Credit card processing fees can be a confusing whirlwind for business owners, making the possibility of overpaying extremely likely. Researching and understanding what each provider has to offer puts you in control of how much your business will spend, the way your community views your establishment and employee satisfaction.

In early August, Minnesota’s minimum wage increased to $8.00/hour, straining small businesses. David Burley and Stephanie Shimp, owners of Blue Plate Co., which owns eight restaurants in the Minneapolis-St. Paul area said that the wage increase and changing health care laws would cost the company $1.25 million. Blue Plate decided to help ease this extra expense by taking credit card fees out of servers’ tips if the customer decides to pay and tip on a credit card. This deduction comes out to be roughly 2 percent of the servers’ tips, on top of the taxes employees already pay. While 2 percent may seem minimal, for someone living paycheck to paycheck, every penny matters. One Blue Plate employee told the Star Tribune, “It’s their choice to accept credit cards, and the customers’ choice to pay with them, and it’s not up to me.”

Although taking credit card fees out of employees’ tips may seem morally unethical, the practice is completely legal. According to the U.S. Department of Labor, “Where tips are charged on a credit card and the employer must pay the credit card company a percentage of each sale, the employer may pay the employee the tip, less that percentage.” That said, keeping morale up among employees is crucial for a business’ success, especially now that millennials are taking over the workforce and can very easily become bored and quit their jobs.

Credit card fees affect small businesses all across the United States and businesses need to develop a plan of how to cope with these costs.

Making Sense of Confusing Credit Card Fees

The rules and regulations regarding credit card fees can be confusing for small business owners. President and CEO of Mainstreet Ventures, Gibbons, an Ann Arbor, Michigan-based company that owns and operates 16 restaurants, explains that his company has no way of knowing what the processing fee will be on any particular card for any particular customer. He notes, “To make matters worse, there isn’t any transparency around the small piece of the swipe fee that is open to negotiation – the amount tacked on by the processing company, which accounts for about 15% of the total swipe fee bill. Most processors don’t itemize their statements, so we have no way of knowing their slice of the total pie.”

But how can your restaurant alleviate this headache? Entrepreneur highlights are a few tips to help save you time and money:

• Become familiar with the language within the credit card industry in order to fully understand what credit card processors charge your business for and why.
• Demand to see a full fee schedule; good processing providers should be willing to evaluate your bill.
• Evaluate rates and transaction fees with your customers’ charging habits. This review includes paying special attention to the non-qualified rate if your customers use government, corporate, or rewards cards.
• Consider a month-to-month option as opposed to a long-term contract. Most of these contracts allow the credit card processing provider to change their rates.

Customer service should be just as important for your credit card processing provider as it is to you for your business. Don’t sell yourself short by sticking with the cheapest plan from an unreliable provider. As Robert Livingstone, president of Ideal Cost, a national merchant consulting firm based in West Palm Beach Florida noted, you can’t control your vendor’s service, but pricing is almost always negotiable. The experience you have with your credit card processing provider is in your hands. Do your homework, don’t be afraid to shop around, and your business can have a positive credit card experience.