get your statement. The [processing company] will say they have the lowest fees per card, but when you look at your statement, there can be handling fees, or some kind of generic processing fee that’s a lump sum.”
John Morgan, director of Independent Solution Providers at FI & Partner Management for Moneris, warns to check for extra costs up front. “Make sure, as a restaurateur, you understand [whether] there are any costs from a third party. Ask, ‘when I pick you as a restaurant system and I pick you as a processor and your two systems are talking to each other, are there any additional costs involved?’”
He also stresses the importance of knowing your responsibilities before signing on the dotted line, “Make sure you know going in who does what if something goes wrong. If the pin pad breaks, or appears to not be working, where is the problem? Is it the network; is it the restaurant system, or is it a processor problem? As a restaurateur, you shouldn’t have to spend any amount of time figuring that out. Make sure you understand the support model going in.”
Ferracuti says that when it comes to fraud and chargebacks, it can be confusing determining when you’re protected and when you’re not, as a merchant. “Unfortunately a lot of it you don’t realize until it happens to you. You have the conversations and it’s all good until you actually get somebody that disputes the card or you get a fraudulent card or whatever you may have; it really is something you learn by experience. Unfortunately, most of the time you end up on the wrong end.”
Ferracuti has taken a hands-on approach to protecting his business. “If someone swipes a credit card, we are actually not protected by the credit company if it turns out that the card is fraudulent. So, we’ve taped over our swipers,” he says. “Luckily it doesn’t happen very often and with the pin-chip technology, it hardly happens at all anymore. Since pin-chip technology has been in place, we’ve seen a huge reduction as far as disputes of payments. It’s a better system.”
The good news is that contactless payments are on the rise. “Contactless is booming in Canada. Almost all payment cards in Canada are contactless-enabled and almost 85 per cent of Moneris retailers — including restaurants — are now accepting contactless payments,” says Morgan.
Tap-and-pay in the foodservice businesses is becoming standard across the board for both restaurants and guests. In October of this year, U.S.-based Square launched its contactless and chip reader in Canada, making it possible for foodservice businesses to accept debit and Interac, credit cards and mobile payments with the Square system.
THE FUTURE IS NEAR
Beyond the increase of tap-and-pay technology, consumers and merchants alike are seeking seamless solutions. “There’s a line blurring between the solution and the payments,” Barrotti notes. “A lot of our customers are more bothered by the fact they have to talk to one person for the software, another for the payment and a third for the hardware — they just want it to come from one source.”
It seems that’s already becoming reality. With the recent launch of its contactless and chip technology, Square removed the final barrier to becoming a full POS solution for the restaurant industry. Previously, Square wasn’t an option outside of pop-ups or off-site events, as accepting debit or mobile payments wasn’t a possibility — only credit cards could be swiped. Now, with all payment options on the table, a free POS app for iPads and a low one-time cost-per-reader ($59), the high expense of payment processing is getting a run for its money.
THE BOTTOM LINE
Though praised for its innovation and low cost, new solutions for the payment-processing industry aren’t necessarily going to see a sweeping takeover in foodservice. For one, restaurant owners often have a long-term contract with their current payment processor that will need to run its course. Ferracuti has been through multiple systems and spent years troubleshooting with one before switching to a different option — even though that meant signing on at a higher cost. “For me, it all came back to reliability. The 3G units were a little bit more expensive on a rental basis, but they saved us so much more in customer satisfaction that, to me, it was worth it.”
Guembel, a fan of Square, initially tried out the system in his brewery, but switched after three months because the solution didn’t accept debit at the time. “Messaging and just managing the expectation of the customer goes a long way. If you’re going to trend toward something new, whether that’s going paperless, Apple Pay or Square, take the time to make it really clear to the consumer upfront. The time to teach [customers] that you’re doing something new is not at the time of payment.”
Now that Square accepts debit and mobile payments, Guembel is excited, “It’s forward thinking and I love that about it.”
Volume 50, Number 8
Written by Andrea Victory