A restaurant cannot run without payment infrastructure in place, but the pure cost of doing business can often be more of a burden than it should be for many fast and full-service restaurants across the country. In order to survive the recent wave of inflation, restaurants must carefully choose their payment processing partners and payment methods, and be persistent in auditing them to minimize these costs. 

To help recoup the cost of accepting cards, some restaurants are raising the prices of menu items, and others (where permitted by state law and merchant services agreement) are adding a credit card surcharge to bills. According to the National Restaurant Association, menu prices increased an average 7.1 percent between July 2022 and July 2023, partially to cover the overall increase of operational cost, and passing that fee onto the patron creates friction and erodes customer loyalty. Swipe fees range around three to five percent, cutting into already razor-thin margins. Although inflation overall has slowed down over the past year, the cost of doing business is radically different than it was five years ago with little positive change in sight.

Payment processing pricing structures often used by restaurants allow payment processing providers to layer their processing fees on top of other underlying debit and credit card fees. According to the Wall Street Journal, the dollar amount of interchange fees more than doubled from 2012 to 2019, and U.S. merchants paid approximately $62.5 billion in Visa and Mastercard debit and credit card interchange fees in 2020 alone. The bulk of fees are  “interchange” fees, collected by the card-issuing bank and set by the card network, based on networks, cards and transaction types. Each of these combinations results in a different amount of underlying fees, which can often be difficult to decipher.

Additional monthly fees can include the “real” fees for software and service subscriptions in addition to “hidden” fees that aren’t actually tied to any underlying restaurant payments contract and only boost an ISO’s potential profit without any added benefit to the restaurant. Hidden fees like a routine $10 “statement fee” to simply receive a statement or a monthly penalty for a restaurant that is not PCI compliant, can quickly eat into a restaurant’s overall profit. 

Negotiating favorable processing rates and understanding the fee structures are integral to keeping a business afloat. Deciphering abbreviated processing terms found in thousands of pages of monthly payment statements can be difficult to navigate even for the best accountants and comptrollers. However, there are multiple signs that restaurateurs should pay attention to mitigate the rising cost of credit card processing, software and service fees.

Here are the top hidden fees that restaurateurs should look out for:

  • Sudden Unexplained Fees for the Customer
    • This summer, restaurant fintech company Toast Inc. landed in hot water for adding a surprise $0.99 fee per transaction without the consent of the restaurant. Why should a customer be paying an additional fee on top of the restaurant’s required transaction fees? After receiving backlash Toast quickly removed the fee, but the damage to customer relationships was already done.
  • Minimum Fees
    • Processors often charge a fee if a client doesn’t process a certain amount throughout the month, and some will charge these on a daily basis, regardless if the business is actually open. This can be incredibly detrimental to a new business and should be avoided when negotiating a contract.
  • Authorization or Transaction Fees
    • Most authorization and transaction fees are regular occurrences and shouldn’t be considered an immediate statement red flag. However, per-transaction and per-authorization fees in a payment processing statement can cost restaurants up to double what they should. 
  • PCI fees
    • The only way to remove these repeat costs is to prove compliance with the payment card industry data security standards (or PCI DSS for short). However, if a business is getting charged more than $20/month for this, the payment processor is biting more into a budget than it should.
  • Monthly Settlement Fee
    • Batch fees are often charged daily at $0.10 every time a batch of transactions is submitted for processing. Many processors compensate for that low fee by adding additional batching fees, and monthly settlement fees are exactly that. These fees don’t coincide with any action on the part of the processor. 


Restaurateurs and franchise leads need to perform regular audits and connect with their payment processor service to regain the upper hand against an industry rife with padded fees. As the payment industry continues to mold itself to the evolving economy, businesses will begin to see more services dedicated to counteracting these hidden fees through AI-assisted auditing services. 

Restaurants that are able to pinpoint these abnormal fees with their payment processing provider can drastically cut costs and improve their bottom line. While Visa and Mastercard’s costs are consistent and unavoidable, there is still wiggle room for a lower monthly cost. Restaurants need to select a payment processing company that tailors merchant services for their unique needs, and stay vigilant for hidden fees throughout the length of their contract. 


Michael Seaman is the co-founder and CEO of Swipesum, a comprehensive payment processing and merchant services consultancy delivering innovative auditing solutions to businesses nationwide. Michael and his brother, Stephen, founded Swipesum in 2016 to serve as Chief Payments Officer for businesses nationwide, combining industry knowledge, AI and proprietary software to create a transparent payments strategy that optimizes payment processing fees. In his free time, Michael enjoys time with his three children.

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